Whitepaper

Reverse Logistics
& Cerasis
Who is Cerasis?
Finding the right company
to help with your reverse
logistics needs is one of the
most important things you
can do for your company.
So why trust in Cerasis?
We've built up tremendous
experience and a proven
track record in the industry,
and are proud to offer our
customers the best reverse
logistics management available today. Just why should
you trust us?

Cerasis is a Certified Transportation Broker by the TIA

We offer services throughout

the continent, not just in the
USA

Cerasis was included in the

CIO "Top 20 Most Promising
Logistic Tech Solutions Companies"
We focus on solutions and on
customer satisfaction and
have a 90% customer retention rate

In This Whitepaper

Brief Overview of Cerasis

What is Reverse Logistics?

The Current Reverse

Logistics Landscape

A Closer Look At The

Why Of Reverse Logistics

Comparing Traditional Logistics Flow To Reverse

Logistics Flow

Reverse Logistics Are More

Than Just A Buzzword

The History of Reverse Logistics

E-Commerce And Its Huge

Impact On Reverse Logistics

The Aftermarket Auto Industry And The Use Of Reverse Logistics

The Big Benefit Of Reverse

Logistics

Why Reverse Logistics Systems and Transportation

Management Should Be
Considered Together

Cerasis Reverse Logistics

Capabilities

2015 Cerasis Inc. All Rights Reserved. Unauthorized Use or reproduction without permission is expressly prohibited

Cerasis Whitepaper: Reverse Logistics & Cerasis

Cerasis Corporate Headquarters, Eagan Mn.

What We Do
We utilize our experience to ensure that every aspect of your reverse logistics needs are met. Here's
a look at some of the main things we do.

Provide supply chain visibility

Utilize predictive analysis into each aspect of freight shipping and logistics

Develop a customized system for your company

Negotiate the best freight rates

Use the latest technology to help manage shipping and reverse logistics issues

Set up and manage the often complex reverse logistics process

Of course, to fully appreciate the various ways that we enhance the world of reverse logistics, the
first step is for you to simply understand more about reverse logistics and what it means to your company. With that in mind, the following guide should help you do just that.

Pg. 2

Cerasis Whitepaper: Reverse Logistics & Cerasis

What is Reverse Logistics?

Any major business operations will have numerous
shared aspects within the way that they work. Logistics has long been a key focus of businesses,
and at its most basic definition is nothing more than
the coordination, implementation, and management
of any complex operation. It will involve various
people, facilities, and supplies as well as various
operations.
Reverse logistics is similar, but instead it focuses
on operations that are related to reusing products,
materials, and facilities. It could include a wide
range of different things, but is generally the process of moving goods from their final destination in
order to properly dispose of them or to recapture
some level of their overall value.
Reverse logistics can involve a number of different
things throughout the process, including:

Management of surplus goods or materials

Sales of surplus goods and materials

Refurbishing activities

Management, resale, or reconditioning of returned equipment or machines

Turnaround of leased machinery or equipment

With traditional logistics, a product moves from

the supplier to the consumer, traveling through
the supply chain.

With reverse logistics, the goods or products

move backwards, traveling from the consumer
back to the supplier or distributor.

A perfect example of this is when a defective product has been purchased by a customer. In this
case, the reverse logistics process would move
thusly:

The customer returns the product to the store

The manufacturer organizes the shipping of the

defective product back to their facilities

The dismantle, repair, or recycle the product

In the end, the product will either be reconditioned

and resold, or will be scrapped and recycled, with
its parts being used to create a new product for
sale. This is the heart of what reverse logistics is,
and it should be a bit easier to understand why it's
so important to any business. There are other aspects of the process, ranging from reusable packaging to offering a product refusal process through
COD and beyond.

To get a clearer picture of what reverse logistics

are, simply consider the flow of a product as it
moves through the supply network. Here's a quick
explanation:

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Cerasis Whitepaper: Reverse Logistics & Cerasis

Cerasis Whitepaper: Reverse Logistics & Cerasis

The Current Reverse Logistics Landscape

Reusing products and materials isn't a new
trend, and for years companies have utilized older components to help cut costs
and drive forward development or production. And recycling itself, which is essentially
the core principle behind reverse logistics,
has grown in popularity for decades. But
reverse logistics goes beyond recycling old
drink bottles and scrap metal it's a much
more complex process that is only now beginning to be given the level of attention that
it needs.
For the last decade, experts have begun
focusing studies on reverse logistics and
what it can do for companies. But there are
still surprisingly few companies that have
fully embraced its potential in fact, it's often viewed as more of a hassle than anything else and as a result many companies
in operation today don't focus too much of
their efforts on it.
A recent study from the University of Nevada can help highlight more
about this reluctance to embrace reverse logistics. The
study asked more than 100
companies several questions

Pg. 4

and found the following:

34.3% of Supply Chain Executives say

they don't have a good reverse logistics
system in place

40% say that returns management isn't

as important as other issues

One third of respondents said that company policies actually made it harder to
focus on reverse logistics and returns
management.

