Reverse logistics may seem incongruous or unnecessary to you, but it is not. In reality, if this approach is well developed, it is a source of benefits for all players in the supply chain: from the e-retailer to the warehouse manager, up to'to the end customer. It can even become a real asset for differentiation and CSR satisfaction. But, what exactly is reverse logistics? How to get the most out of it? How to reconcile CSR and e-commerce issues? Muriel Guillemot, purchasing expert, deciphers the process.
Are you thinking about what is needed to make a successful e-commerce strategy? You may spontaneously think of assets like multi-channel or solid B to C relationships. However, you are overlooking an essential aspect: reverse logistics.
Poorly managed, it can cause serious damage to your business: a systematic delay in recovery or poor inventory management. But used well, it can also be a real springboard to boost your customer satisfaction. There reverse logistics is the result of processes and methods intended to govern merchandise returns from points of sale.
The idea? That the manufacturer can carry out repairs, recycling or destruction, at lower cost while remaining competitive.
Reverse logistics: why apply it in the supply chain?
In the field of supply chain, the habit is to think in terms of return on investment. For what ? First, because calculating customer satisfaction is not always simple. Then, because the financial dimension of returns management is crucial to operating effectively and efficiently.
Reverse logistics is increasingly complex due to the players in the supply chain: B to B, B to C or C to B). To this, we must add the strengthening of regulations: environmental standards or the Hamon law which indicates the rules to be respected towards the consumer.
Environmental standards
For example:
- ISO 14001 standard (environmental management)
- European Directive on Waste Electrical and Electronic Equipment (WEEE)
- ISO 18004 standard (implementation of a social responsibility management system in the context of product returns)
Hamon law
For example:
- Reimbursement for products returned within 14 days
- Clear information to the consumer by the seller on its return policy, including return costs
The application of reverse logistics in the supply chain must therefore begin by taking into account the so-called 4 R issues:
- To recycle
- Fix
- Re-evaluate
- Re-design
Why is it interesting to calculate CSR satisfaction?
These new issues have become a priority for many companies who want to meet customer satisfaction, the basis of CSR, which is becoming a business model in its own right.
CSR (corporate social responsibility) is the putting sustainable development into practice on a company scale.
It consists, for the latter, of making efforts for the protection from the environment and in the social field.
CSR and customer satisfaction are linked because CSR practices can help a company:
1. Meet customer expectations
2. Improve the quality of its products and services
3. Strengthen your brand image
4. Engage your stakeholders and have a positive impact on society and the environment
Thus, to remain competitive, companies have had to develop new strategies such as reverse logistics. In other words: returns management.
A necessary strategy: product returns are reaching records. Indeed, in 2022, retailers had to process 13 billion returns (Deloitte study). Which represents 573 billion dollars in one year. In the e-commerce sector, this is a volume multiplied by 4 compared to 2018. A development which can allow companies to:
- better understand customer behavior
- and thus better understand and personalize their products to meet the needs of the 2024 consumer
[Also read] How can you optimise your e-commerce logistics?
How to calculate CSR satisfaction?
Two possibilities :
1/ By calculating the return on investment or return on investment (ROI). That is to say, compare the budget invested with the financial profit it generated.
2/ By calculating the return on expectations (ROE).
ROI and ROE make it possible to evaluate the performance of reverse logistics from different angles. ROI provides information on financial performance while ROE focuses on performance relative to initial expectations and objectives.
Together, these metrics can provide a complete picture of the value and impact of reverse logistics.
The ROI calculation lends itself to the “simplest” cases: in other words, there is a flexible and free return policy. For example: the management of returns by the leader in global e-commerce is an element of differentiation. Predictive analysis, among other technologies, allows it to anticipate returns.
The ROE calculation is useful in the most complex cases. Distancing itself from the purely quantitative approach to ROI, it places more emphasis on the strategic objectives of returns, that is to say the change desired by the end customer. According to this measure, we consider that an investment in feedback management is relevant if we see, a posteriori, that the change targeted by the strategic objective has actually taken place.
Thus, taking ROE into account involves both:
- Define the evaluation methods at the same time as the objectives SCOR (reference model in supply chain).
- Carefully choose the indicators that will allow you to calculate the ROE and analyze your returns process.
- Communicate regularly and share data (sales trends, inventory levels and product performance) with suppliers on expectations and objectives.
- Implement flexible delivery policies with express delivery options
Does reverse logistics always rhyme with CSR satisfaction?
But then, in which cases can we affirm that CSR satisfaction in reverse logistics represents a good ROI? In the absence of potential revenue, it is necessary to think in terms of savings on expenses with indicators linked to pre-actionsexisting.
For example:
- number of returned packages
- return time
- delivery time
- recycling percentage 4 R
If the need is recurring and concerns a large number of returns, L'Initial investment will be amortized over the medium or long term. It is enough to prioritize the CSR dimension (circular economy, for example) and customer satisfaction at the same time.
How to improve the ROI of your reverse logistics?
It is necessary to collect data and analyze it to possibly implement corrective measures.
For example:
- Le inventory turnover rate : this rate indicates to what extent stocks are renewed. If you have a high turnover rate this shows effective inventory management.
- Le customer service rate which shows the supply chain's ability to respond quickly to your customers' demands. That is to say, order accuracy or speed of service. For example, you can use a CRM to efficiently manage returns and refunds.
- Le customer satisfaction level to define the overall quality of products and service with online ratings, customer comments or satisfaction surveys.
- Or even the level of compliance with regulations and quality standards.
One thing is certain at this stage, do not leave this approach aside! When you meet someone for the first time, that person forms an image of you in a matter of seconds. It's the same for your business. And this image will be almost definitive. It actually takes six months to erase this first impression. Six months is a long time. And it's almost irreversible if you've left a bad impression. This is why reverse logistics is extremely effective in setting you apart from your peers and highlighting your difference in your field.
And to avoid any missteps you can turn to training Organize and optimize your e-commerce logistics.
Face the competition, stand out with reverse logistics – a guarantee of customer satisfaction!
