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ASCM Insights

How Are Supply Chains Handling Post-Holiday Returns?

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The holiday season is full of thoughtful giving, yet returns are always to be expected. Even those brick-and-mortar and e-commerce retailers that have mastered reverse logistics still face numerous challenges with regards to unwanted items. And the more products returned, the more pressure supply chains face in terms of transportation and fuel costs, labor shortages, and the overall impact that their operations have on the environment.

According to a recent report, the number of returns after this year’s Cyber Week was close to double those seen in 2021. Furthermore, experts say 13% of the $395 billion in global online sales will ultimately be returned. That number looks even more significant when compared with last year's data, with a 57% year-over-year increase. With numbers so high, it’s imperative that supply chain professionals have a solid framework for reverse logistics and that they retain the tools to constantly improve the activities that support it.

The foundation of this issue is the returns process itself. Every return bears a cost, despite the fact that most consumers are accustomed to easy returns and free shipping. As a result, many companies have started to tighten the reins on their return windows and rules. This is a start, but deterring shoppers from returning items can, of course, backfire effect on sales. Naturally, this poses a conundrum for retailers who are already footing the bill for double shipping as well as losing out on the initial sale.

A second key consideration is warehousing and reshelving. In most cases, returned items are initially shipped back to a distribution center or warehouse, where they'll eventually make their way back to either the retailer or manufacturer. But during this interim period, they take up valuable shelf space. Even warehousing facilities that plan ahead for holiday returns may face struggles this year with the unprecedented influx of returned items. This is a strong argument for coordinating supply and demand planning with reverse logistics management to ensure that warehouses are able to accept increased returns and deal with them quickly and efficiently.

Next, it’s essential that supply chain organizations prioritize sustainability in their reverse-logistics activities. Unfortunately, most consumers don't consider the impact that their returns have on the environment. For every truck that delivers a package, there's another that will have to pick up the returned item. Plus, although many products can be resold to other customers or shipped to large liquidation warehouses, a great number end up being disposed of after the return is complete.

Knowledge is keys to efficient reverse logistics

Returns aren't going away anytime soon, so it's essential to develop innovative methods of managing and structuring reverse-logistics practices. Regardless of the type of organization you represent, optimizing your reverse logistics can provide beneficial outcomes for both you and the environment. The goal of successful reverse logistics is to keep products moving in circularity so that manufacturing, distribution, shipping and delivery, returns, repairs and disposal can all remain in sync as part of a constantly spinning model of efficiency. Not only does this lower costs for organizations, customers and end users, but it also reduces the number of products that end up in our landfills.

By developing and adopting a solid reverse-logistics plan, your organization can create additional value for your customers by showing them how you manage these inevitable processes. Optimize your reverse-logistics strategy with the ASCM Certified in Logistics, Transportation and Distribution (CLTD) program. Professionals who have earned the CLTD designation are better prepared to implement industry best practices and help reduce unnecessary costs and product waste. To learn more about this certification, view our product page.

About the Author

Elizabeth Rennie Editor-in-Chief, SCM Now magazine, ASCM

Elizabeth Rennie is Editor-in-Chief at ASCM. She may be contacted at editorial@ascm.org.

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