If this seems counterintuitive, that's because

it really is. Companies are essentially willing
to neglect a key part of their business model
simply because they don't understand how
to adequately make the most of it. In the
process, they're losing out the many benefits that reverse logistics can offer to them
most notably the opportunity to reduce profit
loss by a significant amount.

A Closer Look
At the Why of Reverse Logistics
To understand why reverse logistics is
something you should consider for your
business, you really need to start by just
looking at some of the data gathered that
relates to product returns. Thanks to the
rise of online shopping and e-commerce,
the numbers will vary greatly. But here are
a few things to think about.

Return rates can range from 3% all the

way up to 50% of total products
shipped, depending on industry and
business. That's a huge potential percentage of products being returned.
In certain industries, more than 20% of
all products sold end up being returned
to the vendor. Higher numbers are
found in industries like book publishing,
catalog retailing, and more.

4% to 6% of all retail purchases are returned on average on an annual basis.

Those returns add up to high costs

costing the overall retail industry around
40 billion dollars each year.

Some studies have found that returns

take up as much as 3% to 5% of total
sales revenue.

In other words, returns seriously cut into a

company's profits. But the perceived hassles associated with managing those returns means that many businesses will
simply choose to ignore this segment of
their business when in reality they could
embrace a strong reverse logistics program
to help them cut down on the costs that returns can bring.
By utilizing a properly set up reverse logistics system, it's possible to recoup some of
those losses. The key is to determine the
remaining value of materials or goods and
then finding the best way to maximize the
recovered value accordingly. This isn't always as easy as it sounds, which is why it's
important to develop a strong program that
helps with the process while also making
sure that each step of the reverse logistics
supply chain is running at maximum efficiency.

Cerasis Whitepaper: Reverse Logistics & Cerasis

Pg. 5

Comparing Traditional Logistics

Flow to Reverse Logistics Flow
If you're still unsure about just what reverse logistics involves, the easiest thing to do is to consider
the basic supply chain flow as it relates to the process of traditional logistics versus reverse logistics.
Essentially, traditional logistics flow utilizes sales
forecasts that predict the overall sales a product
will expect to net for a company. Then, the product
is created and shipped to the distribution center.
From there, products are shipped to retail stores,
all the while utilizing Advanced Shipping Notices to
assist in basic product flow.

It's much more vital that information be delivered to

the company as soon as possible when reverse logistics are in play since that will have a direct impact on the way that the overall process is handled.
Diagrams related to these two logistics flows can
help get you an even clearer picture as to just how
the two are different supply chains are possible.

With reverse logistics, those estimates and sales

forecasts are harder to set. Instead, there is no
large scale shipping process a customer returns
an item, that item is collected at the store and then
sent to the distribution center. As this occurs, various bits of information will be sent to the company
concerning the item's description, its condition, and
more.
That's an important thing to pay attention to the
importance of information as logistics work in reverse.

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Cerasis Whitepaper: Reverse Logistics & Cerasis

Reverse Logistics Are More

Than Just A Buzzword
Here at Cerasis, we think it's important that our clients and customers understand
that reverse logistics is much more than just a flashy buzzword. It's an integral part
of helping your company thrive in today's competitive business world. A key part of
that is that you fully understand not only what reverse logistics involves and how it
can help you, but what its history is.
Reverse logistics really does go back further than most people realize. The key reason that it's only now getting the attention it deserves is through the development of
reverse logistics programs that help improve efficiency throughout the process.

Cerasis Whitepaper: Reverse Logistics & Cerasis

Pg. 7

The History of Reverse Logistics

While today's modern reverse logistics systems are just now starting to be fully capitalized on, the
fact is that its history dates back
far, far longer. You might be surprised to find out that it can actually be traced back to the Civil
War. There's a chance it's even
older, but it was during the final
days of the war that its use fully
started to be capitalized on. It's
worth taking a closer look at this
past in order to understand more
about how reverse logistics can
work and what it can do for you.
With that in mind, here are some
of the important moments
throughout the history of Reverse
Logistics.
1861-1865 During the American Civil War, General
William Sherman implemented the first recorded
reverse logistics program
when he made the realization that a huge part of his
campaign relied on mobility and supply. Supplying
his soldiers during the
campaign often relied on
the reuse and reappropriation of various
supplies.
1872 Less than a full decade later, reverse logistics
began being implemented
in the retail world by Montgomery Ward. In 1972,
they set up a system that
almost all retailers use today if customers aren't

