Reverse logistics South Africa

logisticsIn South Africa, a significant percentage of products are returned by clients every year. In fact, on average a company can expect to see between 5% to 30% of it products returned by their customers. Managing these returns implies that you – the company – incur costs through logistics, inventory, repairs and/ or disposal.

Given the tightness of error margins in companies, it’s worth mentioning that improved management of retail returns (or rather reverse logistics) has a significant impact on the bottomline of the companies’ performance. The key to managing these returns lies on how you (the company) views the process. In other words, the spare parts management tool should be used from a holistic supply chain approach rather than starting after point-of-sale.

Outsourcing a third party to handle your site upgrades  and reverse logistics has advantages. For example, operations may involve a significant amount of vehicle movement (which consume petrol and emit carbon gases which produce the greenhouse effect) which can have a significant impact on the environment. The outsourced company will audit your logistics activities and identify existing opportunities for reduced fuel consumption, waste management and improved customer care.

Through the use of analytical skills, the company you have outsourced to handle your reverse logistics will be able to highlight any financial benefits you stand to gain from. You’ll be surprised to know that management accounting and in particular, spare parts supply chain management plays a key role to the successful returns logistics. Accounting tools like quality costing and implementation of a transparent performance analysis system help keep track of all commodities crossing organisational boundaries (could be between you and you clients or suppliers).

The 3-R model for managing product returns in South Africa (reducing, reusing and recycling) is the ultimate tool for minimizing cost. Examine how your company can reduce commodity returns in the first place. Manage the supply chain and this would be easy to achieve. If the feasibility of the first R (Reduction) is null, put up an effective refurbishment program to maximize asset value of returned goods. Some returned goods can be sold on the secondary market to minimize wastage. Recycling is the lowest disposition route. It’s environmental-friendly and helps salvage damaged goods which cannot be sold in a secondary market.

In conclusion, management of reverse logistics in SA should incorporate staff training on product handling, inventory management, sustainable distribution and compliance with local/ international legislation, management of spare parts and site upgrades. In addition to this, you should be aware that improving your company’s reverse logistics will take time. Thus, it won’t do you any harm to outsource reverse logistics services.

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