A framework for how logistics service providers should handle returns as a warehouse operation for e-commerce companies

Abstract: Title: A framework for how logistics service providers should handle returns as a warehouse operation for pure e-commerce companies Authors: Louise Meurling and Matilda Sturesson Supervisor: Joakim Kembro, Division of Engineering Logistics at LTH Problem description: Managing the reverse logistics process in a warehouse is a central part of the activities for companies operating in e-commerce. Companies can outsource the return handling to a Logistics Service Provider (LSP) in order to focus on their core competences. The theory of today is based on the assumption that a physical point of contact is included in the chain. Therefore, there is a need to extend the theory into the context of e-commerce. Purpose: The purpose of this thesis is to create a framework for how LSPs should handle returns in the warehouse, from the point of receiving until put back in storage, for customers in the e-commerce business. Research questions: How should a LSP handle returns in the warehouse for customers of e-commerce? What are the barriers of the return handling in a warehouse and how can LSPs overcome these? How do the different characteristics of products and customers of a LSP change the handling of returns? How can the return handling in a warehouse of a LSP contribute to greater value for the customers acting in the e-commerce business? Methodology: A flexible design methodology has been used in this thesis together with a multiple case study based on two cases at PostNord TPL´s facility in Helsingborg. Interviews, observations, and historical data have been collected and analysed in an intra case analysis and a cross-case analysis in order to answer the research questions and modify the reverse logistics framework to the context of e-commerce. Conclusions: A framework for how LSPs should handle returns in a warehouse is extended based on theory to the context of e-commerce. Several barriers of the return handling for LSPs have been identified. These are: limited sharing of forecasts, limited visibility, customer requirements, heterogenous decision making, and the changing business of e-commerce. It can be concluded that the product and customer characteristics impact the handling of returns to a large extent. To be able to contribute to greater value for the customers, the LSP should offer a fast, efficient, and less costly reverse logistics process than if they would perform it in-house. Keywords: Warehouse activities, inbound logistics, reverse logistics process, returns, return handling, e-commerce, logistics service provider