As we continue on to the third key consideration companies must think through when designing a reverse logistics strategy, we’ll be slightly shifting focus. Previously, we covered where the reverse supply chain can live (in-store vs consolidated, and co-located DCs vs dedicated RCs). Today, we are discussing who can create, operate, and manage the reserve portion of a supply chain. Retailers and brands have the option to insource their reverse supply chain or outsource it to 3PLs. So, which option is best?
Insourcing allows brands and retailers to design their reverse logistics holistically. While certain portions such as labor or day-to-day management can be contracted out, the major stakes of the reverse supply chain such as the facility and processing are owned by the company itself. Conversely, companies can outsource and leverage 3PLs for their reverse logistics. Here’s what to consider when choosing to insource versus outsource.
Consider Insourcing If…
- The majority of returned inventory goes back to stock or to liquidation. With insourcing, the fewer the value-added services required, the better.
- The supply chain in place has the ability to process additional items without a large increase in operational cost.
- There is available labor in the market. Many retailers and brands taking on their reverse logistics might need to tap into internal and 3PL labor, especially during the holiday season.
Consider Outsourcing If…
- Returned inventory needs additional handling or value-added services that cannot be completed in-house.
- The supply chain in place has limited reverse logistics capability or few specialized service partners.
- The company is specifically focused on growing eCommerce sales and the efficiency of their forward supply chain.
Based upon these considerations, retailers and brands must select what option is best suited for their reverse logistics designs. While insourcing can provide more control, outsourcing to 3PLs can offer needed services and the ability to focus on the forward supply chain.
Want to learn more about this consideration and four others that leaders must take into account when designing their reverse supply chain? Download our digital flipbook, Bringing Reverse Logistics Forward.