Supply chain management (SCM) coordinates the movement and storage of goods, services, and information from raw material suppliers to end customers (Chopra & Meindl, 2017). Any organization’s supply chain is crucial in streamlining business processes and products. This is a critical success factor and a competitive advantage for many organizations since it creates efficiency and can generate profits while eliminating unnecessary costs.
Reverse logistics, a subcomponent of supply chain management, refers to the movement of goods from the end customer back to the supplier or manufacturer, often for recycling, disposal, repair, or reuse (Srivastava et al., 2006). Sometimes, a customer, for one reason or another, may be dissatisfied with the value of the acquired product. They may wish to return it or exchange it for a better one.
In other cases, it could be because of a deformity on the product that may have occurred due to human error or simply in the shipping process, and the customer would like the product returned for exchange. The role of supply chain management in reverse logistics is to efficiently and effectively handle the return and disposal of goods while minimizing costs and maximizing value.
It is important to note that customers are critical stakeholders in any business because they are the consumers of a company’s product, which drives sales to keep the business profitable and sustainable. Therefore, another function of supply chain management is making the return process for customers smooth and efficient.
The goal here is to improve customer relations, thereby increasing customer satisfaction. Already, the customer has faced some inconvenience or frustration, leading to their decision to return the product. The case should therefore be handled to restore satisfaction and loyalty in the consumer, something which would benefit the company.
However, the role of SCM in reverse logistics does not stop at pleasing consumers but also handling the returned products. Reverse logistics allows companies to handle returned products in a manager that minimizes costs while maximizing value (Prajapati et al., 2019). Therefore, the organization has to ensure that the returned products (majorly deformed and of low quality) have been effectively handled to reduce negative financial costs.
Reverse Logistics: The case of Patagonia
One company that effectively handles reverse logistics is Patagonia. Patagonia is a fashion company that deals in the retail of outdoor clothing and gear. The company has a solid commitment to sustainability and, as a result, has implemented several initiatives to address the return of goods from customers. In the process of its return policies, it demonstrates effective supply chain practices in reverse logistics.
First, Patagonia offers a repair service for damaged or worn items, allowing customers to send their items back for repair rather than disposing of them and purchasing new ones (Patagonia, n.d.). This helps extend the product’s life and reduces the environmental impact of manufacturing new products. The process is streamlined so that customers can access these services provided by a dedicated team. The process is handled very smoothly and efficiently, like a first-time sale. Online consumers can also access these services and help with frequently asked questions regarding this return service.
In addition, Patagonia operates a program called “Worn Wear,” which allows customers to trade in their used Patagonia products for credit toward new items or repair services. This program not only encourages customers to continue purchasing from Patagonia but also helps to reduce waste by finding new homes for gently used products. The Worn Wear program is effective in reverse sales because it uses Supply Chain Management as a function of Customer Relations Management and consumer loyalty. Allowing customers to ‘trade in’ their old products promote brand loyalty among customers. Also, it could increase the customer lifetime value of the consumers who participate in such products.
Finally, Patagonia has a program called “Common Threads Partnership,” which partners with organizations such as the National Forest Foundation and the Conservation Alliance to properly dispose of products that cannot be repaired or reused. This program ensures that returned products are properly recycled or disposed of in an environmentally-friendly manner. In this case, the function of reverse logistics in the SCM of the company is to ensure the efficient handling of these products in a way that minimizes costs while still sticking with the company’s commitment to waste elimination.
Conclusion
The role of supply chain management in reverse logistics is to efficiently and effectively handle the return and disposal of goods while minimizing costs and maximizing value. Patagonia, an outdoor clothing and gear retailer, has implemented several initiatives to address the return of goods from customers, including repair services, a trade-in program, and partnerships with organizations to dispose of products properly.
These initiatives help minimize waste, reduce consumerism’s environmental impact, and demonstrate Patagonia’s commitment to sustainability. Overall, the effective management of reverse logistics is crucial for maintaining customer satisfaction and trust. By streamlining the returns process and working closely with suppliers and manufacturers, companies like Patagonia can ensure that their customers have a positive experience even when returning products.
References
Chopra, S., & Meindl, P. (2017). Supply chain management: strategy, planning, and operation (6th ed.). Upper Saddle River, NJ: Pearson.
Patagonia. (n.d.). Return policy. Retrieved from https://help.patagonia.com/s/article/Return-Policy
Prajapati, H., Kant, R., & Shankar, R. (2019). Bequeath life to death: State-of-art review on reverse logistics. Journal of cleaner production, 211, 503-520. Retrieved from https://www.sciencedirect.com/science/article/pii/S095965261833590X
Srivastava, S. K., & Srivastava, R. K. (2006). Managing product returns for reverse logistics. International Journal of Physical Distribution & Logistics Management. Retrieved from https://www.emerald.com/insight/content/doi/10.1108/09600030610684962/full/html
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