SEPTEMBER - 2023LOGISTICSTRANSPORTATIONREVIEW8 OPINIONIN MYVENDOR MANAGED RETURN (VMR), A VMI CONCEPT ON REVERSE LOGISTICS HANDLINGAt BrandLoyalty, one of our unique selling points is our commitment to accepting all surplus stock from clients following promotional or program periods. This high service level has posed challenges for us over time, with high volumes of returns, varying return conditions, and costly return handling costs. Despite these challenges, we've been putting effort into finding a suitable solution, and I'd like to share some of the alternatives we've investigated.The Challenges of Reverse LogisticsWhen it comes to reverse logistics, many businesses face a complex and multi-layered process that involves various stakeholders and operations. Handling reverse logistics in-house can be challenging, especially due to the high costs associated with product returns, sorting different return qualities, repairs, and repacks. Additionally, standardizing the reverse logistics process with clients, accurately tracking, and managing returned goods, and disposing of damaged or returned goods in an environmentally responsible manner can be difficult. To address these challenges, outsourcing the reverse logistics operation to a third-party logistics (3PL) provider may be a better option, especially if the business has a high return frequency or volume.Outsourcing to a Third-Party Logistics (3PL) ProviderOutsourcing reverse logistics to a third-party logistics (3PL) provider is a popular practice among companies and offers many benefits. A 3PL can help establish clear communication with clients, provide expert guidance, and keep clients informed of the reverse logistics process. They handle client education on proper returns handling and work to ensure the process is efficient and effective. By utilizing their expertise, experience, and resources, a 3PL can improve customer service, lower the cost and complexity of reverse logistics, and ensure regulatory compliance. The 3PL will handle repairs and repacks of returned products to ensure they are in good condition for resale, even for complex returns, at a manageable cost.The Benefits of Vendor Managed Return (VMR)Using a third-party logistics (3PL) provider on reverse logistics is a good option, but have you considered adopting the Vendor Managed Inventory (VMI) concept for reverse logistics? VMI is a supply chain strategy where the supplier manages a customer's product inventory, monitoring usage and maintaining minimum stock levels. We could extend this by having the supplier manage our returns as well, which I would call it Vendor Managed By Terry To, Head of Supply Chain Management & Logistics, BrandLoyalty Canada
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