Woolworths will switch on its latest reverse logistics program in the next two months. It will be run by an outsourcing provider, in order to comply with legislation and cut return-related losses.
Speaking at the Retail Week Supply Chain Conference in London last week, Woolworths supply chain director Neil Ashworth said that UK retailers were way behind the US in tackling reverse logistics.
Volumes of returns have increased significantly in the UK and will continue to grow with the soon-to-be introduced Waste Electrical and Electronic Equipment Directive (WEEE) and the increasing demands from consumer rights-aware UK shoppers.
Returns policies tend to be introduced on a me-too basis, epitomised by the no quibbles deal and without full consideration of all the implications, according to Ashworth. He also argued against bundling it in with distribution.
'Forward and reverse logistics are totally different,' he said, '(because) you are dealing with non-standard products.'
Woolworths has not yet announced its provider, but has identified four specialists in reverse logistics: R-Log (Wincanton/GENCO), Christian Salvesen, Tablogix and ReTurn Logistics.
All providers have developed systems to track and trace returns and offer retailers trend analytics, which were not available to Woolworths in-house.
'(The main) reason to outsource is because of lack of skills in terms of the secondary sales market - it's better understood by the professionals,' said Ashworth.
The benefit for the retailer and its supplier is certainty, Ashworth believes. For every item sold, it will be clear what happens if it is returned. For example, it can be returned to stock, sold to off-shore jobbing, sold at online auction or returned to the supplier
Cornwell Management Consultants consumer goods service director Austin Bendall, also Supply Chain Conference chairman, said Woolworths was a pioneer and encouraged other retailers to consider reverse logistics.
'What's more,' said Bendall, 'you can make more money out of it'.