But who's counting?
September 1st 2009 Around £7.88 billion worth of goods were
returned in the UK last year, with up to 70 per
cent of their potential value lost in the process.
But, with effective returns management, it
needn't be this way, says Danilo Oliynik,
commercial director at LINPAC Allibert
Reverse logistics covers an array
of activities, including returns
of obsolete or out of date
stock, product recalls, refurbishment
programmes, end-of-life producer
responsibility, customer returns to
retail stores and service repair
logistics.
As suppliers of plastic reusable
transit containers and pallets to
sectors ranging from retail through to
manufacturing, we have seen many companies take tremendous
steps to address every other kind of inefficiency, but this is the
one area where companies are still failing to tackle the issue and
it is costing them dearly. Indeed latest estimates put losses at over
£500 million per annum.
In many cases, particularly electrical and larger consumer
goods, once they enter the return supply chain they can quickly
become lost, obsolete or even damaged, minimising the
opportunity to return them to the marketplace.
One of the key problems that plastic RTP helps companies to
resolve is that of the many returned goods that are poorly
packaged, if they are packaged at all. Often little is done to
protect goods from damage in transit or storage, with items left
vulnerable to crushing, knocks and scrapes, making it difficult to
sell them at full value on the open market.
Indeed some returned goods simply vanish.With no system in
place to track them or security measures, such as security sealed
and tagged containers, to ensure their safe return, they become
lost or stolen at some point in the reverse logistics process.
An in-depth study into the problem by logistics experts
Professor Mike Bernon of Cranfield School of Management and
Professor John Cullen of Sheffield Hallam University, estimated
that if an integrated approach was taken to the management of
returns, it could potentially reduce logistics costs by as much as
40 per cent.
So what can be done? Some of the most costly errors involve
lack of planning and poor care and management of stock, both
in transit and the warehouse, with no clear strategies in place to
handle returns.
A thorough review of a company's reverse logistics operations,
ideally via an appointed reverse logistics champion, will help to
identify what the current costs are and where potential savings can
be made. There are a number of key points within the framework
of reverse logistics activity where improvements can be identified,
change implemented, and financial benefits quickly accrued.
Part of the response needs to be strategic with more effective
planning and forecasting to keep returns to a minimum. Tighter
management of stock is essential, including identifying ways to
speed up processes and get products back into the marketplace as
quickly as possible by researching and planning alternative sales
channels to optimise their value.
Practical steps include improved packaging of returned goods
to minimise losses and damage and ensure that goods are tracked
effectively from store through transit and back out again as
quickly as possible. Scrutinising sustainability issues, particularly
where packaging and packaging waste are concerned, is a key
area where plastic re-usable containers have already been proven
to deliver financial and environmental benefits in the return
supply chain.
Goods need to have high visibility through appropriate
packing and labeling to ensure that they don't get lost or end up
being overlooked, taking up valuable storage space. This is
particularly important as companies seek to minimise inventory
and optimise their warehouse usage.
Reducing handling times is vital. Indeed, time should be spent
on planning the collection of products for return to the factory
or warehouse at the same time as deliveries are being scheduled.
This helps to optimise truck loads and cut the number of trips,
saving fuel and improving fleet performance.
Returnable containers, being lightweight, are designed to keep
fuel costs down. As most nest or fold, they save valuable space on
return transport; in use they play a vital role in ensuring that
returned goods are not damaged or lost in transit.
There are clearly financial and environmental benefits to
tackling this problem, however it can be a complex job and this
may act as a deterrent. As part of our efforts to support best
practice in reverse logistics, we participated in an initiative with
the Chartered Institute of Logistics and Transport and the DETR
to develop a useful self-assessment handbook - a useful starting
point for those companies attempting to tackle the issue for the
first time. This is available on the Freight Best Practice website:
www.freightbestpractice.org.uk/default.aspx?appid=1960&cid=43 More articles from Linpac Packaging: | 
