Understanding Retail Reverse Supply Chain
Reverse supply chains occur when the movement of goods goes in reverse, moving backward in the supply chain. Return management in the retail industry has raised sustainability issues, particularly the fashion industry. Being valued at more than $1.7 million in 2022 and employing more than 430 million individuals globally, it is an essential part of our society and economy. Returned inventory generates roughly 9.6 billion pounds of waste annually, emitting more than 27 metric tons of carbon dioxide. Clothing and apparel have incredibly high return rates, with 12.2% of those products being returned last year.
The reverse supply chain involves a process in which a company or organization retrieves products or services from the consumer, who may not want them. They then choose whether to dispose of, recycle, repurpose, or resell the returned product or service. Retailers implement this reverse supply chain model when they allow items to be returned. When done correctly, a solid return policy allows the business to better connect with its consumers while simultaneously growing its revenues through the resale of returned items.
There are certain steps that businesses can take to optimize this process to the fullest. Firstly, companies should evaluate their policies and process the returns efficiently. Collecting data regarding returned products can further explain why customers may be returning certain products, leading to improvements that can be made in the future to prevent them. In order to streamline the return process, collaborating with suppliers and examining logistical information could increase efficiency, speed, and ordering. Lastly, once an item has been returned, it should be determined whether it can be either repaired or recycled, products that can be repaired can be resold whole or for parts. In the case where repairing the item is not an option, it should be recycled. For example, IKEA prevented 4.68 million of carbon emissions by reducing transportation and increasing efficiency within their reverse supply chain. By reselling their inventory, they could divert 3.21 million pounds of waste. Overall through their efforts and technology, they could, on average, help their retail clients keep 96% of their excess inventory out of landfills. A reverse in the supply chain is inevitable for most retailers, and in the fashion industry, it is widespread. Especially with the rise in popularity of fast fashion, it has become an even more significant issue than before. By implementing specific measures and technologies, retailers can ensure that the negative impacts are limited even with returns.
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