Generally, logistics is known to be the process of transporting products from manufacturers to customers. In an instance, of reverse logistics, products move back from customers to distributors or manufacturers. For example, if the purchased product is defective, the customer would return the product. This will make the product travel in reverse through the supply chain network to reach the distributor or the manufacturer and it would require the same process of shipping and warehousing. This is called as reverse logistics. Reverse logistics also include testing of the returned product, dismantling, repairing, recycling or disposing of the product. In other words, any process that takes place after the sale of a product, in order to return to its point of origin is called reverse logistics.
Reverse logistics is not just limited to returning of goods. Reusing, recycling, refurbishing, and remanufacturing activities are also part of reverse logistics. Here are the different aspects of reverse logistics:
• Eco-friendly aspects – Packaging materials such as air pillows, wooden pallets, fuel drums, foams, crates, cartons etc. can all be reused for next load of shipment. Hence, reuse of these materials will lessen the burden of waste on the planet.
• Business implication – “The challenge for retailers and vendors is to process returns at a proficiency level that allows quick, efficient and cost-effective collection and the return of merchandise. Customer requirements facilitate demand for a high standard of service that includes accuracy and timeliness. It’s the logistic company’s responsibility to shorten the link from return origination to the time of reselling.” (Wikipedia). It becomes essential for retailers to follow a returns management system to address both operational and customer retention issues related to returns of products. In order to retain or recover the value of a returned product, the goods can be sent back to the supplier or manufacturer for remanufacturing or refurbishing the returned cargo.
• Return of refused goods – Many e-commerce businesses offers the option of cash on delivery for a purchased product without any ‘no return’ policy. In such a case, customers may refuse the product at the time of delivery. This will require the logistics service provider to follow the process of reverse logistics on the refused product, and the e-commerce company will add the product back to their inventory after a standard quality check.
Lastly, for a profitable and sustainable business, you must treat reverse logistics and forward logistics with equal importance.