CIMA's paper notes that managing returned products incurs substantial costs through logistics, inventory and disposal, yet many companies have inadequate processes to handle these returns.
Reverse logistics has become an area which retailers and manufacturers cannot ignore. Companies can see between 4% – 30% of their products returned by customers and total UK retail returns have been valued at around £6 billion per annum.
Given tight margins, improved management of these returns significantly impact bottom-line performance. There is a significant impact on environmental concerns as well, involving a large amount of lorry movements and consequential CO2 emissions.
Management accountants and management accounting clearly have a role to play in improving reverse logistics processes. Increased transparency and awareness of the real costs of reverse logistics will improve processes, bottom-line performance and customer service.