August 2, 2002, 12:00 AM

As it moves to the web, reverse logistics software comes of age

As retailers step up demand for web-based applications that streamline the often complicated matter of processing returned goods, retailers are improving their reverse logistics procedures, AMR Research reports.

Reverse logistics software is beginning to come of age, as retailers step up demand for web-based applications that streamline the often complicated matter of processing returned goods.

"We’re starting to see some of the big retailers improve their reverse logistics process," says Gerald McNerney, retail industry analyst at AMR Research Inc., Boston. He cites Wal-Mart Stores Inc., Best Buy Co. Inc. and Home Depot Inc. as the early adopters in this area.

McNerney says the most common approach to processing reverse logistics among retailers has been to simply use spreadsheets, while more ambitious retailers have built customized in-house systems that connect existing applications, such as warehouse management, transportation management, enterprise resource planning and international trade logistics systems. “They probably weren’t getting out of this what they should have; they were not getting full efficiencies," he says.

A returned product typically goes to a general distribution center, where managers must decide if they should put it back in regular inventory, send it to a particular warehouse, return it to a manufacturer under warranty or send it elsewhere. "New software pulls all that together," McNerney says, “by enabling you to manage the return process right from the point of where it’s returned to the retailer.”

A new crop of vendors is responding to this new focus on reverse logistics with web-enabled software, such as Kirus Inc., 180Commerce Inc., ReturnCentral Inc. and Swift Rivers Inc.

McNerney says vendors of traditional software used for logistics, such as enterprise resource planning and warehouse management systems, have not had the impetus from customers to develop dedicated reverse logistics software. "They all had conceptual ideas on how to improve reverse logistics, but there was no impetus from their customers saying We need that," he says. “But now retailers are being more cost conscious, so the market finally might have the drive to improve reverse logistics."

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