Going Upstream: Managing the Returns Challenge
Supply chain optimization has been a remarkable success story of the past fifty years. The revolution in seaboard container management, communications standards of EDI, minimal handling standards, automation in distribution centers and just-in-time (JIT) delivery have created a transparent and predictable environment. With the expansion of the internet and ecommerce it has leveraged new tools to lower costs while confronting the challenges of complex requirements for fulfillment to millions of non-business locations. Messaging technology directly connects the route driver to the recipient with real-time alerts to status changes. Given the thousands of miles that product routinely covers with undamaged product delivered routinely to the intended time and place it all quite amazing.
But the high expectations established by the modern supply chain has a significant obstacle of ‘returns’ or in context to the above ‘reverse logistics’. It literally runs counter to decades of optimization in moving product outward with a high potential for expensive. Worse the very expectations built with consumers for predictable product handling are at odds to the process since it has to start with them engaging and participating. In the bad old days, the shopper had to return the item to a store they very likely were in on a regular basis to get a credit. The relative chaos of the existing processes was also flexible and had dedicated positions in the store to handle the flow of products both inward and back out. That process is no longer flexible and those handling the shopper are line generalist. And with the emerge of omnichannel, the shopper sees the store as the easier means of returning versus shipping product back to the sender. And a base promise of omnichannel to the shopper is ‘free returns’.
Whereas they are not always free, the shopper has developed a familiarity with returns as part of their normal shopping processes that has made matters more difficult. In many cases the product is not even opened:
David Marcotte, Senior Vice President of Retail Insights for Kantar Retail, leads cross-channel understanding and research into core retail processes, international retail, and retail-related technology, along with omnichannel operations.