- Posted by Joe Crandall
- On December 31, 2014
In today’s world of prolific online shopping, there is a growing need to address the reverse cycle—moving returned material from the customer to a final disposition. The process of retrieving items from the customer, returning them to inventory and determining a final disposition is called Reverse Logistics
Reverse logistics, in Greencastle’s view, maximizes the value of returned items through responsible reuse, resale or recycling. Remanufacturing and refurbishing activities also may be included.
Retailers and original equipment manufacturers (OEMs) lack the time, resources and proper method to address the vast amount of returned items. Most leave it to online auctions, such as Walmart’s liquidation auctions, or similar programs. Many other retailers insist on managing the inventory themselves but are ill-equipped to do so and often create a larger problem.
Recent articles in the Financial Times and Wall Street Journal to report on the growing issue of customer returns and the magnitude of retail merchandise in need of a final disposition. From the Wall Street Journal article:
“Last January, some retailers were surprised by the high number of returns, said Bala Ganesh, retail-segment marketing director at UPS. Mr. Ganesh said some retailers had as many as 30 trailers full of returns sittingoutside their distribution centers waiting to be processed.”
Thirty trailers represents a huge amount of merchandise awaiting a solution. Pallet space on thirty trucks and the associated storage fees represent a HUGE loss in revenue—most OEMs do not have the space for five idle trailers, let alone thirty—this is a cost that cannot be eliminated until a solution is put in place.
Even if the material is liquidated, returns represent a significant loss in revenue. From aforementioned Financial Times article:
“Returns can obliterate 5-10 per cent of their [‘retailers’] revenue through mark downs and price reductions,” said Mr Braithwaite.
The ultimate question a OEM will need to answer is: What should we do with all this stuff?
Several options exist, but which one is the right one for a company? Reuse? Recycle? Remanufacture? Resale?
The first step is to develop a solid business case that clearly outlines several courses of action and elaborates on the risks and rewards for each of those actions. Most business cases can be developed quickly with little cost—especially when compared to the alternative.
The failure to act leads to mounting costs and decreased revenues.
Greencastle has the experience to help quickly implement a national e-waste recycling program – contact us to learn more.