Robotics revolution: How AI and automation are reshaping supply chains

Thanks to a growing focus on reverse logistics industrywide, more warehousing and supply chain professionals are devising new strategies and applying technology to manage the complexity of the returns cycle. Those strategies include giving retail workers a bigger role in reverse logistics and investing in software and hardware solutions to automate tasks and alleviate the physical burden of restocking items in the warehouse. Both tactics are helping organizations get a better handle on all those returns.

Thinking strategically

More than $700 billion worth of merchandise was returned in 2023, according to the National Retail Federation—a figure that includes an estimated 8.4 billion pounds of products that ended up in landfills. Those numbers illustrate the extent of the returns problem across the supply chain, and it’s only getting worse. Accelerating e-commerce sales and the consumer behaviors that accompany them necessitate a strong returns strategy, according to reverse logistics technology company Optoro.

“Many retailers are [rightfully] focused on the buying experience. Yet critical aspects of the customer experience happen beyond the buy button,” Natalie Walkley, Optoro’s vice president of marketing, explained in a blog post about today’s challenging returns environment. “While returns avoidance seems appealing, returns will always be inevitable to some degree, so it is wise to apply the same strategic approach to curating the best returns experience.”

For many, that means taking a step back and considering the entire returns process, which begins with the customer’s initiating a return and ends with the resale or disposition of merchandise. In the middle is the crucial step of processing the return, which happens in the warehouse. Today, many organizations are engaging front-line retail workers earlier in that cycle to help streamline the overall process.

Jim Musco, industry principal for retail at Zebra Technologies, explains that the growing complexity of returns has put the issue front and center with store operations teams—many of whom are developing presorting strategies to guide the returns journey rather than simply tossing items into a bin and sending them back to a warehouse, where pick, pack, and ship associates must figure out what to do with them. Instead, retail workers are designating whether an item can be returned to the shelves or must be sent back for further processing, as one example.

“On the retail side, they are seeing that there’s some thought that has to go into that—so that [the warehouse can get returned items in and out] quicker and more efficiently,” Musco explains. “[The industry is] becoming cognizant of the fact that the front-line retail store is part of the process—whereas before we wouldn’t have thought of it in those terms.”

Applying technology

Technology is helping to spur that thinking. In Zebra’s “17th Annual Global Shopper Study,” released in November, nearly 90% of retail associates said they believe they can provide a better customer experience when they have mobile technology tools to help simplify communication, prioritize tasks, and check prices and inventory.

Specialized software helps as well: A returns management software (RMS) platform, for example, automates and directs the returns process. A separate 2024 returns study by post-purchase and returns management platform Narvar noted that RMS systems do several key things: enforce return windows and rules; generate a return shipping label or QR code for dropoff; route the return to the appropriate dispositioning site based on rules and logic; and notify customers of the status of their return. Handheld devices provide added assistance—speeding processes in the store by giving associates easy access to data and allowing them to communicate in real time via instant messages and alerts.

“These types of [technologies] are working their way into the conversation,” Musco observes. “Retailers [recognize] that reverse logistics is a big part of the equation and [that] being efficient [when processing returns] matters.”

Indeed, most retailers responding to the Zebra study said they agree that technology allows workers to do their jobs better, with 75% saying they plan to increase their technology investments in 2025.

Mobilizing Robotics

The technology trend holds true in the warehouse as well.

Some warehouses are beginning to incorporate mobile robots to help with reverse logistics, in addition to the handheld and wearable devices they already use to manage the flow of items in, out, and around their facilities. Optoro’s partnership with autonomous mobile robot (AMR) maker Locus Robotics is a good example. The companies announced a deal in 2023 to provide a scalable software and robotics automation solution for high-volume retail e-commerce returns processing. The partnership integrates Optoro’s returns technology platform with the Locus AMRs, feeding the returns information to the robots, which then navigate through the warehouse to deliver returned items to human workers for putaway in a kind of reverse picking process. The system uses data science and automated real-time decision-making to determine the best path for each returned item.

The process alleviates the physical burden associated with returns as well—human workers spend less time walking up and down warehouse aisles and more time restocking, speeding the overall returns process. Locus Robotics describes the AMR-assisted returns process as follows:

• Returned goods are received by the facility.
• The facility reviews and sorts returned goods.
• Returned goods to be put away are sent to a holding location until the task is activated in the system.
• When the task is “ready,” the returned item, container, or case to be put away is scanned and placed onto the robot, which then takes it to a human near that location.
• For the human worker, the display screen shows the location, license plate, item UPC (universal product code), and picture for the item or carton to be put away.
• The worker puts the carton or the individual units away.
• The worker places the empty carton on the robot for disposal.
• The robot travels to the dropoff location. Empty cartons are disposed of, and the process begins all over again with the next item(s).

The scalable solution allows warehouses to add AMRs during the busy post-holiday returns season and scale back when volume eases.

Scalability is key, whether you’re adding robotics, mobile devices, handhelds, or wearables, Zebra’s Coleman notes.

“You want some sort of scalable option that allows you to ramp up for as long as you need to,” he says, noting that warehouses deal with an average return rate of about 15%, which is in line with the 2023 data from NRF.

A little help on the retail side makes a difference too.

“[There needs to be] more conversation and energy [put] into making sure you’re making appropriate decisions at the point of return or in the store as opposed to just sending [an item] to the warehouse,” Musco adds. “We’re trying to be good partners to our friends in the warehousing space.”

Editor’s note: This article first appeared in the January 2025 issue of our sister publication, DC Velocity.

About the author: Victoria Kickham is a contributing editor for Supply Chain Xchange. She has covered manufacturing, distribution, material handling, and supply chain issues for a variety of publications, including DC Velocity.