Introduction to Reverse Logistics
All operations related to the reuse of products and materials comes under reverse logistics. Process of logistics can be defined as “planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of origin to the point of consumption”. In reverse logistics process the same operations take place but in reverse order. To describe it in a nutshell, reverse logistics is the process of moving goods from their final destination for the purpose of capturing value, or proper disposal. We can also add remanufacturing and refurbishing in its definition.
Why is it important ?
The logistics process generally includes moving of products normally through the supply chain network to reach the customer but what if the product customer recieves is defective or he is dissatisfied with the product and wants to return it ? This is where reverse logistics come to the rescue. If the product is defective or customer is not satisfied, the customer would return the product to manufacturing firm for testing, repairing or recycling the product. The product would travel in reverse through the supply chain in order to reach the manufacturer and retain any use from the defective product. The total volume of returns range from 3% up to 60% of all shipments, depending on the industry and the company which makes the reverse logistics one of the biggest operational challenges in the logistics industry. Reverse Logistics is important for :
◼ Improved Customer Satisfaction
◼ Storage Reduction
◼ Distribution Cost
Fitting reverse logistics fit into your traditional logistics processes
Despite all the assumptions, reverse logistics can also be profitable. Reverse logistics is difficult to plan, complicated and the most ignored aspect of logistics processes but avoiding reverse logistics because of these factors will only cause more problems. If you don’t have time or sources to manage the reverse logistics , 3PL stands as the most effective and budget-friendly alternative. Whether you choose a third party logistics or self management, you must not ignore reverse logistics anymore. It should not be seen as an expense but an investment.