What is Reverse logistics and it's importance in your Supply Chain
Reverse logistics is the systematic process and operations involved in changing goods typical final destination for the purpose of capturing value or proper disposal. Forward logistics uses inbound freight while reverse logistics deals with everything after the point of sale. Logistics management can often be a time-consuming undertaking is the correct systems are not implemented.
This article will take a look at the following:
What is reverse logistics?
The purpose of reverse logistics,
Reasons for reverse logistics,
How does reverse logistics work?
Benefits of reverse logistics,
What is reverse logistics?
Typically logistics deals with the process of moving goods and products from the manufacturer towards distributor or customer through the supply chain network. Companies that can process returns effectively have an edge over their competition. These products may include consumer electronics and non-perishable goods. Reverse logistics includes everything that has to do with returns management and recapturing value of products after the point of sale. If a product is returned to the distributor, the reverse logistics channels would move the product at least one step back in the supply chain network, normally more. The products would usually be brought to a warehouse. With proper warehouse management, the products would be sorted, inspected and efficiently costed.
The reverse logistics process involves the rework, reconditioning, repacking and stock redistribution of surplus and defective products. The process may also include the disposal of products. This determines the products lifecycle and what the final destination of the product will be.
The purpose of reverse logistics
The retail industry is reliant on reverse logistics systems in consumer returns to ensure these defective products are handled efficiently and effectively. With the current explosion in e-commerce around the world, how customers are shopping is not constrained to only brick and mortar businesses. The global supply chain is more connected than ever with the integration of online platforms. Which produces another set of challenges for handling reverse logistic flows and the process of planning products returned. Moving products back through the supply chain may seem as if it is an easy process but online and location-based retailers are faced with numerous challenges.
Challenges may include restrictions on how products may be handled when moving through the supply chains, or stringent resale laws. While retaining value or proper disposal.
The purpose of reverse logistics comprises of two primary reasons. The first is to retain any value from the product by reselling or reworking the product. Defective products are often sorted, repurposed and resold to retain some value. The second is to create customer satisfaction. Once a customer has returned a defective product or indicated their product is defective, the reverse logistics process will ensure their defective product will be returned to and corrected by the manufacturer in a timely fashion. Then forward logistics are involved in returning the product to the customer which may give the company a competitive advantage over their competition.
Reasons for reverse logistics
Logistics both forward and reverse are vital to many businesses and especially to e-commerce stores. With the ease at which customers can now buy products, online to brick and mortar distributors, the complexity of logistics is ever-increasing and often the product lifecycle can be difficult to determine. Returns management is becoming more important for running an effective business. Managing reverse logistics is essential to many businesses and without it, the business would simply not be able to scale.
Some of the main reasons for reverse logistics include:
To ensure that distributors can receive products back from the customers and return items a step in the supply chain. Those products can then be sorted, inspected and their final destination can be determined.
Reverse logistics is also vital when increasing products end life value. Reverse logistics systems can also help efficiently cost products where they can then be resold, refurbished or reused to help increase their value when sold to a secondary market.
Increased customer satisfaction by placing more attention on defective products. Reverse logistics help speed up the process from when the product is returned to the distributor, to the time that the same product can be returned to the customer. Giving the customer accurate feedback will also help improve customer loyalty.
Reduce the complexity of returned goods. Moving products back in the supply chain can be a complicated process but with well managed reverse logistics systems in place the process can become efficient and transparent.
Lastly, reverse logistics will help support a company's sustainability goals. Having the products correctly handled and abiding by relevant laws will help mitigate potential fines that may be associated with improper distribution and disposal of products while maintaining cost-effectiveness.
How does reverse logistics work?
Most returns would be caused by damages caused during forward logistics, in-store damages, and customer damages. Normally customer damaged returned products would be returned if the product is within the warranty period.
After the customer has returned the product to the distributor, a reverse logistics company such as Antel Solutions will collect the product and transport the product to the correct step in the supply chain. The product will often be brought to a warehouse where it will be inspected and sorted.
The inspection and sorting process will determine what the next steps of the product will be. This may include disposal, repurposing, refurbishing, or resale of the product.
Reverse logistics would be responsible for the following processes:
Repair: Repairing damaged products which will then be returned to either the distributor or customer.
Refurbishing: Updating old or broken products to ensure the product meets the new specifications of the manufacturers.
Disposal: Proper disposing of products in accordance with relevant laws and regulations. This often applies to consumer electronics.
Recycling: Ensuring the product is dismantled and correctly recycled.
Resale: Many products can be resold after the correct debranding process has taken place and the correct regulations are abided by.
Benefits of reverse logistics
With the advancements in technology, the reverse logistics supply chain has never been more efficient and transparent. Companies in the past have battled to reverse the flow of products in the supply chain because the process of planning the return of products had many different moving parts, and therefore struggled to track product returns.
With effective management, companies can now tap into a host of reverse logistics benefits including:
Increased resale value
Reduced transportation costs
Ensuring all regulations are abided
Better customer service for increase retention
With the addition of the right logistics technology implemented, a whole range of new benefits open up for distributor including:
Total supply chain transparency
Increased awareness of logistic friction points for optimization
Faster responsiveness to customers
Integrated and synchronized supply chain including forward and reverse logistics
Using a global supply chain network can increase a company's profitability and help increase the market share. While most companies focus on forward logistics and inbound freight, handling reverse logistics may be the edge over the competition many companies are missing. Reselling products to the secondary market to recapture value is becoming more important as e-commerce explodes around the world.
Expert reverse logistics companies such as Antel Solutions use modern technology and proper warehouse management to determine the products end lifecycle. If you are unsure about your logistics, contact Antel Solutions and find out how your company can process returns effectively and recapture value.