Evan Armstrong shares views on 3PL’s expanding role in returns

As the complexity of supply chain management deepens at the same pace as the double-digit growth of e-commerce, logistics professionals now need to realize that a product’s journey no longer stops at the consumer’s front porch or loading dock. Now, more than ever before, the “U-turn” has to become a vital part of every company’s revenue model.

Fortunately, there are scores of third-party logistics providers (3PLs) out there to help shippers more efficiently manage returns, with many more looking to enter the marketplace.

“Thanks to Amazon, Alibaba, and other dynamic e-commerce retailers, we’re living in a buy-anywhere, return-anywhere consumer society,” observes Evan Armstrong, president of the 3PL analyst and consultancy firm Armstrong & Associates. “It is no longer acceptable to disallow returns if the product wasn’t sourced in the U.S.”

Armstrong says that for 3PLs, e-commerce and the omni-channel retail environment have driven a proliferation of stock keeping units in inventory on the fulfillment side. This creates the need for well-defined processes for handling reverse logistics and the disposition of returns.

“Third parties such as FedEx Supply Chain [formerly Genco], OHL/Geodis, DHL Supply Chain, and XPO have become masters of reverse logistics,” notes Armstrong. “In third-party logistics, it’s often the ‘messy stuff’ that contributes greatly to bottom lines, and returns are messy.”

If handled well, he adds, a good reverse logistics operation can have double the operating margins of an outbound fulfillment operation.

In related news, Armstrong & Associates is also putting its finishing touches upon the The 3PL Value Creation Asia Summit, to be staged in Hong Kong this spring.