What are the risks of not managing food industry returns effectively?

Reverse logistics is more than just returning goods and tracking them. Adding the sustainability component to it will add value to the whole chain, for instance: - returning carton boxes and recycling them: once we deliver the food to restaurants, we collect the carton boxes and then recycle them. - returning used oil and recycling it: companies are adapting trucks with tanks to collect used oil. This product is then recycled and reused for industrial purposes. Reverse logistics is also essential when it comes to recalls, therefore tracking the products' destination through the use RFID, bar codes, etc is super important in the food industry.

Reverse logistics refers to supply chain management that involves the movement of goods from the consumer back to the manufacturer or point of origin. This includes processes such as product returns, recycling, reconditioning, and proper product disposal. Reverse logistics seeks to optimize these product flows efficiently, reduce costs and minimize environmental impact. It is essential for companies that want to address product returns, recycle materials and maintain a sustainable supply chain.

Utilizing AI and IoT in reverse logistics enhances food industry returns management. These technologies provide instant data, improving decision-making and sustainability by reducing waste. They are particularly crucial during recalls, ensuring public safety and trust.

At the warehouse, managing returns is a critical procedure. When it comes to retail products, its normal that the delivery trucks have the direct sale process, most especially to the traditional retail market, where there is no pre-order. If we are dealing with dry products, its much simpler, but temperature-controlled perishable products are much more complicated. If the products are expired or exposed (not in the original package), they should go directly to the disposal area. Returning products in good condition to the warehouse should have a special treatment. After making sure that the product is good (the cold chain was maintained, the package is intact, and so on), it should be picked on the next wave of selection.

In addition to mismanagement risks keep in mind that the so-called Food Safety Modernization Act (FSMA) contains presumptions that fresh proteins not documented to be properly refrigerated throughout the journey may be deemed adulterated without confirmation that the product is in fact spoiled. This can create liability and insurance coverage issues. Consider and address these issues.

Returned products in good condition shall have a special treatment. - is the package intact? - was the cold chain broken during transportation? Was it even monitored? I have had an experience where the truck driver turned off the refrigeration equipment to save energy. It was common, especially on long hauls. You should be able to monitor the cold chain all the time during storage and delivery.

Dealing with B2C business is a whole different scenario. Nowadays, with e-commerce, in which 3PL companies have to deal on one side with the food manufacturers and on the other side with the customers. Having clear rules and a well-trained customer service department is mandatory.

From my point of view, with +20 years working as a 3PL company specializing in the food industry, managing returns is a critical part of the logistics. It can add value to the customer and make the difference since it can hurt the customer's profitability if the process is not well managed. Implementing best practices, training the staff - from truck drivers to warehouse workers, monitoring temperature, and tracking the whole process.

Monitoring with the use of KPIs and setting goals for salespeople and truck drivers is a good practice. For example, my rate of return was 8% but with good practices at the point of sale, controlling it, setting goals and bonuses, we reduced to 2%. This can set the difference to a profitable company. In the case of distribution, margins are so low that we can not risk losing any percentage of it.