Reverse logistics relates to the backwards movement of products and goods in the supply chain. This can also relate to refurbishing and re-manufacturing of products. While we normally deal with products moving from distributor and then eventually to the customer the opposite is discussed in relation to reverse logistics.
In the past 15 to 20 years this has become all the more of an important topic as governments and companies around the world try to become more energy efficient in a bid to save money but to also save the planet.
The part of the supply chain that includes reverse logistics will deal with such things as containers for alcohol or milk crates that have been used before at a different stage of the supply chain. Many companies then seek to re-introduce them into the cycle once more so that they can be used again and again
Many of us interact with reverse logistics a lot more than we think we do. For example, when we use the internet to find something new to wear or to use, we often can buy it over the internet and be safe in the knowledge that we can return it at no extra cost. This is afforded to us as companies have put in place Return to Origin processes whereby the supply chain management companies can then re add the stock into the inventory and re sell it. It is a one of the selling points about internet shopping, and a part of the process that people take advantage of a lot.
There are many reasons that companies implement reverse logistics systems and 5 of them are listed below:
- Implementing effective reverse logistics systems can improve customer loyalty. Feedback is crucial for any organisation out there and with this part of the supply chain working perfectly, customers are able to return faulty products as well as giving feedback and rating the service. All organisations should listen to their customers so that they can grow to serve their clients better in the future and this is one of the procedures that allows them to do that
- Reverse logistics can be used to recycle and reuse returned goods and to get more value out of them. Rather than throwing returned or faulty goods away they can be altered and reintroduced into the supply chain and placed back on the shelves for customers to choose again. This is an easy way for companies to cut costs.
- Growth is affected greatly by the supply chain, if all the steps are working efficiently then it spells good news for the company. The return part of the supply chain is an important cog in the machine and can go a long way to improving product lifecycles
- As already mentioned, companies need to have procedures in place to allow return of goods from the customer or to return unsold goods themselves to the supplier. This process helps with recycling goods, repackaging them and also reselling them once more. It is vital if a company wants to stay profitable and lean.
- Reverse logistics can help the company reduce costs. This cost reduction can be felt through transportation or administration, as the processes become more efficient and less likely to break down. Due to this fluidity, customers are more likely to buy or use this companies’ products again and again.
Supply chain management may not be the most exciting process of how a company operates however, it is a very important part of a company and when managed properly can help the company increase profitability and growth quite easily.