What is reverse logistics?
Once trading for a while you will find that customers may need or want to return products to you either because they are damaged, faulty, or are no longer required.
Companies must manage costs, inventory and customer relationships during this returned product process.
One solution is reverse logistics which is a supply management practice for moving products from customers back to the sellers or suppliers. Using reverse logistics enables businesses to regain value from returned goods by recycling, refurbishing or reselling them. Unlike traditional logistics that transports products from suppliers to distributors to consumers, reverse logistics starts with the consumer and moves in the opposite direction along the supply chain.
Examples and types of reverse logistics
Retailers like Home Depot, Levi Strauss and Kohl use reverse logistics to repurpose returned goods into new items or product lines while enhancing customer relationships in the process. Manufacturing and healthcare companies also adopt reverse logistics practices to refurbish, repair and remanufacture goods consumers find defective or outdated. There are different types of reverse logistics that businesses can explore. These are also known as reverse logistics components which focus on policies, procedures and management strategies for reusing products that are returned, unsold, damaged or reached end of life or contractual terms.
Why do reverse logistics matter for my business?
Managing returned items by customers can often lead to additional unplanned costs, hiring extra staff, return shipping costs, possible additional duties and increased overhead. To offset costs involved in returns, reverse logistics can help generate value companies can use to recoup losses. Reverse logistics can offer a way for your business to maintain an efficient flow of goods while reducing supply chain management costs and building consumer trust. By adopting reverse logistics, you can generate additional benefits to your business such as improved customer satisfaction and retention, enhanced brand sentiment, waste reduction and greater sustainability.
How can I get started with reverse logistics?
Business support organizations such as chambers of commerce and industry associations may have relevant resources to help you get started with using reverse logistics as part of your business practices. By searching on the internet, you can also find guides, training manuals and materials on reverse logistics.
Links to Supporting Information
Oracle NetSuite A Guide to Reverse Logistics: How It Works, Types and Strategies | NetSuite information on how reverse logistics works
The International Trade Centre (ITC) ITC SME Trade Academy – Summary of Introduction to Supply Chain Management (intracen.org) Online Training Course on Introduction to Supply Chain Management