Reverse logistics is becoming an integral part of operations. But what is it? Why is it an important element of logistics nowadays? Is it cost-effective and efficient? Read the answer to your questions in the article below.
Let’s begin with what reverse logistics is
The set of activities carried out after the sale of a product to recover its value and end the life cycle of the product. Yes, that’s right, that’s reverse logistics. Sometimes referred to as the after-sales supply chain, after-sales logistics or demotion. It usually involves returning a product to the manufacturer or distributor or returning it for maintenance, refurbishment or recycling.
Which path does it follow?
The reverse logistics process includes the management and sale of surpluses, as well as equipment and machinery returned by the equipment rental industry. Normally, logistics deals with situations that bring the product to the customer. In the case of reverse logistics, the resource takes at least one step back in the supply chain. For example, the goods pass from the customer to the distributor or the manufacturer.
When a product from a manufacturer goes through the supply chain network, it must reach the distributor or the customer. Any process or management after the sale of the product involves reverse logistics.
If the product is defective, the customer will return it. The manufacturing company should then organize the delivery of the defect product, test it, disassemble it, repair it, recycle it or dispose of it.
→ The product would travel the other way through the supply chain network.
The rise of reverse logistics in the world of e-commerce
Reverse logistics represents one of the biggest operational challenges in the world of online freight logistics due to the volume and cost of processing returns.
Effective reverse logistics has direct benefits, including increased customer satisfaction, lower resource investment, and lower storage and distribution costs.
Facts and figures
The number of returned products that are backtracked in the supply chain from the endpoint (customers) is usually much larger than what people normally think.
For example, the number of returns generated by many companies ranges from 3% to 50% of all the deliveries and this across all sectors. In some sectors, such as book publishing and greeting cards, more than 20% of the products sold are finally returned to the seller.
More surprising news?
Some industries are estimated to have return rates between 30% and 50%, it might climb to a rate of more than 60%.
Becoming more efficient and cost-effective
Like other supply chain management processes, reverse logistics can be made more efficient and cost-effective through better planning, management and execution. It’s a key element in the management of the life cycle of the supply chain services.
We hope we succeed in giving you more insights on this subject. If you have any questions feel free to reach our Shippr team at “email@example.com”. You can also connect with the team on Facebook, Instagram, LinkedIn!
*Article initially published on Medium 15/05/2019