Pg. 8

satisfied, they could return

their purchase for a refund.
From this basic policy, the
entire retail reverse logistics system was born.
1942 It took another war to
kick reverse logistics into
high gear, and with World
War II came a serious material shortage. This led to
the need of manufacturers
to rebuild and recondition
automobile parts. This
made a huge impact in the
industry, and to this day
about 90 to 95 percent of
all alternators and starters
are remanufactured, making it a huge $36 billion
business.
1984 Sadly, the next major
moment in reverse logistics' history isn't a positive
one, though it led to some
positive changes. The
1984 tainted Tylenol scare
caused for a huge recall of
the popular pain reliever,
and the manner in which
its manufacturer, McNeil
Laboratories, managed to
get the dangerously tainted
pills off of store shelves
helped set a new standard
for the industry that is followed to this day.

crease the rate of recycling

in that country. The UK followed suit in 1006 and required shippers and manufacturers to be responsible
for the return and recycling
of packing materials. By
2001 laws were in place
requiring a 50 to 65 percent recovery or recycling
of all packaging waste.
This in turn led to a new
approach to large-scale
reverse logistics.
1998-2000s As you can tell,
most of the points above
fall outside of the retail
business world. But in the
early 90s, studies began to
be published that showed
just how important reverse
logistics could be for various companies. Since
then, the process has been
hones to a science and
many companies have begun to utilize it on a regular
basis.

1991-1996 When the German government passed

stricter recycling ordinances in 1991, it began to in-

Cerasis Whitepaper: Reverse Logistics & Cerasis

E-Commerce And Its Huge Impact

On Reverse Logistics
Few things over the last century
have impacted reverse logistics
quite as much as the rise of ecommerce. While the convenience of shopping online has
helped millions of people get
great deals, the fact is that it's
brought a fairly large rate of return with it.

retail, and they all help give rise

to a significant amount of returned merchandise merchandise that needs to be dealt with
properly in order to adequately
keep profits high. This is where
reverse logistics come into play.

5. Dedicated Technology and

Up to Date Web Standards

The technology driving the automation must be based open

standards and an SOA architecture to allow easy integration
with existing systems, including
4. Speed and Scalable
ERP. The inbound freight management shipping application
The TMS must be able to supmust allow for rapid deployment.
In 1995 Amazon was launched, port rapid growth demands,
Delays due to IT controls and
and from there things have truly while not feeling bloated with
taken off for online retailing.
unnecessary features requiring backlog reduce savings and put
More than 65 million people
the success of deployment at
onerous training or orientation.
shop on Amazon.com, with rev- Busy logistics professionals
enue of more than 34 billion dol- need practical tools that deliver risk. A dedicated technology
team behind the TMS and logislars. Add to that plenty of other results immediately. A system
online stores ranging from EBay should still work as effectively
tics service provider will elimito Zappos, plus the online vernate such updates and backwhether you have 2 inbound
sions of major retailers like Wal- freight shipments per day or
logs. Ask the provider if they
Mart or Target and it becomes
100. Inbound freight managethemselves develop and iterate
clear that online retailing is the
ment, over time, with a scalable
future and the present.
the application/system, or if the
system, should start to see
greater returns as your company provider outsources to a softHowever, the nature of online
grows.
ware company.
retailing means that there is a
larger need for reverse logistics
to be in place. Consider some of
the common issues that can
arise from online retail:

Returns

Malfunctioning products

Undelivered products

Damaged goods

Exchange programs

Clothing that doesn't fit

Those are just a few of the

things that can exist with online

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Pg. 9

The Aftermarket Auto Industry

And The Use Of Reverse Logistics
The US auto industry is one area that is ex
pected to see significant growth in its aftermarket throughout the future. In fact, recent stats
suggest that it's going to grow by around 3.4
percent annually through 2016. That means its
sales will likely reach $236.8 billion.
And while the industry's sales will likely be
very robust, the automotive world is one that
has one of the largest aftermarket industries in
the nation. After a vehicle is sold, it continually
has to be managed not just by the owner, but
by the industry itself. With traditional supply
flow, your product needs to be manufactured,
warehoused, shipped to the dealer, and then
sold.

Parts that don't fit

Parts that are damaged upon delivery
Parts damaged during use that are returned

Product recalls

Whether it's an official dealership, a local mechanic, or a person doing some auto tinkering
in their backyard, the fact is that auto parts
and components are returned regularly. And
with vehicles staying on the road for even
longer than before, there's now an increased
need for service, repair, and maintenance. As
a result, it's important to focus on the various
aspects of this industry's need for reverse loBut with the automotive industry, reverse logis- gistics.
tics takes up a serious place in the way things
run. The very nature of the industry means
that it's much more likely for various issues to
arise. Here are just some reasons that reverse
logistics is such a key part of business operations in this industry:

Pg. 10

Cerasis Whitepaper: Reverse Logistics & Cerasis

The Big Benefit Of Reverse Logistics

By now, you probably see just
what reverse logistics means to a
company and why it's so important to take a look at it for
your business. Whether you're in
the automotive industry, ecommerce, or some other retail
industry, there's almost a guarantee that you'll face the need to
accept returns, offer refunds, and
manage those returns in a way
that doesn't eat into your bottom
line. Because of this, reverse logistics is a must. Consider the
Benefit #1 Increased Customer
following points:
Satisfaction

