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  • Writer's pictureJeremy Conradie.

Procurement’s Critical Role in Maximizing Reverse Logistics Efficiency

Building reverse logistics capabilities was a big focus for tech companies in the early days of the pandemic, as they saw a chance to capitalize on the surge of e-commerce activity. But those pursuits soon proved more trouble than they were worth. Industry experts noted that tech companies lacked “experience with the physical world problems related to logistics,” and struggled with the nuanced relationships between products, places, and people.

When tech companies began offloading their reverse logistics businesses, industry giants with physical capabilities were waiting, eager to see if they could deploy those capabilities in-house. The need certainly remains, as do the potential rewards. During the 2022 holiday season, Salesforce estimated that as much as 16% of e-commerce orders were returned each week between November and February. And a FedEx study revealed that 98% of shoppers would be open to ordering from a brand again if it offered fast and convenient returns, while 56% would even be willing to pay for the service if those returns were hassle-free.

As shipping companies actively pursue reverse logistics technology to enhance their services, other non-traditional competitors are focused on building their own more intelligent supply chains, ones that enable real-time, data-driven collaboration. A critical part of that effort lies in procurement, which can be strained as supply chains become more complex. Procurement leaders depend on suppliers to source, obtain and organize their goods and services. New supplier relationships mean new supplier processes and new risks.

In recent years, innovative digital tools have been applied to the procurement sector, moving it further from its manual past by delivering automation, efficiency and greater resilience. Accenture, for one, recently completed the purchase of both a reverse logistics business and a procurement services firm. Commenting on the acquisitions, the firm said, “We see the focus on supply chain operations as a vital source of competitive advantage.”

Procurement is just the beginning. According to McKinsey, “The new economic era represents a unique opportunity for procurement to step up and redefine its scope, mandate, and playbook.” Bringing procurement into a company’s broader strategic imperatives, the firm notes, will be crucial in creating holistic value. That concept should be a top priority for procurement leaders in the year ahead, especially as shoppers continue to scrutinize the after-sales process and returns impact performance.

As challenging as accelerated digital transformation might be for the broader supply chain industry, any increased optimization in the procurement space is bound to ultimately benefit customers.

Source: Supplychainbrain

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