Reverse logistics is an essential aspect of supply chain management. But what is it exactly? Read below for a complete guide on reverse logistics!
What Is Reverse Logistics?
Reverse logistics is a process that involves the movement of goods from the point of sale to the end of origin. This is an essential element of supply chain management and can apply to physical or digital goods.
This process deals with customer returns, product recalls, excess inventory, warranty claims, refurbishment, end-of-life cycle, maintenance, and other issues that may arise. So, this system helps to reduce costs that come with waste disposal, product recalls, and other expenses. Additionally, the process helps to ensure customer satisfaction, increase profits, and reduce waste.
What are the types?
Types of reverse logistics include:
- returns management
- return policy and procedure
- remanufacturing or refurbishment
- packaging management
- unsold products
- end of service life
- failed deliveries
- rental equipment
- repair and maintenance
Businesses needing any of these services will benefit from utilizing reverse logistics.
How Does It Work?
First, items needing to be returned are identified. This can include items no longer required and damaged, defective, or expired. This can be done manually or with technology such as RFID tags.
Then, the items are collected through traditional pick-up services or an automated process such as a self-service kiosk.
Next, the items are processed to determine the condition. Upon inspection, the things will be determined if they can be reused, resold, or recycled.
After processing, the items are transported. The goods are securely packed, labeled, and shipped on the ground, by air, or by sea.
Once the goods arrive at the origin point, they are stored before they are reused or resold. The items may be stored in a facility or climate-controlled environment to prevent damage and deterioration.
Lastly, the items are repaired or refurbished before being resold or reused. Or they are recycled or disposed of in an environmentally responsible manner.
What Are The Benefits?
Reverse logistics is an essential step in supply chain management. So, understanding the actions and benefits can help maximize performance, reduce costs, and improve customer satisfaction. Benefits include:
- cost reduction
- improved customer satisfaction
- increased revenue opportunities
- improved inventory management
- enhanced supply chain performance
- reduced environmental impact
- increased product lifespan
- increased productivity
- increased quality
- increased product availability
All the benefits listed above should be considered when considering reverse logistics.
What Are The Challenges?
Although reverse logistics has numerous benefits, there are some costs, too. Challenges include:
- lack of standardized processes: each company has its unique process
- high costs: managing this process can be expensive, and expenses can add up quickly
- risk of product damage: collection, transportation, and storage create the possibility of causing damage to goods
- limited visibility: it can be a challenge to track and manage the progress of returns without investing in the proper technology
- complex regulations: complex regulations can make it challenging to ensure compliance
Though there are a few challenges to reverse logistics, they don’t take away from the process’s numerous benefits.