A company needs a lot of different things in order to truly thrive

in today's marketplace, and one
of the single most important
things is maintaining the maxi That's .7 percent of the total mum levels of customer satisfacGNP, and about 6% of the
tion. Customers who aren't hapoverall $3.5 trillion in retail
py with your products or your
sales in the country each
service are far less likely to conyear.
tinue doing business with you,
and they're also far less likely to
Estimates suggest that supply recommend your company to
chain costs stemming from
their friends. There are several
improperly managed reverse things that can help improve cuslogistics average around 7 to tomer satisfaction, but good re10 percent of the total costs
verse logistics management is
of goods.
one of the key ones to think
about.
If you're still not convinced, maybe taking a closer look at the key Customers dont' really care how
benefits of reverse logistics can you go about meeting their prodhelp you understand more about uct and service wants and needs
why you need to adopt a reverse they just want to ensure that
logistics program for your busiyou do it. There are two ways to
ness.
look at the process:
The total volume of returns
each year is estimated to be
between $150 and $200 billion in total costs

tionship with you.

Event-specific customer satisfaction hinges much more

heavily on a single purchase
or experience. A single product sale or product return
could be all it takes to form a
customer's opinion on what
you can offer them.

Reverse logistics is obviously a

key part of the process, and
working with a good firm that can
handle your reverse logistics
needs is vital. There are a few
key things that help reverse logistics organizations stand out
from other ones, and they include the following.

The ability to adapt to changes in the market demands

and develop new processes
to meet those changes

Strong inventory management capabilities

Faster cycle times

Establishment of good logistic

capabilities and maintaining
of a strong market position or
presence

The use of Key Performance

Indicators to make sure that
performance is measured
properly

Cumulative customer satisfaction comes by continually

meeting and exceeding a
customer's expectations consistently throughout their rela-

Cerasis Whitepaper: Reverse Logistics & Cerasis

Pg. 11

Recent surveys have found that

most companies about 60% aren't that satisfied with the way
they currently handle their reverse logistics needs. This in
turn means that those companies' customers aren't as likely
to be satisfied with their return
policy process.

By utilizing the right reverse logistics management firm you'll

be setting up a partnership that
can help extend the overall level
of customer satisfaction that you
offer your own clients and customers, giving yourself a huge
range of key benefits within that
spectrum.

There are a few key things that

help offer stronger benefits
through the use of reverse logistics. These are the main attributes that stand out as important
factors in reverse logistics management.

Elimination of shipment discrepancies

Reduction or elimination of
lost shipments

There's a big difference between

good management of reverse
logistics and poor management.
To get a clearer idea of what effective management can involve, think about the following
process that involves a diesel
engine manufacturer with 31 regional distributors.

Distributors are offered a financial incentive to collect

and return broken or damaged parts

Those parts are tracked via

electronic information that
helps manage the location
and the info associated with
the products

Benefit #2 Reduction of Overall Total Costs

It's true that some businesses

Reduction in product returns need the use of reverse logistics

more than others, but no matter
Better return process to sim- which industry you're involved
in, the process can help reduce
plify things for customers
costs. Consider the automotive
Improved reliability with de- industry
livery
70 to 90 percent of all goods
A good reverse logistics mansold in the automotive afteragement provider and its cusmarket field are remanufactomers will form a strong parttured

nership that is forged by the

That market totals more than
points listed above. However,
$43 billion dollars according
the following points can help ento the Auto Parts Remanusure that both parties get the
facturers Association
most from the partnership.
The process of managing those
remanufactured parts involves
getting parts from a dealership
or repair shop back to the manufacturer or to a qualified remanufacturing provider. Then, the
parts are rebuilt and redistributed. The entire process involves
strong reverse logistics management in order to succeed.

Mutual loyalty

High expectations for the

overall success of the partnership

Willingness to share risks

associated with the process

Good use of task force and

teams

Strong communications

Willingness to negotiate differences of opinions.

Pg. 12

Preferred carriers are used

to return those parts to the
appropriate warehouse
A dedicated part of the company's warehouse is utilized
solely for incoming return
parts about 180,000 core
parts are handled each
month.
Parts are inspected and then
confirmed by associates
Reusable plastic containers
are utilized for shipments,
keeping costs lower

Throughout the entire process, a

third party logistics company
handles the process by coordinating, scheduling,

Cerasis Whitepaper: Reverse Logistics & Cerasis

communicating, and auditing all

steps of the process. This way,
the company themselves can
focus on other aspects of their
business while the third party
group oversees the complex reverse logistics process.

Logistics Costs These are

the costs of moving, handling, shipping, and storing
the returned items. Things
like warehouse handling
costs and freight fees are included here.

Reverse Logistics Cost Equation

Asset Depreciation Returned products all have a

value, whether it's a resale
value following refurbishment
or a scrap sale value. You
need to factor in the initial
value of the item as well as
the depreciation associated
with it following a return.

