What is reverse logistics? Reverse logistics definition is the process of moving goods from their final destination in order to properly dispose of them, or to remanufacture or refurbish them. The procedure also includes the management and sale of surplus goods, equipment, and machines that have been acquired from hardware leasing businesses.
Goods normally move through a supply chain network with the final destination being the customer. Any process following this such as the return of the product and its testing, repairing, recycling, or disposal is referred to as reverse logistics. This process of implementing, controlling, and planning the cost-effective flow of finished goods and raw materials is the full definition of reverse logistics.
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Reverse logistics examples
There are ever-increasing demands for recycling and reuse of materials resulting in an increase in reverse logistics. Examples include:
- Goods being returned by customers as faulty or unsuitable
- Goods returned as unsold by distribution partners
- Packaging re-use
- Recycling and disposal of goods that have expired
- Repairs and maintenance during guarantee terms
- Returned or defective items being re-manufactured
- Selling goods to a secondary market due to overstocking
- Refurbishment of goods
The importance of reverse logistics
By recycling and further processing unwanted or damaged goods, taking a step backwards in the shipping process can be advantageous. By collecting old distributed products by clothing companies and transforming them into new items, both waste and production costs can be reduced.
Cardboard boxes can be reused by shipping companies, or recycled to make new ones. Empty bottles can be collected and recycled. Recycled gadgets can be used to produce new ones, and reusing defective or excessive products improve sustainability. This second return of investment becomes clear as the value of these products increases as they’re effectively given another lease of life.
Another important benefit of these types of reverse logistics is the information it provides to businesses regarding the reasons why products are returned. Receiving customer feedback allows adjustments to be made to improve the products in question. Returned items can be restored, dismantled, repaired, or disposed of in the appropriate manner.
Reverse courier pick-up can also play an important role – they will be the first point of contact for a customer who wants to return goods. This is an additional service that builds strong customer loyalty.
Reverse logistics challenges
The profitability of reverse logistics is the most common issue as often shipping products back to the distribution centre outweighs the actual value of the product. Repair costs also need to be cost-effective, and there must be infrastructure set up to enable the item’s warranty status tracking.
So, the challenge is to provide returns at a proficiency level that allows the quick and cost-effective collection and return of merchandise. This will be the responsibility of the logistics company to shorten the link from the origin of return to the time of reselling.
The activities within reverse logistics are not only management of returns but also related to avoidance of these returns and after-market supply chain issues. Businesses can benefit by improving internal integration efforts to plan for returns and how to recover that value.
Reverse logistics companies
Third-party logistics providers say that up to 10% of a business’s gross sales can be tied up in return costs. Therefore, it’s essential to work with a company with experience and understanding of business products to plan ahead for these specialist logistics requirements.
Goods will be collected from their final destination for the purpose of adding value back into the business or ensuring disposal in accordance with current regulations. Products can be packed on-site and taken from the warehouse onto a waiting vehicle for safe and secure transportation.
Using trusted specialised reverse logistics companies will ensure a fast and safe returns process. Reverse logistics plans can be put in place to deliver excess food to shelters and foundations as charity donations for example, or to help stores empty warehouses by selling goods to other companies who are willing to re-sell them or locate them in different markets or dispose of them.
Reverse logistics services can include:
- Asset management
- Disposal of waste electric and electronic equipment
- Removal for resale
Other types of reverse logistics
Redeployment – refurbished equipment can be delivered by reverse logistics companies to new locations, often involving the design and implementation of tailored logistical operations for large volumes or one-off solutions.
Recycling – streamlining the release of collected products onto containers provide by reverse logistics companies to be sent back to the recycling plant is another feature. Valuable materials will be stored in secure warehouses prior to entering the raw material supply chain.
End-of-life disposal – through reverse logistics services a responsible approach to waste management can project a positive responsible company image, with waste disposal following all environmental practices.
An all-in-one solution
Bear in mind a company like DRG Solutions can help with any international shipping from Barcelona. Simply get in touch to request a quote for all of your reverse logistics requirements.