Too Many Happy Returns: The struggle to predict reverse logistics

Where does it all go?

Returned products go to a variety of locations. Sometimes they go back into inventory to be resold, but often they are diverted to a third-party return center, where they are to be sold in a liquidation market, donated or even recycled.

At RMI, Kimbel said its typical returns – sofas, dining room sets, light fixtures, gas grills, etc. – usually arrive damaged in transport. “That’s been a real headache, but we have a team of technicians, who will do product repairs,” Kimbel said. “We’ve set up secondary channels for redistribution of those products, where thay can be re-sold. We do a profitshare with the client around those products.” What cannot be repaired usually gets donated to nonprofits.

On several occasions, RMI has been able to take back a line of defective products and make necessary modifications for the client. “One year we did almost three-quarters of a million units for major clients,” Kimbel said. “We set up major operations in their existing warehouses and fixed all of that product before it got into the marketplace. We were able to save their holiday season.”

To provide these valued-added services, Kimbel said RMI relies heavily on airfreight to ship crucial parts needed for repairs. “It’s a finely tuned machine between the folks that are manufacturing the components and the carriers that are getting the parts to us,” he said. “That’s really what I consider to be one of the most challenging things that we do.”

“The perpetual job of a reverse logistician is to determine what the best disposition is for each item and the most costeffective way to achieve the highest recovery of that item,” said C.H. Robinson’s Iaria. “Logistics leaders are those that treat supply chain as an extended enterprise, deploying best practices all the way from order through returns.”

Iaria said he anticipates new technologies to emerge, focused on crowd-sourcing, as well as tools that can provide “smart disposition,” while product is in the field. “This would help improve the process of bringing product back and scanning/sorting at a returns warehouse, it would potentially allow product to be diverted to its next best destination. “