Reverse logistics has been employed by businesses, manufacturers, and retail sellers for more than a hundred years now. Recently, the growth of online businesses and the e-commerce sector have contributed to a surge in it. Here are 7 things that you need to know about:
What is meant by reverse logistics?
If you know what is a standard supply chain, reverse logistics is the opposite of it. It deals with all the activities after selling the product. The end-user moves the goods back to the manufacturer or the seller. In other words, the product is returned.
When is it used?
The product can be moved back to the seller or manufacturer because either the product does not fit the consumer’s needs or the product has reached the end of its life and needs to be disposed of. Sometimes, the returned product can be resold.
What are its types?
After the initial sale of the product, it can take many forms such as
- Return of goods
- Return avoidance
- End of life of a product
- Unsold goods
- Failure of delivery
- Leasing and renting
- Service and repairs
Does it impact the supply chain of a company?
Companies nowadays also build reverse supply chains separately depending on the volume of the products sent back to them. It definitely has an impact on the supply chain of companies and managers make strategies to deal with these inbound logistics. These can include the products to be repaired, recycled, redistributed, and value recovery.
Why reverse logistics are important?
It might look like that returning products to a business would be a loss for them, but it can actually increase the efficiency of a supply chain in many ways. The product, in this way, can be reused and repurposed. The companies can renovate and refurbish the product to resale it. Also, it can be recycled in a proper manner.
How can we use reverse logistics?
The exact process differs from company to company, but usually, when you buy a product, the seller mentions a return policy. This process starts with a reason for return. In order to initiate the return request, the customer needs to contact the appropriate party involved. In some cases, the manufacturer asks the customer to contact them directly instead of contacting the store they bought from. After making contact, the responsible party describes a method of returning. Either they arrange for a pick-up or asks the customers to ship to their address.
What are the constituents of reverse logistics?
There are mainly three components involved in this procedure. The first one is RPP which is the return policy and procedure. RPP includes all the information about the company’s strategy of dealing with the returns. This policy is shared with the employees of the company and also the consumers so they can make the returns if needed. This can involve the maximum time limit to return, the party responsible for the shipment, and whether there is a returning fee. The next component is remanufacturing or refurbishment (ROR). This component comes into the act after the company has accepted the returned product. Some items at this stage are remanufactured such as the automotive parts, and others are simply restocked by the company to be sold again or are repackaged. The third and final component is Waste Disposal (WAD). If the products returned cannot be resold or repackaged, they are wasted, such as if the product has reached its end life or is not permissible to resell the product.
It is now essential to integrate this logistics type in your business for a smooth and successful supply chain because the market is competitive, and consumers are smart.