How important is logistics in the aftermarket market?

How important is logistics in the aftermarket market?

Aftermarket logistics is a phrase subject to some confusion. Auto parts dominate many people’s understanding of the term aftermarket, and while brake, supercharger, and spoiler kits can be a part of aftermarket logistics, an aftermarket logistics strategy is about more than automobile parts. The term is actually nearly synonymous with the reverse supply chain.

Aftermarket logistics is concerned with what happens to products and materials after they’ve reached the point of sale, and, until approximately the past decade, aftermarket logistics strategies were concerned wholly with product returns. However, a growing interest in reducing waste has expanded the focus to packaging and shipping materials. A well-developed aftermarket logistics strategy can arrange for the reuse or recycling of product packaging, which ultimately improves supply chain efficiency and brings cost savings while creating a more sustainable, ethical supply chain.

The discussion of aftermarket logistics is generally dominated by strategies for retailers managing product returns. The growth of globalization, the online marketplace, and direct shipping to the consumer has complicated this process. It may be difficult for companies to honor a return policy for a product that was sold through an online retailer that they have no direct dealings with. Retailers often find that it is uneconomical to arrange returns when suppliers may be overseas and when there is no credit available for damaged or defective products.

For product manufacturers, aftermarket logistics strategies are different. Single items or individual lots being returned are dwarfed by a product output of potentially hundreds of thousands of individual products. The return of damaged or defective products may be a hassle, but the number of these instances is small and the equipment needed to arrange for a return is minimal. As a result, the return of these products is best handled individually on a case-by-case basis and a hard-and-fast procedure for aftermarket product returns might actually be counterproductive. However, when it comes to the equipment and packaging used to ship truckloads of products to retailers, a well-developed aftermarket logistics strategy for reusing or recycling materials can save money and reduce waste.