What are the key performance indicators (KPIs) for measuring reverse logistics efficiency and effectiveness?

2 Return processing time

The return processing time is the average time it takes to receive, inspect, sort, and disposition a returned product. It is a measure of operational efficiency and responsiveness. A short return processing time can reduce inventory holding costs, increase asset utilization, and improve customer satisfaction. A long return processing time can increase inventory obsolescence, decrease asset recovery, and damage customer trust. Therefore, it is important to optimize your return processing time by streamlining your return policies, procedures, and systems, and by using automation, standardization, and quality control.

3 Return processing cost

The return processing cost is the total cost of handling, transporting, and disposing of a returned product. It is a measure of operational effectiveness and profitability. A low return processing cost can increase your margin, cash flow, and competitive advantage. A high return processing cost can erode your profit, liquidity, and market share. Therefore, it is important to minimize your return processing cost by reducing your return rate, improving your return processing time, and maximizing your return value.

4 Return value

The return value is the amount of revenue or savings that can be generated from a returned product. It is a measure of strategic value and sustainability. A high return value can enhance your brand image, customer loyalty, and environmental impact. A low return value can harm your reputation, customer retention, and social responsibility. Therefore, it is important to maximize your return value by choosing the best disposition option for each returned product, such as reselling, refurbishing, recycling, or donating.

5 Return feedback

The return feedback is the information and insights that can be obtained from the return process and the returned products. It is a measure of learning and improvement. A rich return feedback can help you identify and address the root causes of returns, improve your product design, quality, and marketing, and increase your customer satisfaction and loyalty. A poor return feedback can prevent you from solving the problems that lead to returns, miss the opportunities to enhance your product value and differentiation, and lose your customer trust and confidence. Therefore, it is important to collect and analyze your return feedback by using surveys, reviews, data analytics, and quality audits.

6 Return performance scorecard

The return performance scorecard is a tool that can help you monitor and evaluate your reverse logistics performance based on the KPIs mentioned above. It is a measure of accountability and alignment. A well-designed return performance scorecard can help you set clear goals and targets, track and report your progress and results, and identify and implement actions and improvements. A poorly-designed return performance scorecard can confuse and mislead you, create conflicts and inconsistencies, and waste your time and resources. Therefore, it is important to create and use your return performance scorecard by involving your stakeholders, selecting relevant and balanced KPIs, and reviewing and updating it regularly.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?