Reverse Logistics: Enabling a System that Can Boost Profits and Long-Term Efficiency

Once your product arrives at the consumer’s door what becomes of it? The consumer will use the item and dispose of it when it ceases to be useful. The usual downstream flow does not dictate solely the fate of every product ever manufactured. There are instances when products are returned or require specific disposal and must go upstream back to its source.

Reverse logistics or returns management services is relevant to your campaign for increased profitability. Allow us to explain why this is so.

The Scope of Returns Management

A usual measure of the effectiveness of a supply chain network is on-time delivery metric. The flow of materials starts with the supplier and ends with the customer. The final destination of a product changes when the purpose shifts from using it to returning it. A customer would return the product for various reasons, such as when it has sustained damage upon arrival, when it is the wrong product, to begin with, or when the end user does not want it anymore.

When a product travels in reverse, it still goes through a set of processes. The reverse flow starts with the customer shipping the product back to the source. A system must be in place to test, repair, or dispose of the item. Some products may be identified for recycling. Because of innate complexities, the reverse logistics process is often difficult to navigate.

The Importance of Reverse Logistics in the Supply Chain

Reverse logistics processes must be efficient for the products returned to still create value. For instance, if there is no system in place that will ensure a product can be repaired or recycled, there is no chance for the manufacturer to recover their assets. By recovering raw materials, the manufacturer can save on costs. In addition, recycling products or component parts is a practice that gains public approval, not to mention tax credits in certain locations.

Essentially, reverse logistics maximizes opportunities to extract as much value from a product as possible. Managing reverse logistics processes has a significant impact financially, and companies must consider it not only as an add-on service but as a core competency.

Success Stories

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The reverse logistics flow of Apple is admirable and smart. If you are an avid consumer of Apple products you know that you can receive discounts on new products upon returning an old model. The company utilizes components of the old models and save on manufacturing costs in the process. The system they have in place has global coverage. Consequently, it lowers the volume of electronic waste that ends up overwhelming landfills.

Another example is UPS’ strategy of allowing consumers to reuse boxes for shipping. This lowers their environmental impact significantly. Other global brands have found ways to institutionalize and implement reverse logistics systems, giving their consumers a new and equally important role in the supply chain.

Collecting and refurbishing used or unwanted products is a smart and practical way to create value anew, reduce waste, and lower manufacturing costs. Reverse logistics systems are essential for long-term profitability. What are you doing now to make the most of available opportunities?

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