Returns vs. Replacement: How Reverse Logistics Affect Processes
To outpace the competition, businesses must adopt processes to harness the reverse supply chain. In this way, companies can milk every bit of value in the return business stream.
The challenge that plagues many companies, however, is differentiating between – and establishing best practices for handling – returns versus replacements.
Although not every business model has the need for creating and maintaining separate processes for each of these categories, doing so may allow you to recover even more value. Reverse logistics automation solutions may be just what you need to make this happen quickly and easily.
Critical Differences in Reverse Logistics for Returns & Replacements
As more businesses recognize the value in applying reverse logistics principles for optimizing returns, handling replacement orders poses yet another level of complexity.
Although some companies may be able to get away with using the same processes for both functions, you could be cutting into your profit margin unnecessarily by attempting to lump them both into the same category.
Returns are generally straightforward: receive the product back and issue the customer a refund based on your established policies. Needing to send a replacement necessitates adding multiple extra steps to the process.
Tailoring Product Replacement Process Solutions to Fit Your Business Model
The first step in establishing a stand-alone replacement process flow is determining when, why and how your customers may need a replacement product.
Warranty returns are the first category to consider, as this aspect of the reverse business cycle affects many companies. Straight-across warranty replacement processes are fairly simple to design and implement. If you must differentiate between warranty repair and replacement, however, the logistics become more complex.
If you accept replacement orders from your customers for reasons that are not warranty related, you have yet another set of steps to add to your process flow.
The most pressing challenge inherent in the replacement cycle – warranty related or not – is what to do with the returned item. Depending on your business model, this can add a mind-boggling number of “decision diamonds” to your process map.
Choosing the Best Reverse Logistics Solution
The bad news in all this is that you must work through your process design for each possible replacement trigger event. The good news is that, once you determine your process flow, you can automate your reverse logistics.
An effective automation tool – like the ReverseLogix SaaS platform – allows you to take a hands-off approach to many phases of these processes. At the same time, as the system gathers valuable data about your returns and replacements, you can improve quality control and process flow to reduce turnaround time, improve recovery and enhance the customer experience.