In e-commerce, reverse logistics is the process of coordinating returns. All operations related to how the returned product is shipped by the customer, where it’s shipped to, and how it’s processed when it gets there involves reverse logistics. It is the set of activities that are conducted after the sale of a product to recapture value and end the product’s lifecycle.
It is a higher level perspective that includes the overall process of planning, implementing and controlling the inbound flow and storage of secondary goods and their related information.
In a warehouse setting, it involves the process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.
In reverse logistics, goods move from the end consumer back to the seller or manufacturer. The most common example is when a consumer returns a purchased item for a refund. The returned products may be resold or disposed of permanently.
The processes that a product can undergo include:
It comes with a lot of challenges. One of the most common is tracking the profitability of the reverse logistics process. Depending on the items, it’s not always profitable to ship products back to a distribution centre because the value of a product may be less than the cost of shipping.
Another common challenge is having the necessary infrastructure to track an item’s warranty status. It’s also important to ensure any repair process is cost-effective.
The traditional product cycle ends when the end customer makes their purchase. However, now, the product’s life cycle has been expanded to include dissolution of the product after the end-user has extracted its maximum use or value. Logistics, either forward or reverse, can have a significant impact on the asset recovery of the business.
The most important reason to adopt strategies is because of its profitability. All of these other aspects of asset recovery lead to the same place, decreased expenses and increased revenues. It will improve every step of the supply chain which will have a rippling effect on the rest of the business. The trend of reusing and recycling is gaining momentum. This will encourage new forms of competition within the industry.