Taking a closer look at the overall level of cost reduction you

could experience by utilizing reverse logistics and how those
reductions can impact your bottom line is well worth doing.
It's also simple to do by just taking a look at the reverse logistics

cost equation.
Basically, this is nothing more
than an assembly of the overall
components within the total
costs of the management of a
return item. The equation presents the costs in a straightforward manner, and it is as follows:
Processing Costs + Logistics
Costs + Asset Depreciation +
Credits and Replacements
Costs = Total Reverse Logistics
Costs
When any of the above costs
are lowered in any way, that
lower costs transfers directly to
your overall bottom line profit.
But just what are the costs listed
above and what do they entail?
Here's a closer look at it:

Benefit #3 Maximization Of
Return on Assets

The third big benefit of an effective reverse logistics management program is that it can help
boost the overall return on assets associated with each return. Improving in the asset deCredits and Replacement
preciation or credit replacement
Costs This refers to the
area of the points listed earlier
cost of replacing the item,
can help improve your profit. Doexchanging it, refunding
ing so means effectively recovmoney, or issuing a credit to ering value from a returned
the customer who returns the product.
item.
This really comes down to effecAny improvement at all in each tively managing returned units
area above can translate into
and maximizing the profit potensavings for you and a boost to
tial from them. For example, inyour bottom line, so it's worth
stead of leaving items in a waretaking a look at each one care- house, its' often possible to refully and ensure that you are do- furbish or even sell those items
ing all you can to improve it.
for scrap in some cases returns of as much as 80% have
occurred since unit selling prices
are frequently above manufactured costs, even with returned
items.

Processing Costs This refers to all of the costs that

are incurred when you process and handle returns,
from the moment a return begins to the end refurbishment
of the item.

Cerasis Whitepaper: Reverse Logistics & Cerasis

Item depreciation can have a big

impact on your profits, but monitoring it in order to ensure that
you get the most return on your
assets is the key to getting all
that you can from the process of
reverse logistics management.

Pg. 13

e-commerce and Reverse Logistics

ensure that you keep your customers as satisfied as you can.

Now that you've got a solid idea

as to just what reverse logistics
involves, you'll need to learn
more about why it's so vital to e
-commerce based businesses.
There are few areas of retail
that have changed the way
businesses operate and the
way customers shop quite like
the rise of e-commerce, and it's
also one area that really requires a lot of attention where
reverse logistics are concerned.

Key E-Commerce Reverse Logistics Facts

Most e-commerce businesses

are retail-based, and while it's
also true that plenty of manufacturers and distributors utilize
the internet as well, catering to
customers directly is one of the
biggest components of ecommerce and something you
need to pay close attention to.
Reverse Logistics Is A Must
For Any E-Commerce Company

Over the last few years a tremendous amount of research

has been done into the ecommerce world and the way
that reverse logistics impact
and are impacted by things that
transpire there. Taking a look at
some of the findings from this
research can help you understand more about effective reverse logistics management for
online retail businesses.
Customer Behavior
The way your customer base
behaves can impact your company, and the way that you satisfy them will be a key part of
keeping them loyal to your
brand. According to research
done by BizRate.com, online
buyers say that the level of
quality and customer support
an online company offers is the
key to winning their loyalty.
Along with this, several other
findings are notable.

If you operate any kind of ecommerce store or are in the

process of putting your catalog
online, there's one thing you
are pretty much guaranteed to
encounter product returns.
And since you don't have an
actual storefront for customers
to return products to, the process of reverse logistics are
even more challenging for

online businesses. But properly

handling your product returns is
one of the most important
things you can do for your company since it will help keep

costs as low as possible and

Pg. 14

back on a credit card during

a return was said to be the
leading reason customers
are driven away by a company's return policy 85%
of respondents said it would
keep them from doing business with them.

Second on that list was the

time limit for returning products being too short, by 68%

Along with the points above,

here are some other attributes
online buyers said were important:

The ability to exchange a

product for a different item
(58%)

Being able to return an item

by mail instead of going to a
storefront (66%)

E-Commerce Reverse Logistics Framework

It's important that you fully understand what the key components are within a reverse logistics management system in order to determine how effective
your own system is.

The top three products purchased online that are returned are Clothing (27%),
Computer Software (20%),
and Books (15%).
89% of all online shoppers
say that return policies have
an impact on which online
stores they do business
with.
The inability to receive credit

Cerasis Whitepaper: Reverse Logistics & Cerasis

There are a few basic components that make up the overall

framework. These components
are:

How long the customer has

to perform a return

When credit or replacement

items will be received

Returns Policy

Returns Preparation

Receiving

Ship an Exchange or Issue

Credit

Today, most companies and

especially major online retailers
offer free exchanges and returns. Things like pre-printed
shipping labels are often utilized
to allow customers to circumvent shipping while in other cases customers are responsible
only for the shipping of an item.

