If a product is substandard, oversupplied or not wanted for any other reason, it may need to be returned to the original supplier.
If you have a simple supply chain – say manufacturer to user, then returning goods is fairly simple. Most supply chains are not so simple. Getting goods back is like swimming against the tide. Most supply chain systems are not designed to efficiently take products backwards through the chain.
Some low value product returns have often been disposed of as the cost of return would not be viable.
Legislation
The following pieces of legislation have are applicable to product returns:
- WEEE Directive
- Packaging Waste Regulations
- Landfill Tax
These regulations have made us all think more critically about what types packaging we use and how reverse logistics can cope with returns.
Economics
Even without the pressure exerted by legislation, surely it makes economic sense to properly take the cost of product returns into account. There are currently proposals to force product manufacturers to take into account the full life cycle of the products that they produce. Once again, surely this already is an economic necessity?
By taking into account product returns, supply chain operators can:
- Accurately define the true cost/benefit of a given product
- Reduce wastage and therefore reduce costs
- Improve the product design to take into account not only its working life, but its “after-life”
- Help to improve our environment
Expertise
You will need some specialist help in order to adapt your supply chain to efficiently distribute returns and deal with returns administration.
You will need to develop a decision-making process for returns processing. Such decisions may include:
- Physical return to source
- Physical return to other point
- Use of the National Clearing House
- Local re-working of product
- Long-distance re-working
- Disposal, using a compliance scheme to discharge obligation
- Sale, as is
All of the above are subject to the WEEE legislation