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Reverse Logistics Basics

Reverse logistics involves the returns process from customers back up the supply chain due to issues like quality problems or legal/environmental regulations. It was once seen as an unprofitable necessity, but is now recognized as a strategic activity that can enhance competitiveness. Reverse logistics encompasses all post-sale and service activities needed to efficiently reuse or dispose of products and packaging. It aims to save cash and resources rather than waste. As reverse logistics grows in importance due to trends like globalization and e-commerce, companies that master reverse logistics will gain an advantage over their competitors.

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45 views

Reverse Logistics Basics

Reverse logistics involves the returns process from customers back up the supply chain due to issues like quality problems or legal/environmental regulations. It was once seen as an unprofitable necessity, but is now recognized as a strategic activity that can enhance competitiveness. Reverse logistics encompasses all post-sale and service activities needed to efficiently reuse or dispose of products and packaging. It aims to save cash and resources rather than waste. As reverse logistics grows in importance due to trends like globalization and e-commerce, companies that master reverse logistics will gain an advantage over their competitors.

Uploaded by

Arindom
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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The Basics of Reverse Logistics


Supply Chain Management is a term with which we are all familiar with, being the logistics and
management planning involved in bringing the finished product to the customer or end-user, in
the most efficient way. However, what about flow in the opposite direction? The returns from the
customer, because of product quality, environmental pollution as implemented by new statues,
design problems, higher losses and higher emissions etc. A decade back, businesses saw this
reverse flow as an unprofitable logistics exercise and termed it A necessary evil. Today with
globalization and e-commerce, business have categorized this as a means of profit by making the
customer aware of how efficiently and skillfully, this return flow is tackled which has been
named as Reverse Logistics. As Reeves states Recently reverse logistics has begun to
lose its "necessary evil" status, and analysts and industry veterans point to several
trends that have increased the importance, and raised the profile, of the reverse
logistics process (Reeves,2005, pp44-47). Today it is seen more like a strategic activity, that
can enhance supply chain competitiveness in the long run. Reverse logistics can be defined as
all activities arising after the sale i.e. the aftermarket business and the principles necessary
applied to keep the same at maximum efficiency and productiveness
(Diane&David,2005,9pp 34-
35), so that both cash and
material resources are saved
from waste
The adjacent chart shows
clearly the differences or the
start and ends of the forward
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supply logistics and reverse logistics (taken from the RLA homepage).
At first sight, it appears that the different facets of reverse logistics are almost double that of
conventional forward logistics and supply chain management. However, if we look at the subject
headlines more closely, we will see that most businesses have been practicing these all along but
not under a common umbrella. So now, what do we do? There is only a single answer .We
utilize and implement all management principles, which we have built up, in the reverse-logistics
scenario, under which the entire gamut of post-sales /service functions has to be dragged into.
Whoever will do their reverse logistics more efficiently will win the battle because reverse
logistics is a much stronger USP then forward-logistics. This is because the latter is consumed
and disappears from our sight but the former hangs around and reminds the managers of due
dates gone by and promises not kept.
An example of this is the HP printer cartridge, which is so expensive that organized competition
has today become possible even at the risk of the HP warranty not being honored. What can HP
do to salvage its cartridge business? It can hardly admit that they have been charging us inflated
prices, it cannot. Till now, HP has not come up with anything in this regard but the giant is
already taking notice and some sort of declaration from HP soon, will not be surprising. The ink-
refillers now not only save the customers money but also reduce e-waste and now are also,
laughing all the way to the bank at HP.
Environmental Pollution is one more area where reverse logistics can play a stellar role. In fact,
they may not have that choice if statutes like Germany are passed, that the manufacturer is
responsible for your waste and pollution. The customer is only buying the value. Therefore, each
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supply contract can have a provision that the pollution if any and waste, is to be taken care of by
the supplier.
This is an extreme thought but can happen unless we wake up to the importance of reverse
logistics and develop our own national industries into this path. All industrialists have to be
aware of this phenomenon. Until reverse logistics platform is made, the US will be back at the
head of industry soon until the other countries catch-up, in the reverse-logistics way.

Reference List/ Bibliography:

Diane A.M & David J.C.(2005) ; The Hidden vale in Reverse Logistics The Supply and
Demand Chain Executive Magazine,9 (34-41)
Krikker H.R. & De Velde S. (2003): Creating value from returns; Center for Applied
Research, Netherlands.
Reeves A.K,2005; Meeting the reverse logistics challenge The Supply and Demand
chain executive Magazine, 6 (44-47);2005)
Table borrowed from http://www.reverselogisticstrends.com/reverse-logistics.php available
at and accessed on 10/03/2012.

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