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Combining Returns Handling into Distribution Center Boosts Efficiency, Cuts Transport Costs

Two distribution centers make the case for co-location.

(Boonton, NJ, March 8, 2012) — Seeking new efficiencies from its returns operations, third-party logistics provider Ryder has integrated its forward and reverse logistics in the same facilities in several locations.

The results have been promising according to an article in the March issue of Distribution Center Management newsletter. By combining operations that are normally separate, Ryder has seen efficiency gains that range from 8 percent to 18 percent, says Steve Sensing, vice president and general manager for Ryder Supply Chain Solutions. It's also seen a 10 percent reduction in transportation costs.

While co-location makes sense, Sensing acknowledges that in many operations, there are still barriers between distribution and reverse logistics. But the lines are beginning to blur.

In another example, Genco ATC has used the strategy for years, including at a facility in Nashville that handles outbound and inbound shipments for Dell.

Tim Konrad, senior vice president at Genco ATC, tells Distribution Center Management that while the outbound and inbound operations are clearly separated, putting both under one roof saves on real estate and labor costs. "You don't have the overhead of an additional facility," he says.

More companies could follow the lead of Genco and Ryder, notes Dale Rogers, chairman of the Reverse Logistics Executive Council. "It makes sense, particularly as fuel costs continue to rise."

The March issue of Distribution Center Management includes details on Ryder and Genco's reverse logistics operations.

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