Logistics typically refers to moving product in the forward direction. Reverse Logistics involves moving the product in the reverse direction, from the customer or channel partners back to the manufacturer. The biggest differences are as follows:
- Open box – the units are usually being returned due to a problem, dissatisfaction or warranty issue. The warranty units could be 3 or even 5 years old.
- Single units – the returned units often do not arrive in bulk on pallets. They are single units often in non-standard packaging.
- Verification at Receiving – since the returning product is not in “new” condition, additional verification must be performed at receiving to ensure the expected product from a customer matches the actual received product.
- Inspection and Grading – since the returned units are in various conditions they need to be processed through inspection or grading to determine where to stream the unit to recover the highest value.
- Reconditioning – many returned items just require basic testing and repackaging. (Well within the existing capabilities of most logistics providers). Some units require more advanced repair work. The units are streamed back to the original manufacturer or to a service center for repair.
Retailers need to handle returns from their customers. These returns arrive in a variety of conditions, many with open boxes, some with defective units and many with no faults. A retailer needs to process these returns and maximize value from these returned items by getting them back on the store shelf, returning them to the manufacturer for credit, liquidating them through some other channel or scrapping them.
OPMs need to handle returns from multiple sources such as end-user customers, retailers, value-added resellers or distributors. The manufacturers typically require their customers to obtain an approved RMA (Returned Materials Authorization) or RA (Return Authorization) before accepting any product returns. These returns arrive in various quantities. The returns may be new stock, damaged stock, open box or defective.
The manufacturer’s main concern is to satisfy the customer or distribution channel partner who is returning the goods by exchanging the unit, repairing the unit or issuing a credit. The returned units need to be processed and then returned to inventory, repackaged, returned to the vendor, repaired or scrapped. The manufacturer needs to maximize value on these returned units by processing them quickly to yield the highest price through secondary market channels.