Benchmarking in Brick-and-Mortar Stores

According to Jenkins (2025):

Reverse logistics is the reverse of the standard supply chain flow, where goods move from manufacturer to end consumer. Reverse logistics includes activities like returns management, refurbishment, recycling, and disposal. It’s an important part of supply chain management, often involving the return of products due to damage, seasonal inventory, restock, salvage, recalls, or excess inventory.

Benchmarking has several interesting twists when applied to the problems of reverse logistics in brick-and-mortar stores, such as hardware stores.

In the context of a hardware store, internal benchmarking of reverse logistics is possible. For example, comparing rates of customer returns by manufacturer would be valuable to the customer, with the idea of minimizing the number of returns. Based on that information, manufacturers making products with high return rates can be dropped from the hardware store’s offerings (Jenkins, 2025).

In cases where customers do return a product, the speed at which the vendor provides credit can also be tracked. Even if products from the slowest vendor are maintained in the store’s offerings, knowing the expected delay in credit could be useful for accounting purposes. For example, if a particular vendor takes 60 days to provide credit, then that credit cannot be used to cover any expenses until 60 days.

Other information that can be gleaned from benchmarking returns includes measurements to identify and reduce slow-running processes like return processing, reentry into the inventory system, and coordinating with the vendor (Goetsch & Davis, 2021).

Internal comparisons aren’t the only route to using benchmarking for process improvement, of course. Benchmarking partners are also available, and in a way that is different from benchmarking between the information technology (IT) departments of various companies.

By being brick-and-mortar, hardware stores can engage companies in the same business but are separated by geographic distance so that they aren’t direct competitors. For example, a hardware store in Hawaii can form a benchmarking partnership with a hardware store in Philadelphia, say. Because these stores rely on foot traffic, there is extremely little chance that a customer of the Philly store would travel to Hawaii to pick up a hammer!

So, information learned by forming a benchmarking partnership is extremely relevant and valuable to both partners (since they are in the same business), but that information cannot be used against each other (since they are brick-and-mortar stores located on opposite sides of the globe)!

It is also possible to set up a reuse supply chain (Atterblad & Blomkvist, 2023). With this, used and returned products are shunted to a used hardware store. It isn’t clear from Atterblad & Blomkvist how profitable this is to the original hardware store, but it at least avoids a 100% loss. Besides “return to point of origin,” it is also possible for the customer to sell or donate products to a “second-life retailer” (Beh et al, 2016). In that situation, the original hardware store does not benefit at all.

References

Atterblad, R., & Blomkvist, H. (2023). Challenges and recommendations for product reuse: Exploring the reuse supply chain of in-store hardware: A case study. https://www.diva-portal.org/smash/get/diva2:1770268/FULLTEXT01.pdf

Beh, L. S., Ghobadian, A., He, Q., Gallear, D., & O'Regan, N. (2016). Second-life retailing: a reverse supply chain perspective. Supply Chain Management: An International Journal, 21(2), 259-272. https://doi.org/10.1108/SCM-07-2015-0296

Goetsch, D. L. & Davis, S. B. (2021). Quality management for organizational excellence: Introduction to total quality (9^th ed.). Pearson.

Jenkins, A. (2025, 1 May). A guide to reverse logistics: How it works, types and strategies. Oracle NetSuite. https://www.netsuite.com/portal/resource/articles/inventory-management/reverse-logistics.shtml