The importance of reverse logistics6 min read

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When we talk about logistics, we often link the concept to the traditional logistics process, which consists in planning and controlling the flow of raw materials, goods, and information, from the point of origin (the manufacturer) to the final destination: the customer. What if the products moved backwards?

Today, we want to talk about reverse logistics, a component of the supply chain which plays a big role in the sustainability of the industry and helps manufacturers to reduce the production costs.

What is reverse logistics?

Reverse logistics includes all the operations concerning the management, the control and the planning of the flow of goods from the point of consumption – the customer, to the point of origin. The purpose of reverse logistics is to capture the value of returned products, by rechannelling them into other industries, disposing of them properly and, nevertheless, gather important user information from the customers.

Whether an article is defective, broke, or its life just reached the end, the customer will then need to send it back to the producer or, eventually, get rid of it, starting the reverse logistics process. The returned article will be then restored, dismantled, repaired, and its components disposed of correctly.

Sometimes, industries find themselves with an excess of raw materials. Among the advantages of reverse logistics, there’s the possibility to rechannel these materials: they can be exchanged for other raw materials that will then be used to produce a different product.

Why is reverse logistics so important?

Reverse logistics brings to life a new step into the supply chain. More and more companies are adapting their logistics program, to include the reverse shipping process. The importance of reverse logistics is now even more evident, as it allows improving the sustainability of the organization, and to benefit in full of the usage of defective or excessive products.

How are reverse logistics and sustainability-related?

The bond between reverse logistics and sustainability inevitably stands out: organizations implementing a reverse logistics program have, among others, the goal of reducing their environmental impact. By collecting old distributed products, a company with a good reverse network can dismantle them and transform the old components in new material, reducing both waste and costs of production.

Many famous brands and companies have realized how strictly linked reverse logistics and sustainability are, such as:

  • H&M places drop-off points in every store to collect used clothes, which will then be used to create a recycled clothing line.
  • Whenever a customer wants to buy a new device in-store, Apple offers a discounted price if the old product is returned: the material will be recovered and used to produce a new one.
  • The Return Service offered by GLS is meant for businesses and e-commerce: the courier is taking care of returning the products or goods by picking them up from the customers directly. They will then be returned to the seller or to any other location of choice.
  • UPS allows customers to use old boxes to return their products and dispose of the goods that are not needed anymore.

The advantages of reverse logistics for retailers and final customers

Reverse logistics and sustainability, as well as cost reductions, are not the only advantages of reverse logistics. Companies with a good reverse logistics plan have higher chances of increasing customers’ satisfaction, by giving them access to repairment services, shipping service and showing interest in faulty goods. This translates into one of the most important advantages of reverse logistics: gathering information over the reason why products are returned, and receiving customers’ feedback, to improve the product.

Retailers and producers will have more benefits in putting the reverse logistics process in hands of specialized logistics companies: this leads to a faster and safer return process, a cheaper way to re-integrate the resources and the advantage of organizing the shipping in a tailored way, both for the retailer and the customer.

The advantages of reverse logistics in B2B

In the industry of B2B, reverse logistics has several advantages, as it allows the business to cope with unsold items, food, goods, clothing. When it comes to food, it’s easier to think of a way to recoup the surplus: more and more supermarkets are implementing reverse logistics plans in order to deliver food excesses to shelters and foundations as a charity donation.

Speaking about clothes, household items, and branded articles, things might get more complicated. In some specific periods of the year, the demand increases significantly: let’s think about Christmas, Black Friday, and other similar occasions which inevitably bring to many products being returned from the customers.

Here is when reverse logistics comes in handy, helping the stores emptying their warehouses, by selling the goods to other companies which will take care of re-selling them, by locating them in different markets, liquidating them, and so on.

How does reverse logistics work in e-commerce?

Reverse logistics in e-commerce simply means the return process of a product the customer is not satisfied with: a good plan of reverse logistics is essential for the success of e-commerce businesses. Customers who need to return their products want the process to go as smooth as possible. The well-organized return policy will retain customers, enriching the business. Thus, the importance of reverse logistics in e-commerce is undeniable.

How do shippers use reverse logistics?

Earlier in this article, we discussed the importance of reverse logistics in retaining customers and final users. Courier companies play a major role in building strong customer loyalty towards the company or the brand.

E-commerce companies and organizations who decide to implement their reverse logistics, also establish agreements with courier companies or third-party logistics provider. The courier companies will then be the first point of contact for the customer who is willing to return the defective product.

How shippers use reverse logistics may vary. Some companies start contracts which include a pack and pick up services for customers who want to return a product, others only agree on recycling and disposing agreement. As said earlier, courier companies play a very crucial role in reverse logistics, as it’s an additional service which customers can take advantage of.

If you’re looking for a reliable courier service to implement or improve the logistics plan of your business, do not hesitate to get in touch with our team of logistics expert!

Last modified: October 23, 2019

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