Retail Returns: Turning cost into profit at a UK 3PL

Returns can be a costly process compared to forward logistics due to the increased complexity of handling returned items that arrive at a returns centre in a random order in batch sizes of one. In order to recover value from returned items, it is necessary to undertake additional activities, from inspections through to preparation for re-sale. This case study looks at a UK-based 3PL and the value-adding activities that it has implemented to improve the efficiency and minimise costs of managing returns with four of its clients. Over an 18-month period the authors worked with Prolog Fulfilment Ltd to identify financial efficiencies, sustainability improvements and general changes to working practices. A reverse logistics toolkit was applied across the four clients to help determine new and innovative ways of processing returns. The paper applies a returned items classification continuum to demonstrate how improving processes can move products up the continuum and hence recover more value. The case study illustrates how returns management services can both add value for retailers and improve the reusability and recyclability of returned products and their component parts, thus reducing the amount of product going to landfill