Inspection and Sorting

Other businesses charge restocking fees if items aren't re Asset Recovery

turned in like new condition,
such as Best Buy. The key is
Taking a closer look at the spe- determining which policies work
cifics of each of these compofor your business and how they
nents is important as well, and impact your bottom line a returns policy that is too lax sets
can help you determine what
you up for being taken adyou may be doing wrong and
vantage of, while a difficult and
what you're doing right.
strict policy may scare customers away.
Returns Policy
Your returns policy needs to be
set up in a way that is competitive, allows your customers the
confidence they need to shop
with you, and still reduces the
overall impact of returns and
their costs to you. This involves
making a few decisions about
the following points:

Returns Preparation

Giving your customers the ability to be properly prepared for

returns is important, too. But
there is again a tradeoff the
one mentioned in the last section. Making it easy for customers to return items is important
since a difficult return process
drives away customers. But
Where goods can be remake it too easy, and you will
turned
have more goods returned. This
What customers are allowed tradeoff needs to be balanced
properly.
to return or exchange
If anyone must be contacted In brick and mortar stores, the
in order to arrange a return norm is now a 'no hassle, no
quibble' policy that allows customers to return whatever they
Overall costs for the return
want without giving any reason
of goods
at all. This has helped customWho pays for shipping of the ers buy with confidence, but it
also means that customers exgoods
pect to be able to do the same

Cerasis Whitepaper: Reverse Logistics & Cerasis

Pg. 15

when they shop online. In doing

so, the old RMA Return Materials Authorization process
has been eliminated in most
cases.
This old policy meant that
someone needed to contact a
representative of the company
before returning an item and be
granted the ability to return the
item. Now, that customer service representative is often no
longer a part of the process
customers prepare their returns
on their own.
This means providing a clear,
easy to understand set of instructions that customers can
use to return items. If you've ever ordered anything online,
you've probably noticed packing
slips or materials inside that detail how to return an item. It's
important that you make these
instructions as clear as possible
and include anything that may
be needed.
For most major e-Commerce
retailers, the following items are
usually included in every
shipped package.

Simple, clear instructions

A return form for the customer to complete that includes

spaces for why the item was
returned

Return labels that include

your shipping address and
any identifying bar codes

Pre-paid shipping identifier

on the label

These things can help the customer package and ship the
items correctly, but they can also help your returns management team by making it easier to
identify and restock items once
they arrive.

Credit Once your receiving

team has processed and validated the returned item, the next
step is how to approach the return. You have two main options
exchange the item for another
or issue credit.

bor intensive and the better your

team knows each of the products, the better they'll be able to
make decisions on how to process those items.

An assembly line system is usually utilized here, and it allows

Receiving
Issuing credits can be expenfor easy separation of products
sive, especially if not handled
as they flow through different
Once the item is shipped from
properly. Your team needs to
stages of the reverse logistics
the customer to you, the way
properly match the original items flow. It's a good idea to set up a
you handle returns once they
purchased with the returns or
system that sorts items based
arrive will be incredibly imelse this aspect of reverse logis- on their final destination, with
portant as well. Processing retics can be abused easily. It's
different streams heading to difturned packages comes with a
worth noting that in some cases, ferent designations including:
wide range of distinctive chalitems can indeed go missing
lenges, and your receiving team due to the large gaps in receiv- Scrap for damaged goods
needs to pay attention to several ing processes and in the shipthat can't be reclaimed or repoints including:
sold
ping industry in general. Some
un-validated credits may need to
Who has returned the
Restock for unopened boxbe issued, but you should be
freight?
es that can be returned diable to keep these to a minirectly to new inventory
mum.
What goods have just been
received?
Repackaging for sale for
Inspection And Sorting
goods that are in an open
What condition is the shipInspection and sorting has one
box but are in 'as new' condiment in?
key goal to help push returned
tion
items towards the path of netting
Does the freight match the
the highest return for you com- Return to vendor for goods
original purchase?
pany. This could mean reselling
that are to be returned to the
them at the retail level, scraporiginal vendor for credit or
To speed up the process of re- ping them for parts, refurbishing
exchange
ceiving, which is often very labor them, and more. It's often a prointensive, most companies set
Disposition for items that
cess that is attached to the reup an assembly line process
still hold value but that won't
ceiving process since it's easier
that their team works in. This
be resold directly
to complete it as goods are rehelps speed up product identifi- turned and being handled.
cation and the basic product
Each of these destinations are a
handling process.
During this stage, goods are re- possibility for a returned item,
and it's important that your team
ceived and credits have been
Problems like delays and back- processed. Now that customers is able to quickly and effectively
logs can lead to tremendous
are satisfied, you need to deter- determine which is the best
hassles, reduced customer ser- mine how best to manage the
choice for each item returned to
vice, and much more. As such, goods for your corporate needs your company.
receiving is one of the single
in order to recover the highest
most important aspects of the
value from them.
entire reverse logistics process
and one of the things you should One of the key things to rememspend the most time developing ber here is that training and
to its fullest.
product knowledge is an absolute must during inspection and
Ship an Exchange or Issue
sorting. The process can be laPg. 16

