Reverse logistics is the removal of assets from the primary supply chain and dispositioning those assets, in an efficient, effective manner, that maximizes the value of those assets.

How you process returned goods will determine the net value realized for the asset and this will significantly impact corporate earnings. When supply chain leaders look at returns processes for the first time, they often realize that market realities demand more focus and resources on reverse logistics. Like it or not, reverse logistics is an important part of the supply chain, as stated recently by an executive at a large computer company who said, “We're in an industry with 60-day product life cycles and 90-day warranties. Of course customers are going to bring products back.”

Returns can lower profits by as much as 25%, which makes being proficient at reverse logistics a financial imperative. Without a robust reverse logistics solution, businesses could be leaving money on the table and not even realize it. In fact, in a recent study by the Aberdeen Group, 93% of companies said they don't even measure the impact of reverse logistics on their company.

If your company is looking for ways to improve the bottom line, when sales growth is slow and you have already cut everything to the bone, look at your reverse logistics processes. You might find hidden opportunities that could dramatically improve profits.