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Innovation

UPS service aims for more efficient 'reverse logistics'

The service, dubbed Returns Exchange, is an example of a supply chain aid that can cut down on CO2 emissions.
Written by Larry Dignan, Contributor on

UPS on Monday unveiled a reverse logistics service that aims to allow retailers and other business better track high-value product returns.

The service, dubbed Returns Exchange, is an example of a supply chain aid that can cut down on CO2 emissions. It's the first service of its kind in North America. Something as simple as on pickup for deliveries and returns can save on fuel and boost efficiencies.

According to UPS, the Returns Exchange is focused on the high-tech, healthcare and retail verticals---specifically high-value goods worth more than $250. In a nutshell, a UPS driver delivers a replacement item while picking up a return, say a replacement smartphone or laptop.

Sumeet Shroff, director of new product development at UPS, said reverse logistics are often overlooked by businesses, who struggle to track items. "There's a good chance that businesses don't understand how managing returns affects the bottom line," said Shroff.

Shroff added that UPS' service ensures that a new item has a return to offset it. If the customer doesn't have a return item, the replacement won't be delivered. Companies periodically ship replacement items and never get a return. Shroff said two large technology customers never get back 25 percent to 42 percent of their returns.

Those lost returns add up to big losses. U.S. consumers returned $200 billion in goods in 2010. In addition, manufacturers spend 9 percent to 14 percent of sales on returns---even though only 20 percent of goods are actually defective.

UPS' tracking systems link the replacement and return shipment data together so both the vendor and customer has a record. The customer would still handle the customer service call.

For a simple service there are some benefits in inventory management, CO2 emissions and supply chain visibility. For instance, shippers typically send an empty box to customers for returns and dispatch UPS twice. In the Returns Exchange setup, the replacement box becomes the return package.

The service launches in the U.S., Canada, Europe, Mexico and Puerto Rico in October.

This post was originally published on Smartplanet.com

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