Using Reverse Logistics in Inventory Management

The slogans of “Save money Live better” and “Always Low Prices” has been Wal-Mart’s marketing strategy for many years. However companies of today’s market do not compete solely on what company has the better market strategy. Although a market strategy is important, many companies compete in today’s market against each other’s supply chain management. Companies utilize supply chain management to focus on active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. As companies use marketing strategies to attract customers, the ability to keep those customers depend solely on how that company is able to provide that service and product at consistent reliable rate and at a quality-level the customer can be satisfied with.

Now the challenges that all companies encounter is how to predict consumer preferences and meet consumer demand. As a result of this challenge, many companies miss forecast resulting in surplus products. With that surplus in products, companies have to deal with inflated inventories reducing efficiency. However many companies, one being Wal-Mart uses an effective reverse logistics strategy that will account for surpluses and provide the means to clear goods from inventory. In addition to that, most companies can gain flexibility by liquidating unsold goods.

Reverse logistics strategies can offer insights into changing consumer demand as well. Tracking surplus products after a big clearance sale indicates the error rate of previous market forecasts. Businesses can use this information to adjust their analytics and create better predictions about future customer behavior.

In using reverse logistics, many businesses have noted improved cash flow and reduced inventory through fast, automated processing of store and consumer returns, drastically reduced labor hours for store processing. In addition, reverse logistics improves retailer/vendor relations through fast, accurate applications of vendor credits. Some companies use reverse logistics software packages, which reduces the heavy reliance on warehouses and in-transit damage and increase in overall efficiency in inventory management.