What Are The 5 R's Of Supply Chain Management?

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What are the 5 R’s Of Supply Chain Management?

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The primary idea behind optimizing a supply chain is to profit from every single part or process involved.

According to a specialist 3PL partner in Melbourne the majority of companies are focusing on optimization of the forward supply chain management. Therefore, forgetting about the process of returns management, which remains a major bottleneck in the supply chain process.

For companies having no knowledge of what to do with the returned items can cost them billions of dollars.

To come out of this situation, companies are considering the forgotten, last segment of the supply chain which is reverse logistics.

Reverse logistics helps in regaining the value of returned products, materials, and parts from the end customer by getting them back into the marketplace as quickly as possible or effectively disposing of them.

To manage this, companies are using the best supply chain management practices through the 5 R’s of supply chain management: returns, recalls, repairs, repackaging and recycling.

This article will help you gain a basic idea of these important R’s of supply chain management and for elaborate knowledge on these major concepts,

you can opt for a comprehensive Digital Supply Chain Certification that will not only introduce you to the key topics but will also impart knowledge on the latest technologies and tools used in supply chain management.

The 5 R’s of Supply Chain Management

Here we will focus upon the essential 5 R’s of supply chain management. Let’s dive deeper into the article for detailed knowledge.

1. Returns

Returns generally constitute the first step in reverse logistics. Customers return products due to a number of reasons such as defect in item, damaged product, or the product failing to meet the customer expectations.

It is not essential to focus on the underlying reason behind the return of the product but to manage the returns of products effectively through processes that can help in receiving products, and to inspect and test products.

To have these things in place, companies need to use ‘Return Material Authorization (RMA) verification and tracking systems to facilitate smooth flow of data and important information.

2. Recalls

It is almost the same as the normal returns, however, they majorly include a defect in product or any potential hazard that may be subject to regulations of government, liability issues or reporting requirements that can make it too delicate to handle them.

Companies manage these issues the same as they manage the normal returns, however, they follow a different approach for salvaging revenues and convert a negative customer experience into positive that can lead to building brand loyalty.

3. Repair

Cases when products are returned need not always go to the landfills. Manufacturers take an ample number of actions to identify the problem and fix it if possible.

When the damages are not too severe, the returned product can be repaired and refurbished included back in the stock.

In case if the product cannot be repaired or refurbished, then its functional parts are reused by the manufacturers to make new products.

An appropriate inventory management system with strong application of reverse logistics , and good visibility and tracking smoothen the repair or refurbish process.

Companies lacking these processes or not following the best supply chain management practices may have to incur huge losses in terms of time and money.

4. Repacking

Nearly 95% of the items are returned for not meeting the customer expectations even though the products are not damaged.

Upon testing the problem, when no issues are found, the items are generally repacked and returned back to the marketplace or inventory as soon as possible.

Additionally, parts and items with minor flaws can be repaired, reconditioned and then repackaged for sale.

With the best supply chain management practices, cuch items can be repackaged at the facilities used for producing product and listed for resale.

5. Recycling

When products start losing their shelf lives, companies start looking for ways to scrap them through environment-friendly methods.

This may include seeking recycling companies that can collect the waste and dispose of them off.

Supply chain management is not only about going forward but also includes reverse logistics that can help save huge monetary losses.

Companies should always focus on following the best supply chain management practices for maximum efficiency and returns.

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