In today’s day & age, many of the world’s largest fashion retail brands have committed to implementing more sustainable supply chain practices. Big fashion retailers like Chanel, Nike, H&M and Adidas, just to name a few, are actively reviewing their supply chain and are aggressively trying to make their supply chain more sustainable. Solidifying their commitment through the signing of the G7 Fashion Pact, they are aiming to reach zero carbon emission by 2050, sustainably sourcing raw materials in an effort to reduce waste chemicals in water supplies and the oceans, eliminate single-use plastics in business-to-business (B2B) and business-to-consumer (B2C) by 2030, just to name a few.
With continuous business growth, it is not always easy to balance business growth objectives with a commitment to sustainability. As more companies are adding D2C channels in their distribution strategies in order to capture more of the eCommerce market, there is a significant influx of orders. These orders involve delivery to the home of the consumer. To prepare and pack each order individually and then to fulfill these does lead to a consumption of more resources. Fulfilling these eCommerce orders involve more single-use packaging, foam peanuts & air packs, plastic and lastly, more vehicle trips to deliver these goods. With more deliveries to many more locations, this in turn leads to more carbon emissions.
Moreover, when it comes to D2C or online channels, customers are only able to select items online without physically inspecting or touching the items. As a result, many customers are prone to returning the items because they feel dissatisfied with the items. According to Shopify’s data, 30 to 50 per cent of customers prefer to return items because they feel dissatisfied with the sizing and fit. As a result, retailers often need to send replacement products to the customers while simultaneously handling the damaged or returned items. This means more trips to the same location for a single order, which means more energy consumption and carbon footprint.
More often than not, companies are still unsure what to do with the returned items, especially if they are damaged. In these cases, companies typically choose to dispose of these items, which leads to waste. Instead of throwing away these returned items, companies can start looking into how these items can be resold, reused, remanufactured, refurbished, or repurposed. However, before the returned items can be collected and reused, companies need to have a robust and strong return process to support these efforts.
Sustainable Supply Chains: Commitment to Circularity
With sustainability being in the forefront of everyone’s minds, some companies are looking into how they can adopt a circular supply chain in order to reduce waste and build efficiency. In a circular supply chain, the supply chain can flow back in the reverse direction, allowing items that are collected from the retailer or end consumer to be reused, repurposed, or resold. Not only does it apply to rejected and returned goods, it can also be applied to old and pre-loved items. Applying this practice can also enable businesses to repair old or damaged components or break down the items in order to recover raw materials. This ensures little to no waste of the raw materials or old products.
Brands like NIKE, for example, have announced plans to refurbish the sneakers that have been returned by customers and will then sell the refurbished sneakers at lower, affordable prices. Levi Strauss, a clothing company, has also committed to extending the life of jeans by repurposing, recovering, or reprocessing the fibres into raw materials for their next-gen of Levi’s.
The most challenging part of the circular supply chain is actually the reverse logistics involved to collect the goods from the retailers or end consumers. This means that the success of a circular supply chain is dependent on a company’s ability to manage the delivery process in reverse. This is actually not an easy task, and if often underestimated. Not only do companies need to know how to handle and collect the returned products from customers, they also need to know what to do with the different returned products. Companies need to be able to effectively separate the products into its different purposes (eg. resold vs refurbished) and manage this accordingly.
In reverse logistics, the items flow from the opposite direction. It is different from the forward logistics process, where the flow starts from customers placing an order, and then the logistics process will pick, pack and ship it to the customers’ doorstep. In reverse logistics, the item processes start when customers return the items to the seller or manufacturer, which includes returns from e-commerce and retail. These items are picked up from the customer or retailer and brought back to the seller or manufacturer.
Reverse logistics management should not be underestimated as it also involves significant work in order to be impactful for the company. A good returns process also improves customer experience and increases brand loyalty. Some consumers only shop at stores that allow returns. Nowadays, returns also extend to personal furniture like mattresses. Many brands understand the importance of allowing and facilitating returns for their customers. Companies like Haylee & NOA, all actively promote their return policy, sharing that any returned goods are either donated to charity or refurbished so that they can be reused.
Towards a More Sustainable Commitment
The challenges of reverse logistics can be easily mitigated and managed if a company is equipped with tools that can help streamline both the delivery and return processes. Investing in software solutions that can support the return processes can help smoothen the processes as well. Deliveries should not be the only focus when it comes to optimisation, returns should also be included in this conversation. Companies that optimise their vehicle routing and including both deliveries & returns are able to gain higher efficiency while fulfilling their commitment to sustainability.
Doing both forward (deliveries) and reverse logistics together at the same time also means that there are less wasted trips and less carbon emissions from unproductive separate trips. Solutions like Transport Management Software (TMS), that includes route optimisation functionalities, can help optimise all kinds of orders to maximise trips and resources. As returns and reverse logistics become more crucial to the supply chain and more companies try to implement a circular supply chain, adopting technology that can help facilitate this effort is unavoidable.
To better balance a company’s commitment to sustainability and their desire for business growth, selecting technology that can help ease reverse logistics processes can help companies optimise both their last-mile delivery and returns experience. Effective management of both the deliveries and returns can help to reduce overall energy consumption and carbon emission.
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References:
- Fashion Report Industry. Shopify Plus. https://www.shopify.co.id/plus/industry-reports/fashion-and-apparel
- Dopson, E. How to Plague of E-Commerce Return Rates and How to Maintain Profitability. Shopify Plus. https://www.shopify.co.id/enterprise/ecommerce-returns
- Dopson, E. Reverse Logistics: How to Process Returns Quickly, Easily and Efficiently. Shopify Plus. https://www.shopify.co.id/enterprise/reverse-logistics#:~:text=The reverse logistics process&text=The customer decides to ship, to do with the inventory.
- Jenkins, A. A Guide to Reverse Logistics: How it Works, Types & Strategies. Oracle Netsuite https://www.netsuite.com/portal/resource/articles/inventory-management/reverse-logistics.shtm
- Kuebix. 2019. How the Circular Supply Chain Model Will Replace the Linear Supply Chain. Supply Chain 247. http://www.supplychain247.com/article/how_the_circular_supply_chain_model_will_replace_the_linear_supply_chain#:~:text=circular%20supply%20chain.-,The%20circular%20supply%20chain%20is%20a%20model%20that%20encourages%20manufacturers,raw%20material%20costs%20and%20volatility
- Parker, T. 2020. An Expensive Problem for the Online Fashion Industry: Too many returns. Medium. https://medium.com/@parker_content/an-expensive-problem-for-the-online-fashion-industry-too-many-returns-abc441ed1b51
- Syverson, S. 2021. 45 Things you Should Know about Reverse Logistics. Warehouse Anywhere. https://www.warehouseanywhere.com/resources/45-things-about-reverse-logistics/#:~:text=Reverse logistics is the opposite, resold or disposed of permanently.
