In order to stay competitive in the global economy, it’s important for all companies to make reducing costs and increasing efficiency a priority. Reverse logistics is one way that many businesses are looking to do just that.
With an ever-growing consumer base in China, this industry has exploded over the past few years with more and more companies getting into the game. This blog post will provide you with some of our best practices when it comes to reverse logistics in china!
Why reverse logistics is important for e-commerce businesses?
Reverse logistics is the process of collecting purchased products from consumers, ensuring they are restocked or repaired to full working order, and then redistributing them back into the retail supply chain.
It is useful for a variety of reasons, including:
- Decreases the cost of transportation as it allows companies to reuse or redistribute items back into inventory within 24 hours from when they were purchased.
- Helps e-commerce businesses compete by reducing their operating costs and increasing efficiency.
- Increases customer loyalty with a good customer experience that includes fast, efficient delivery.
What are the 5 R's of reverse logistics?
The “five R’s” of reverse logistics are:
Reduce – Reduce what you need to work with, and reduce how much waste is generated.
Reuse – Reusing an item instead of recycling it saves resources and money. Reverse Logistics in China becomes even more important if a company wants to be environmentally friendly.
Rotate – Rotating inventory to keep products fresh and in demand. It is better than just storing products forever.
Repair – Repair items whenever possible, especially if the defect or breakage cannot be fixed with a simple part replacement. This helps reduce customer returns of defective products that are not repairable because it saves time and money.
Recycle – Recycling is the last “R” of reverse logistics, but it should not be your first option. While recycling can cut down on waste and pollution in China when possible reusing or
How does reverse logistics work?
Reverse logistics is a process that starts with an initial purchase to distribute product from one company to another, oftentimes for sale at retail value.
When products are no longer wanted or needed by consumers, they can be sent back as a return, which then enters the reverse logistics process. Products can be collected from customers and brought into stores for restocking or repair before being redistributed to retailers.
The steps of the returns management process are as follows:
Step #1: The customer requests a return.
Step #2: A return authorization is issued and the customer receives an RMA number.
Step #3: The product arrives at the warehouse or returns center, where it is inspected for damage (by security personnel) and processed through a reverse logistics system that ensures accurate accounting of inventory levels. Damaged products are identified by the reverse logistics process and are either repaired or disposed of according to company policy.
Step #4: The product is restocked, resold at a discounted price, donated, recycled if possible, or otherwise processed appropriately as per company policies.
Check this article : 10 Global Logistics Challenges in China (Solved With #1 Tool)
What are some best practices for effective reverse logistics in China?
There are a few factors that will determine the success of your reverse logistic strategy, especially when it comes to China:
1. Effective return policy
Clear and concise return policies will set clear expectations for the customer. The policy should state what needs to happen with a returned product, such as whether or not it has been restocked, repaired, and where it is being sent – this will make things easier on your customers!
A return policy should include the following:
- The process of how to contact the retailer for a return
- What is required in order to make a return, such as proof of purchase or a valid receipt
- The time frame in which the customer must complete their return
- Whether or not items must be restocked and if they can be sold as used goods. If products are sold as used goods, they should also be clearly designated as such through the company’s website and other marketing material that includes pictures of used products.
- How it applies to your country or region – if you’re located in China, you may want to include whether or not customers need to send back their products from an address within China or internationally, which would affect shipping costs on both ends.
2. Detailed disposition strategy
It is important to have a detailed disposition strategy for products that cannot be restocked or repaired. The disposition process should prioritize recycling, re-sales at discounted rates and donations, while also making provisions for disposal if necessary – this will reduce the operating costs of your business!
- Recycling products will reduce your company’s carbon footprint and costs, as well as increase customer loyalty – this is an easy way to please customers!
- Re-selling returned products at discounted rates can help you to get rid of unsold inventory, and increase your company’s profits.
- Donating returned items can be a great way to help out charities in need, while also providing opportunities for word-of-mouth marketing – this is a win/win situation!
3. Comprehensive warehouse management system
A comprehensive warehouse management system will help you collect data on the volume of returns and products that are being restocked or repaired – this way, your company can make more informed decisions.
- Reduce operating costs
Automated warehouse management will help your company reduce the amount of time spent on administrative tasks, which can translate to increased profits.
- Minimize risks and liabilities
Risks are minimized with an automated system because it provides a clear audit trail for what has happened to each product in the reverse logistics process – this is key for any company looking to minimize risks and liabilities.
You can also read: Your Guide To A Perfect eCommerce Warehousing
4. Organized working station
Organized workstations are important for the reverse logistics process. This will allow you to keep track of exactly what needs to be done with each returned item and it is also a great way to avoid mixing products that have been damaged in addition to those that are not defective or unwanted.
5. Well Trained staff
You should always have well-trained staff who are on the frontlines of your reverse logistics process.
This is because they are more likely to know what can be done with an item that has been returned and whether or not it can be saved for re-sale or recycled. When it comes to customer service, staff should also be trained on how to handle problems in the sales process such as refunds, exchanges, and other customer service-related tasks.
6. Improve data tracking and analysis
Always maintain visibility of your products at all times – no matter where they are. This means using the right tracking technologies and supply chain management systems to keep a record of every item along with its location, condition, date and time it was received, and where it is scheduled to go.
Use analytics to track what your customers are doing so you can better understand their needs and expectations. Set up a system of metrics that will help you measure the success or failures of your return policy.
Use risk analysis tools like “Value at Risk” (VAR) to quantify risks in order to mitigate potential losses. This will help you to identify the right logistics and best practices for your business.
7. Understand your Customers
Make sure you have a solid understanding of your customer’s return habits and what they’re looking for in an effective return policy. This will help ensure that your return policies match their wants and needs thus increasing overall satisfaction which leads to increased sales. By making it easy and convenient for them to return products when necessary, you improve customer satisfaction.
Also, effective communication is key when it comes to customer satisfaction. This includes issuing clear instructions on return policies, responding promptly to customer questions, and providing customer service that will keep them coming back.
8. Consider the 5S methodology
The five S methodology is a set of five manufacturing and warehouse guidelines that can be adopted in order to make work areas safer, more organized, and efficient. It was developed by Toyota Motor Company in response to the Toyota Manufacturing System (TPS).
The five guidelines are:
- Sort: Sorting through items and organizing them by type
- Supply: Making sure that work surfaces are always stocked with the necessary tools
- Shine: Wiping down tools, equipment, floors, or any other surface to ensure it is clean
- Standardize: Establishing routines for production processes that should be followed in order to make the process more efficient and effective
- Sustain: Maintaining the five S guidelines to ensure a successful system is maintained.
9. Outsourcing to Logistics partner
In order to avoid the pitfalls of managing your own reverse logistics operation, you might want to consider outsourcing it. This will allow you to focus on other aspects of your business that are more essential for its success and is also a great way to keep costs down in addition to increasing efficiency.
Therefore, be sure that any potential partner has the resources and manpower necessary to take on this task.
Looking for a trusted partner for an effective reverse logistics process? we got you!
We offer reverse logistics services for e-commerce businesses in China that want to maintain visibility and control throughout their supply chain. Our solution also helps with forecasting product demand, monitoring inventory levels, improving customer service, reducing costs of shipping products from one region to another, and more!
To learn more about how Fulfillment Bridge can help you with your reverse logistics, reach us via sales@fulfillmentbridge.com or click the button below to request a quote.
Make Your Reverse Logistic Easier With Us
