Leveraging IoT in Reverse Logistics

By: Kirti Acharya, General Manager, Digital Transformation and Enterprise Solutions, Happiest Minds Technologies

In today’s era of fierce competition, Reverse logistics is as important a process as forward supply chain management. The transgression from the traditional brick and mortar format to online sales and e-commerce have driven manufacturers to evaluate their ROI and become conscious of the costs and operational challenges associated with reverse logistics. Interestingly, online sales contribute to 20-30% of all returned goods, making reverse logistics no more an e-commerce challenge, but a major challenge affecting all most all industries. The risk encountered in this space is not just concerned with transportation and pick-up of returned goods, but also, to assess the resell or reuse value of the product, thereby having an overall impact on manufacturing and inventory costs as well.

Getting the Mix Right

With upsurge in e-commerce sector powered by digital transformation, the customers’ expectations are also increasing. During e-commerce purchases, in the absence of the required product, services or delivery, the percentage of free returns has seen a staggering rise. This puts the companies at a disadvantage and entails bearing the cost of pick-up from the customer’s location and transporting it back to the warehouse. In the case of third party logistics, the damage is even more, as it requires transportation of goods back to the delivery center and eventually to the warehouse. The entire process is not only time consuming but also a costly affair and makes it difficult for the manufacturer from placing the product back into the marketplace. UPS has been an inventor in this regards by building and implementing an innovative supply chain program called UPS Returns Flexible Access. This program allows the customers to drop off any returned product at a UPS center or their own mailboxes, which gets picked up by US Postal or UPS and sent back to the company’s warehouse. Smart sensors like beacons, which have high battery life and powered with Bluetooth are used to track the shipment.

Smart tagging , with the use of RFID and sensor technology, is another innovative concept that is being used by many companies connecting products/items to a cloud server in real-time and track them after it is picked up, and make them available in the inventory again. Smart tags can also be utilized for sorting products and aiding in merchandising solutions. In cases, of damaged or end of lifecycle goods, the delivery agent can either tag the product for replacement, reuse or remanufacture. This will mean that the firms implementing this technology and aiming at benefiting from these features will require robust system integration and network.

Need for strong Reverse Logistics

Company leaders, experts and CXO’s unanimously agree that a strong reverse logistics strategy is indispensable for companies to sustain and grow themselves in this era of sharing economy. The strategy should include the three key mantras of 3Rs, ‘reduce, reuse and recycle’ which entails reduced cost, and reuse and recycle of raw material and product scraps. IoT and connected devices, make it possible for companies identify and sort the products that can be reused and remanufactured for use in other products. Interestingly, it is stated that retailers can save up to 32% of the total product cost by recycling on time. Without doubt we can expect this to bring in a positive impact on cost and environment. Samsung realized this potential early on and initiated the Samsung Take back and Recycling (STAR) program in the US that allows users to return used printer cartridges through their mailboxes. These cartridges are then reprocessed by Samsung into usable components.

Servicing in Reverse logistics

Manufacturers are tapping into the IoT framework to monitor and improvise the performance, depreciation and service timing of products. Servicing is being an important aspect in reverse logistics, a focused effort needs to be placed in the process. Leading by example, Komatsu has installed sensors in its equipment that communicates real-time information back to the central database about machine performance and condition. This is done through innovative devices such as sensors and trackers that enable companies to monitor unpredictable return flows. This information is then analyzed and utilized by Komatsu to optimize their maintenance operations and reverse logistics.

The Way forward for Warehousing: Is IoT the key?

The future of warehousing is IoT enabled Smart Warehouses. The warehouse is the key to efficiency related to reverse logistics. Important processes related to managing returns, manual inventory counting, pallet tracking and disposal of overstock and damaged inventory are performed physically at the warehouses. No doubt, a Smart Warehouse is a precursor for efficient Reverse logistics process. However, the pivot question is how to make warehouses and warehousing smarter. Sensors, Beacons and Robotics are the technologies which holds the potential to convert a Modern warehouse to a Smart Warehouses. Data collected through the sensors and analyzed using the data analytics tools enables finding the most productive, efficient, safe, convenient and effective ways of running the warehouse.  Smart Warehouses holds greater potential to radically transform supply chains by managing and optimizing end-to-end activities.

· Using sensors with high battery life enables remote monitoring of equipment, conveyors, pallets or packages and determines how the equipment is performing or additionally to track products through the end-to-end supply chain.

· Managing the maintenance of physical assets through technology enabled monitoring and control.

· Gaining real-time visibility, which allows managers to know what is happening on the warehouse floor at all times like pallet tracking. The sensors and the technology allows real-time visibility and enables tracking assignments, pallet and ensuring better efficiency.

· Using sensors to identify storage capacity thereby facilitating optimum utilization of resources and efficient tracing of goods in the storage.

· Smart tagging can eliminate manual inventory counting by monitoring goods placed on each pallet as it arrives into the warehouse.

· IoT enabled warehouses provide a cost effective and safer environment for workers.

Quality screening by automatically erasing, health related products that are returned.

To make a reverse logistics strategy successful, the various stakeholders including manufacturers, consumers, logistics and transportation departments are required to be connected and integrated. This earlier impossible feat can be achieved now through IoT. The various business models from transforming customer experience, operational and manufacturing costs to corporate social responsibility will be benefitted with the aid of this technology. Reverse Logistics, is as significant as any other process and cannot be underestimated and siloed anymore.