Cerasis Whitepaper: Reverse Logistics & Cerasis

Asset Recovery

Those same destinations

above are also the key categories for asset recovery. Every
item returned are still assets to
your company, and turning
them around in a way that
helps you recover the highest
value for each item is important. Here is a closer look
at the different classifications
above and how they can impact your bottom line.

that can be confusing. Few

things are scrap today, and
you can still resell items for
some form of compensation.
Outsourcing Your Reverse
Logistics Needs

For most companies, the process of reverse logistics is

something that falls outside the
scope of their resources and
understanding. Allowing a third
party company to process and
handle reverse logistics for you
Restock If processed
quickly, this will lead to very is often a better idea. Areas
like transportation, returned
little loss of value or profit
good processing, manageReturn to Vendor This will ment, freight claims, accountoften lead to a total recov- ing, and more can all be outery of costs as well, and is sourced to another company.
used when goods are efTo start with, you need to unfective or when vendor
derstand the processes that
agreements are in place.
you need help with in order to
know which should be outRepackaging for sale
These goods are often sold sourced effectively. This way,
in a clearance type setting you can choose the partner
for slightly less than retail, that best matches your needs.
while still netting you a solA Return To Profitability
id return over cost. Quick
turnaround is a must, how- It's true that reverse logistics
ever.
management in e-commerce is
an area that is just now beginDisposition If your rening to get the attention of maturned items still hold value
but you don't want to resell jor companies. But the fact is
that it's an opportunity that can
them, various disposition
sources are now available greatly boost your bottom line
that can help you recover a and help you increase profits
good bit of money from
by making sure that you cut
them.
overall costs and increase the
recovered costs of returned
Scrap Scrap is a term

Cerasis Whitepaper: Reverse Logistics & Cerasis

Pg. 17

items. With the right reverse

logistics management service
on your side, you could help
improve your business' profitability in a big way.

Why Reverse Logistics Systems and Transportation

Management Should Be Considered Together
Needs for efficient reverse logistics systems
continue to increase as e-commerce claims
greater market share, and as so many traditionally functioning businesses grow and inevitably
incur increasing volume of returns. This presents opportunities for developing new revenue
streams, an exciting challenge to logistics professionals. However, forward logistics management skills (involving original production and distribution of new products) may scarcely apply to
reverse processes of moving products
from buyers locations in order to recover remaining value or appropriately dispose of items.
Product travel in reverse of their original paths
from the seller to buyers locations, after which
they may undergo disassembly and disposal or
recycling, or repair or refurbishment, testing,
packaging, warehousing, resale, shipping, customer support, and other reverse logistical processes executed by the seller outsourced services. Parts that don't fit
Need For Reverse Logistics Breeds
Opportunity
Efficiently managing reverse logistics is a daunting challenge for many businesses. Quality, service, costs, environmental and legislative issues
are strategic issues that must be managed in
addition to the operational challenges mentioned
above. Successful reverse logistics systems and
programs significantly increase customer satisfaction, decreases necessary allocations storage, energy, and other resources. Program
managers recognize the revenue potential of
returned assets and strive to streamline processing systems in order to capitalize accordingly. Opportunities in this area of U.S. business
are huge. The annual volume of returns in the
U.S. is estimated to be as much as $200 billion,
per the Reverse Logistics Association.

repeat purchasing. Companies that integrate reverse logistics systems into their logistics systems distinguish themselves from competitors
in:

effective management of inventory availability and cost

reverse logistic cycle time control
meaningful and accurate performance metrics
responsiveness to fluctuating market demands
reputation for excellence in reverse logistical
results
customer satisfaction

Effective Cost Management Driven By Reverse

Logistics Systems
A growing network of channels for disposition of
product returns, regardless of condition, has
opened up major opportunities. (Asset depreciation also offers significant profit potential to
some companies.) Managing returns is a customer service fundamental requiring your company to balance your customers needs for competitive product and service value and your companys need to yield profit. In the interest of
both, businesses are increasingly tying reverse
logistical operations to transportation management as a natural fit.
Managing all costs associated with moving, handling, and shipping returns and/or replacements,
in conjunction with warehousing functions,
amount to a logistical enterprise that often is not
among a companys core competencies. In such
cases, its advisable to look to experts in freight
management, logistics, and reverse logistics systems implementation to optimize customer service and maximize potential profit.

Customers want results. So, many suppliers uti- Many companies now outsource transportation,
logistics technology, accounting, and other syslize outside logistics management to ensure
customers remain fully satisfied and continue to tems management.

