Role of Transport Management System in Reverse Logistics

Reverse logistics

Reverse logistics

We all order our favourite products from online stores or any E-commerce website. But, if you decide to buy a product the next day, it will be available on your doorsteps, unlike traditional methods of purchasing a product in person or waiting for the product for a long time. 

E-commerce made it effortless for us to buy almost everything online. What if you don’t like the product that has not met your expectations of what you have imagined or received it in damaged condition?. Here, there is an option to return your products online. 

In this pandemic situation, the online mode of purchasing has increased, and the return of goods has also increased. But, do you know there is a separate logistics world behind managing these returned goods?

Here comes the role of reverse logistics plays a more significant role in the E-commerce industry and damage that occurs in any stages of forward logistics. 

By considering Green and sustainable operattions to preserve natural resources and environmental factors, the Reverse Supply chain plays an integral role in eco-friendly practices.

Reverse Logistics

When a consumer rejects a product during the various steps of forward logistics, this is known as reverse logistics. When there is fixable damage, the goal is to capture value by transporting the items from the destination point to the maker or completely dispose of it when it is no longer fit for use. 

The 5Rs (Recall, Repacking, Refurbishing, Remanufacturing, and Resale) are all included in Reverse Logistics. For a long time, reverse logistics was unstructured, but with the advent of E-commerce, that has changed. Many large companies, including Amazon, Flipkart, and others, have their own Reverse Logistics management.

Approximately 4% to 5% of all products distributed are returned to the companies. This reverse supply chain from the consumer to the enterprise creates a logistics loop.

In other words, it’s a closed-loop supply chain in which a company’s products are made, then distributed to customers through a forward supply chain and returned to the company via a reverse supply chain.

According to industry research, reverse logistics is expected to rise at a CAGR of 4.6 percent, from $600 billion to $630 billion by 2026. Asia-Pacific and South America are predicted to account for the majority of market growth in this forecast.

Why do products find their way back into the supply chain?

In general, forward logistics refers to a company’s manufacture of items from raw materials and then selling them to dealers and distributors. Then, through the supply chain’s distributors, it reaches the clients. Finally, the products are transported from the vendors to the end-users.

Why do products find their way back into the supply chain?

As listed below, there are a variety of reasons why products are returned to distributors or manufacturers by consumers

1.Change in Product (Wrong size, color, low quality)

On a broad scale, such situations arise in e-commerce. Consumers should be aware that the things they see on websites are not always the same as what they receive. Changes in the product or discontent with it cause customers to return it to the manufacturer.

2.RECALLS

In these circumstances, the company’s products may cause an irregularity in the market, causing the corporation to halt sales and recall distributors to return the products. For example, suppose the corporation sells a drug with additional negative effects that were not found during the trials. In such circumstances, the corporation recalls all of its products from the market.

3.OVERSTOCK

A corporation may run too many promotions with enticing offers for clients, such as buy one, get one free. In such circumstances, manufacturing ramps up, and stores are overstocked in anticipation of higher sales. If sales are not likely to be as high as expected, the corporation returns the merchandise for resale or suitable disposal.

4.LEASES

Companies rent out their bulk products to a third party for a set length of time. When the lease period ends, the business returns any products that have not yet been sold.

5.PRODUCTS WITH DEFECTS

A small percentage of products may be defective when they are delivered. For example, it could be the result of substandard packaging and shipping. In these instances, the customer returns the product.

6.EXPIRED PRODUCT

When the product is no longer valid, it is returned to the company for a reduced price—for instance, a television and a washing machine.

7.REUSABLE ITEMS

These are critical components of the supply chain because they are used repeatedly at numerous places by diverse users to transport commodities from one site to another. Containers, cans, carts, and cartons, for example. These articles are returned to distributors or manufacturers for reuse after being utilized in the supply chain. 

Hence these are the several reasons for the return flow of the products in the supply chain of forward logistics.

Market demands of Reverse supply chain in COVID 19

Covid 19 had impacted not only the health of people. It had impacted the global economy severely. The supply chains are impacted heavily as the demands of the products have gone down. And the products are being returned to the companies more and more. This reverse supply chain is in huge demand in this pandemic situation. 

For the past 2 years, there is a drastic increase in the reverse supply chain where the companies had to take back the products that have been sold.

The major reason for this is the drop in demand ratio. When demand has gone down, there are a lot of products being unsold, and due to overstocking, the products are being returned back. 

Another important factor in the covid-19 pandemic is the increase in e-shopping. In order to avoid exposure, people order their necessities online and get them delivered to the doorstep.

This massive rise in demand for the online market has also increased the range of reverse logistics. About 30% of the products that are sold through online trading are returned back to the companies.  

Every company is in huge demand for the reverse supply chain as many products are being returned by the customers due to various reasons discussed earlier. Since the supply chain demands have risen, the transport systems are in a hike in the market.

Therefore, transportation is a key factor in the reverse supply chain as the number of products returned to the company is vast in this pandemic situation. 

Safe and secured transportation is a need of the hour as any company would expect cost-effective solutions in this pandemic. Most companies use third-party service providers who can get the products back to the companies safely. 

Security of the sold products are very low; they can be misused easily as they are not much prioritized compared to the products before sales. Hence such supply chain demand needs proper regulations with an effective transportation system. Further will discuss the importance and benefits of the Transportation Management System (TMS) in the reverse supply chain.

Benefits of incorporating TMS in Reverse supply chain process

Transportation is always a key factor in the field of logistics. In recent times, the global economy has been affected so badly that the countries can survive only because of the transportation industry.

In the reverse supply chain case, that too with a sudden rise in the increased number of returned products in recent times, management of getting the products back with utmost security is the biggest concern for any company. 

For such cases, incorporation of a specialized Transportation Management System (TMS) would be a better option for the companies to get back the products safely.

So, what are the sources for effective management?

Several sources can provide adequate services through telematics. Companies like VAMOSYS is a specialized service provider in case of highly secured transportation. These telematic services ensure the high security of the products with continuous tracking of the fleets through GPS tracking systems and proper documentation. 

With these telematics services in play, companies can know about the current status or the live locations of their products with their mobile applications in hand. Therefore, incorporating such a fleet management system is highly beneficial with the security of the products and time-bound delivery without affecting the quality of the products. 

Another benefit of such transportation management in the industry is that they are highly equipped with advanced technology that ensures the systematic functioning of the operations. Moreover, in case of any abnormality in the operations, the management gets to know about it with alert calls and messages through the telematics devices attached. 

And proper documentation of the service provider is also an important aspect in the reverse supply chain for the clearances during shipment. Companies like VAMOSYS have proper and updated documents of their services to ensure the free flow of the goods without any delay in time.  

Such transportation systems are also cost-effective for the companies as they have fuel monitoring systems embedded within the vehicle. This fuel monitoring system ensures fuel efficiency by avoiding wastage through vehicle idling and fuel thefts. 

In this pandemic situation, companies that need safe and secure transportation of their goods with an increased reverse supply chain, here are the professionals of VAMOSYS to provide the best transportation service through intelligence and effective management.

Sushanthi

Sushanthi is a Content Writer who wishes to be the voice of brands to project their innovative ideas and stories through her writing skills.

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Categorized as Telematics

By Sushanthi

Sushanthi is a Content Writer who wishes to be the voice of brands to project their innovative ideas and stories through her writing skills.

View all of Sushanthi's posts.

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