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

The barriers to entry may be falling in the reverse loop

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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. 


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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