Spotlight on Reverse Logistics
Cambridge Capital’s Benjamin Gordon Interviews Gaurav Saran
Reverse logistics is a vital market that is skyrocketing in importance due to the growth in ecommerce. For apparel and other categories, the return rates are as high as 30%. Cambridge Capital invested in ReverseLogix in order to help logistics firms, brands and retailers provide a better solution for reverse logistics. In this interview, Cambridge Capital CEO Benjamin Gordon interviews ReverseLogix CEO Gaurav Saran.
Gordon: The supply chain is a vast and complex industry. What influenced your focus on reverse logistics and specifically returns management?
Saran: When I was with Microsoft, I got an up-close look at how the supply chain works in high tech industries. That’s when I saw a huge gap that wasn’t being addressed: how to efficiently manage product returns.
Tell us more about that gap.
At the time, there wasn’t any sort of purpose-built platform for returns management. Most companies were piecing together a bunch of systems to handle their returns, but that wasn’t truly helpful or cost effective. And it didn’t give them any insight into their returns, such as trends around return reasons or strategies for reducing returns altogether. I saw an opportunity for a new type of supply chain technology that could address all of that.
You founded ReverseLogix, a company that offers a returns management system for B2B, B2C and hybrid enterprises. “Returns management system” is a relatively new solution in the mix of supply chain software.
When I founded ReverseLogix in 2014, there was no other tech platform that could manage product returns from start to finish. So we started on the journey of helping enterprises move returns management from a spreadsheet-based operations to an automated platform.
An RMS — returns management system — complements and completes the value of an OMS, WMS and TMS. It’s the final piece of the supply chain picture. An RMS integrates with other supply chain systems to orchestrate the entire returns journey and after-sales care management. Its two major functions are 1) managing the end-to-end returns process and 2) centralizing and analyzing returns-related data.
Tell us about the first function. There’s a lot that goes into returns processing and management. Does an RMS handle all of it?
From start to finish, an RMS manages everything that goes into a return. This includes returns processing, repairs, return-to-vendor, customer portals, returns merchandise authorization (RMA) initiation, and customer notifications.
What about returns data? What role does that play?
Managing product returns — a customer portal for initiation, team workflows, rules and policies at the facility — that’s the how of returns management. The data is the why behind it. With ReverseLogix, companies can finally understand the why of their returns, and pinpoint areas that are costly, or slow, or that may reveal a problem (like higher-than-average return rates for a certain item type).
Some companies hesitate on enterprise technology implementations because they can be long and disruptive. Can an RMS work around that?
One of the best things about an RMS is that implementation can be as fast as 4–6 weeks. We just had a customer tell us they saw an ROI within days of the go-live. We’ve had other customers report up to a 5% increase in profits and a 15–25% increase in customer satisfaction after streamlining and optimizing their returns. An RMS is quick to get up and running, quick to learn and quick to show results.
What are the trends driving companies to invest in returns management?
There are three major reasons companies are addressing returns management. I think of them as the three Cs: Cost, Customers and Carbon.
Let’s start with cost.
A ReverseLogix survey found that 80% of retailers said the cost of returns to their company is “significant to severe.” That echoes other studies that found not only are returns expensive, but a lot of companies don’t know what to do about that cost.
An RMS drives down expenses by providing standardized, digital workflows that speed up processing and reduce errors. For example, more than one ReverseLogix customer has doubled their return processing rate because of our automation and guided workflows. Managers can use the RMS to see the number of returns coming into a facility, and proactively staff up or down.
How important is customer satisfaction when making a return?
B2C and B2B customers alike expect an easy returns process. In practice, this could mean a really easy online portal or app to initiate a return and print a shipping label, and then automated communications about the return’s status. An RMS can handle all of that.
Customers also want choice about returning a product: Perhaps it’s returned in the mail, or in the store, or at a third-party drop-off location with a QR code. For the company, an RMS can track the efficiency and cost of those options, which is important for balancing customer ease with cost efficiency.
What’s the carbon angle?
Return volumes are impacting the planet — more transportation emissions, more packaging waste, and more products in the landfill. For companies that want to shrink their carbon footprint, supply chain sustainability is a major focus. Smarter returns management opens up a lot of opportunities; for example, rules in an RMS can reflect corporate priorities for recycling and repairing rather than landfilling. Data from the RMS can align return operations with greater corporate sustainability goals.
We’re just at the beginning of returns management technology, but what do you think the future holds?
For the most forward-thinking companies, sustainability efforts and carbon-reduction will continue to drive investments in RMS technology. RMS data will be used to track which return strategies work, which don’t, and what the cost is (both in hard dollars and from a sustainability perspective). I also think there will be a greater emphasis on avoiding returns in the first place, which companies can tackle using customer incentives and good data from their RMS. It’s all about doing right by the customers, the shareholders, and the planet.
Thank you Gaurav!
For more information on ReverseLogix, please visit here.