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Reverse logistics can reduce losses

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Reverse logistics is a necessary evil for all retailers and often considered time consuming, discombobulated, and with little to no returns.

However, retailers who successfully manage their reverse logistics have reported a reduction in losses due to unknown shrink by up to 75%, in addition to capturing more value from optimising the sortation of returned goods based on disposition.

In a new report from IDC Retail Insights, “IDC PeerScape: Practices for Reverse Logistics”, supply chain decisions makers will learn what some of their peers are doing in reverse logistics to reduce wasted movement, money, and time and to more strategically manage this “necessary evil”.

Reverse logistics tackles the complexities that are introduced to supply chains from returns and end of season redistribution. While reverse logistics may not add exponential value to a retailer’s bottom line, there are strategies that make the process more streamlined, less wasteful, and generally more efficient.

In this new IDC PeerScape, retailers are guided through a set of five industry best practices, designed to help them identify a strategy framework, recognise which practices make sense for their business and, upon execution, improve their bottom-line logistics spend and optimize shipping spend as well as lost inventory expenses.

“As retailers focus on squeezing excess waste from their supply chains, improving reverse logistics will be of keen interest in the months ahead,” says Victoria Brown, senior research analyst at IDC Retail Insights. “With consumers demanding to buy whatever they want, however and whenever they want, products are ending up in locations never imagined, and sometimes need to find their way back to a retailer.

“Because of this, retailers need to face the complexities introduced to their supply chain and formulate effective tactics for their distribution model or they will continue to lose money and margin on returns.”

The best practices outlined in the new IDC PeerScape may not all work for every retailer, and some will only amplify the results of others while others may not work well together. Each retailer needs to understand the complexities of its own distribution network and may not identify the best strategy right away. Some of these take time to realize results or may be slow to see the results but, over time, will eliminate wasted time and resources and positively benefit the bottom line.