Pg. 10

Cerasis Whitepaper: Reverse Logistics & Cerasis

Recapturing Value

source these logistics services.

send data to validate returns
received.
Especially
if
your
company
does
The value of a product is more
likely to decline and damage to it significant amounts of eReturn center
is likely to increase when movement through the reverse logisti
Your return management syscal process is unnecessarily protem must provide all functions
longed. The speediest possible
necessary for your company
disposition is critical to recapturing the full remaining value from
to manage all returns.
the product. Further, ability to accurately track movements of

The system for entering new

components and measure
returns, tracking all returns,
costs of returns to your company
approving returns, and auand supply chain members is esthorizing payment of apsential to profitable reverse logistics management. TMS software
proved returns should be fully
in conjunction with a reverse lointegrated.
gistics system provides necesbusiness, your reverse logistics
sary metrics, including:

Proof of Delivery receipts for

services should offer your comreturns should be closely
average travel distance per
pany these essential features.
trackedchecking carrier
item
energy expenditures, perfor- Website
sites every 2 hours for POD
mance of sustainability initiadocuments.
Your site should be customtives
ized to suit your customers
Benefits
total cost of the product, origisubmissions
of
returns.
nal acquisition, return, resale,

Your reverse logistics providor move to secondary market, Functionality should include
er should create BOLs using
custom text fields and/or
or trash disposal
least cost rules for your comdropdown menus that can
continuous GPS tracking data
pany as a shipping customer.
contain whatever information
regarding locations of return
your company and customer
goods in relation to causes of

The service should ensure

need to communicate.
delays, and routing adjustthat multiple returns are con Entry fields should be fully
ments for traffic, road concompatible with any type of
solidated into every shipment
struction, and convoluted
return
being
submitted.
possible to reduce costs.
routes

Mobile
capability
is
increas scheduling to prevent route
ingly becoming a basic these The reverse logistics system
crossovers, increasing
days.
software program elements
Data tracking should display
Optimized Reverse Logistics
and functions provided should
for your customers the status
be streamlined, centralized,
Systems
of their returns
coordinated to meet lean opYour company may have the re- The system should display
erating standards, and built
the BOL (bill of lading) once a
sources and the will to invest in
for ease of use with
return is approved.
developing and maintaining optithe transportation manage Systems should be integrated
mal reverse logistics systems.
ment system.
with web or file upload funcHowever, its becoming more
tions so your company can
common for businesses to out-

Cerasis Whitepaper: Reverse Logistics & Cerasis

Pg. 11

Cerasis Team

Implementation Team

An Exceptional Group of Experi-

enced Freight Professionals
Striving to Exceed Your Expectations

Dedicated Customer Service

Representative

Freight Desk

Volume/Spot Quotes
Truckload Quotes
Routing of Inbound Shipments
Hotshot, International, and
Guaranteed Shipments
Assistance with Freight in
Transit Issues

Claims Specialist
Carrier Relations Group

Rate and Rules Negotiations

Carrier Contract and Relationship Management
Carrier Performance Monitoring

Pg. 18

Cerasis Technology

In-House IT Department
Oversees New Account
Setup and Account SpecifIntegration
ic Bid Process
Conducts Commodity Re- Working with your IT Staff,
view
we can help design a soluWorks with Your Managetion that will pull order informent Team to
mation from your ERP system and write fulfillment and
Implement your Custom
accounting information back
Solution
to your system.
Provides Training
XML Web Services
Our TMS System to perform
most of the common tasks related to shipping. This allows you
to rate/ship from a custom built
application, retrieve shipping

CERASIS REVERSE LOGISTICS CAPABILITY

Cerasis developed ,as an added functionality to our proprietary transportation management system, the Cerasis Rater, a
reverse logistics product in order to serve our shipper customers and future customers to seamlessly handle returns, especially core returns and warranty policies in the automotive aftermarket for Less-Than-Truckload shipping. However, for
anyone who is looking to implement automation features, gain visibility into, and start reaping the benefits of a reverse
logistics process in transportation, the Cerasis Reverse Logistics technology product is the only choice.
Features, Capabilities, and Benefits of the Cerasis Reverse Logistics Product:
White Label Site

Customizable site that allows our shippers customers to submit returns

Designed mobile first so will work with phones in the field

Fields can be customized to fit the needs of the return

E.g., Custom fields can be either text fields or dropdowns that can contain whatever the shipper wants

These fields can be required based on the type of return that is being submitted

The type of return dropdown is also customizable

From the white label site customers can see the status of the return, track the return, and pull the BOL once a return
is approved

Integration Option

Customers can send Cerasis data that we can validate

against so the returns they receive are valid

Cerasis TMS, the Cerasis Rater

Cerasis Return Center

New section of Shipper side control within the TMS that

allows for managing all returns

Shippers can enter new returns, track returns, approve

return, and authorize payment of approved returns

Shipper can see Proof of Delivery receipts for returns,

Cerasis checks carriers sites every 2 hours for these documents

If youd like to schedule a consultation with one of our sales reps,

please
Fill out a Contact Request at: http://cerasis.com/contact/
Call Us at 1-800-734-5351
Email us at info@cerasis.com

Pg. 19