Return of Unsold Goods
In certain industries, goods are distributed to downstream members in the supply chain with the understanding that the goods may be returned for credit if they are not sold. Newspapers and magazines serve as examples. This acts as an incentive for downstream members to carry more stock, because the risk of obsolescence is borne by the upstream supply chain members. However, there is also a distinct risk attached to this logistics concept. The downstream member in the supply chain might exploit the situation by ordering more stock than is required and returning large volumes. In this way, the downstream partner is able to offer high level of service without carrying the risks associated with large inventories. The supplier effectively finances the inventory for the downstream member. It is therefore important to analyze customers’ accounts for hidden costs.
Refusal of the products in the cash on delivery process (COD) In case of e-commerce business, many websites offer the flexibility of Cash on delivery(COD) to the customer. Sometimes customer refuse the product at the time of delivery,as there is no commitment to take the product.Then the logistic service providers do follows the process of "Reverse logistics" on the refused cargo. It is also known as Return to origin (RTO).In this process the e-commerce company adds the refused cargo to its inventory stock again, after proper quality checks as per the company's rules.
Read more about this topic: Reverse Logistics
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