Reverse Logistics: Application area and Activities involved

Reverse Logistics

Reverse logistics is for all operations related to the reuse of products and materials. It is “the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics.” Growing green concerns and advancement of green supply chain management concepts and practices make it all the more relevant. The number of publications on the topic of reverse logistics have increased significantly over the past two decades. The first use of the term “reverse logistics” in a publication was by James R. Stock in a White Paper titled “Reverse Logistics,” published by the Council of Logistics Management in 1992. The concept was further refined in subsequent publications by Stock (1998) in another Council of Logistics Management book, titled Development and Implementation of Reverse Logistics Programs, and by Rogers and Tibben-Lembke (1999) in a book published by the Reverse Logistics Association titled Going Backwards: Reverse Logistics Trends and Practices. The reverse logistics process includes the management and the sale of surplus as well as returned equipment and machines from the hardware leasing business. Normally, logistics deal with events that bring the product towards the customer. In the case of reverse logistics, the resource goes at least one step back in the supply chain. For instance, goods move from the customer to the distributor or to the manufacturer.

When a manufacturer’s product normally moves through the supply chain network, it is to reach the distributor or customer. Any process or management after the delivery of the product involves reverse logistics. If the product is defective, the customer would return the product. The manufacturing firm would then have to organise shipping of the defective product, testing the product, dismantling, repairing, recycling or disposing the product. The product would travel in reverse through the supply chain network in order to retain any use from the defective product. The logistics for such matters is reverse logistics.

Benefits of an Efficient Reverse Logistics Systems

While many companies consider the return process to be a necessary evil that shouldn’t be noticed, companies that implement an effective reverse logistics workflow can reap several benefits.

Some of these benefits are:-

1. Reduced costs

By planning ahead for returns and making the return order right, you can reduce related costs (administration, shipping, transportation, tech support, QA, etc.)

2. Faster service

This refers to the original shipping of goods and the return / reimbursement of goods. Quickly refunding or replacing goods can help restore a customer’s faith in a brand.

3. Customer retention

Dealing with errors is just as important as making sales. If a customer had a bad experience with your product, you have to make it right. Fulfilment blunders can create educational opportunities. Learn how to keep your customers happy and engaged with your company – even after you’ve made a mistake.

4. Reduced losses and unplanned profits

Recover the loss of investment in your failed product by fixing and restocking the unit, scrapping it for parts, or repurposing it in a secondary market. With a good reverse logistics program in place, you don’t have to leave money on the table. Take a product that would otherwise just cost your company money and turn it into an unforeseen asset.

Application area and Activities involved in Reverse Logistic

Reverse logistics has become one of the significant concepts for various industries to practice to achieve sustainability objectives. Reverse logistic is defined as “The movement of goods from a consumer towards a producer in a channel of distribution”. A number of cases that implement successful reverse logistics system have been found worldwide in specific industrial sectors such as heavy machines, electronic sectors and plastic sector. Whereas, there is a limited application of reverse logistics in other sectors. The main purpose of this study is to explore and describe the applications of reverse logistics processes in industrial sector. This leads the researcher to conduct a comparison using qualitative approach between those applications to highlight strengths and weaknesses in RL practices in Egyptian industrial companies. Finally, the researcher proposes a number of corrective and preventive actions to improve the application of RL. Based on the findings of the comparison, the researcher recommends that the companies shall establish, implement and maintain acquisition strategy and a manual to describe the inspection criteria and guidelines for the inspection process to accelerate the process and avoid any errors in deposition decision.