Reverse logistics: How to

REVERSE LOGISTICS: HOW TO MAINTAIN PROFITABILITY

Jeff Hedges, OPEX Warehouse Automation President and Khurshed Mirza, OPEX Asia Pacific (APAC) Director, share the profitability of having an efficient returns management system that is powered by automation.

It’s Christmas time across the supply chain, but it’s only July? November is annually known as the beginning of the outbound inventory rush for retailers. Following a few weeks of holiday returns, distribution centres can take time to breathe after Christmas presents have been bought and returned.

However, in recent times, the traditional set Christmas peak period is now a piece of cake compared to the volume of orders that fulfilment operations have been experiencing since consumers started panic buying in March. Everyday fulfilment centres Khurshed Mirza, OPEX Asia Jeff Hedges, OPEX Warehouse are operating at maximum speeds Pacific (APAC) Director. Automation President. and processing orders at rates never seen in the global supply chain outside warehouse operations is essential. FAVOURABLE RETURNS the holiday rush. Jeff Hedges, OPEX Warehouse Jeff says not only is it favourable to

For today’s retailers, dealing with Automation President and Khurshed have an efficient returns system, but returned goods is one of the toughest Mirza, OPEX Asia Pacific (APAC) it is also an important financial move challenges they face. During social Director, say returns aren’t a to boost profits. “E-commerce and distancing restrictions at the peak of burden on operations with the right omni-channel merchants will need the recent COVID-19 pandemic, more scalable solution. to re-evaluate and retool their DCs to people were online shopping than ever “E-commerce retailers are plagued efficiently handle a growing volume of before. Fashion retailers reported online by returns totalling anywhere from 25 returns and the expense dedicated to orders were up an astonishing 450 per percent to 30 percent of their orders. managing them,” he says. cent compared to the prior year, with Many people will order three of the According to Jeff, most OPEX clients many retail markets including fitness, same pairs of shoes and send back the in the US have experienced a dramatic grocery, home and garden recording sizes that don’t fit,” Jeff says. increase in e-commerce operations, similar figures. For e-commerce and omni-channel even up to 300 per cent. As more orders

Unlike the holiday period, when retailers, there’s a direct link between get fulfilled, more returns have come companies can forecast orders and the efficient handling of returns and back to the retail sender. He says returns, the current situation is profitability. Jeff says this is especially companies have been forced to question rapidly changing. Therefore, when important in retail environments automation capabilities, exploring returns volume is as high as it will where free returns are encouraged solutions that process returns within be, a returns management system as a strategic point of customer the warehouse management system that is integrated in everyday convenience differentiation. that is already in place.

“Return policies are expected by consumers, no matter what product a business is selling on the market. Therefore, return management is just as important as initial order fulfilment,” he says.

For fashion in particular, Jeff explains that there is a very high percentage of clothing items that get returned and can easily be resold by the merchant. “Being able to process that efficiently and get it back in the supply chain loop, makes returns management just as profitable as an original order,” he says.

Khurshed agrees with Jeff and believes return management can be complex, but the

Improving returns operations begins with automated technology.

“Being able to process that efficiently and get it back in the supply chain loop, makes returns management just as profitable as an original order. ”

OPEX Sure Sort is a scalable, configurable, and cost-effective small-item robotic sorting system.

quicker the returned goods can be entered back into the order fulfilment system to customers, the better off a business will be. Khurshed says the efficiency lies in the automation of the warehouse system for sorting and picking. “It’s time to eliminate the manpower of manually sorting through packages of returned goods and entering them into the fulfilment loop. You can get immediate savings with a sophisticated automated solution,” he says.

RAPID FULFILMENT

A constant two-way flow of merchandise requires considerable and dedicated restocking labour, and the labour allocated to managing returns will only climb as the volume of direct-to-consumer sales continues its upward trajectory.

Jeff says it’s imperative that merchants get returned merchandise back in stock and into a saleable position as quickly as possible during this time of unprecedented demand. That’s where automation comes in.

Khurshed says Perfect Pick from OPEX is scalable and can perfect the put function of the returns process as it is at speeding the pick function that enables rapid

fulfilment. “Perfect Pick’s iBOTs can put products back into storage racking as fast as they can pick those goods for order fulfilment, which relieves a labour-and cost-intensive reverse logistics burden in distribution centres and speeding time to resale of returned merchandise,” he says.

Jeff says keeping the cost of reverse logistics under control and getting returned goods available to sell are growing imperatives, and flexible two-way warehouse automation like Perfect Pick is a key enabler of those goals.

Developing an e-commerce channel almost always requires retailers to expand their SKU counts. “Automating put away processes relieves that burden, Perfect Pick d esigned by OPEX can handle the put function of the returns process as seamlessly as it picks SKUs for fast fulfilment,” he says.

The system can be set up to allocate and pick items for fulfilment from the front while returned goods are simultaneously put away from the back, items can be picked for fulfilment on one shift and returns put back on another, or merchandise can be picked for fulfilment while returns are put back in place simultaneously

OPEX Sure Sort is utilised by leading retailers across pharmaceutical, fashion and electronic brands.

through two-way screen and light user interface.

Jeff also says OPEX’s Sure Sort, a robotic item sorter that handles complex variables and delivers a wide variety of parcels and single items to their final location in a single pass, is helping clients achieve performance levels of over 2000 order lines per hour with precision accuracy.

“Sure Sort can increase pick and pack rates by more than 7 times depending on the operation, equivalent to around 6 labourers. In a time where less human contact is welcome, this automated sortation solution is allowing retailers the flexibility for the goods-to-person system to grow with less workforce,” he says.

Khurshed says the proven accuracy and small footprint of both Perfect Pick and Sure Sort is giving companies the ability to breathe and successfully manage the influx of return goods experienced across operations in both Australia and the US.

ELEVATED EFFICIENCY

“Current trends indicate that returns will only continue to increase as e-commerce booms,” Jeff says. The challenge isn’t reverse logistics but handing both inbound and outbound fulfilment. “Companies have to ask themselves how they will handle its returns as demand for goods increases, that’s where the investment in automation must come in,” he says.

A recent study from a UK consultancy agency found that nearly two-thirds of customers wouldn’t make an order if they had to pay for returns. “Everyone who is part of the e-commerce industry is trying to get a share of the pie to build their customer base. Companies are competing to entice customers by offering an attractive returns policy, but it needs to be financially viable,” Khurshed says.

Jeff and Khurshed say that the only way companies can be viable is to implement automation in its reverse logistics process. “Having a credible solution in place to manage returns whilst simultaneously picking and packing new orders ensures cash flow isn’t lost,” Khurshed says.

“Your returns solution isn’t going to turn on and off like a tap, whatever a company decides to do to improve its reverse logistics, they can’t stop current operations,” Jeff says. For large retailers, flexibility and scalability are achieved by integrating business applications and systems. Although it may not be feasible for a small to midsize retailer to achieve full automation immediately, Jeff says replacing the traditional personto-goods fulfilment model with an automated solution is a good place to start.

Khurshed says the benefit with OPEX Sure Sort is that the customer doesn’t need to have a huge initial capital investment, it is scalable and can be implemented whilst continuing operations, which is un-thinkable during this peak of increased fulfilment. OPEX Sure Sort is utilised by leading retailers across pharmaceutical, fashion and electronic brands, and 3PL’s.

“Sure Sort grows with the business, which our clients are thankful for. We’ve had plenty of well-known clients across the global supply chain who have started with Sure Sort and scaled up as their e-commerce operations have taken off, which has proven to be a really powerful investment,” he says. ■