Logistics is the commercial activity of transporting goods to customers. This is also known as forward logistics. On a basic level, reverse logistics is the transporting of goods in the other direction: from customers to the vendor.
Yet reverse logistics is not limited to defective goods or handling customer returns. Defective product returns account for only 25% of goods handled in its operations.
The rest involves the management of recalled products and overstocks and end-of-life goods. Fixtures, recyclable items, and assets for disposal are also included in reverse logistics.
There is a more apt definition of reverse logistics. At Advanced Logistics (ALDS), we see it as the streamlined movement of items from their end destination for proper disposal. The aim of streamlining is to reduce your expenses.
Reverse Logistics Management
Businesses have begun to pay attention to the challenges involved in returns management. The fact is that poor returns management has a negative impact on environmental risk and costs associated with waste.
Returns represent around 8% of total sales for the average retailer. So, the proper handling of reverse logistics is one way to extract as much value as possible from each item returned.
In the book publishing and related industries, that figure is much higher. The industry returns to the vendor as much as 20% of the products sold.
Supply Chain Length
Increasing profitability and providing value to the customer are the aims of reverse logistics. Manufacturers’ chief concern is to transport new products to the consumer as fast as possible. The shortest possible route in the shortest possible time for both these activities means greater profits.
As anyone involved in logistics knows, the longer the supply chain the more inefficient it is. And the longer a product stays in the loop, the less valuable it becomes, reducing the chances of a decent profit.
A custom policy and better planning can reduce your storage and distribution costs. As a spin-off, it can also improve your reputation. You’ll be satisfying customers better, after all.
Convergent Reverse Logistics Through Good Warehouse Management
Manufacturing involves sourcing raw materials and making them into finished goods for distribution. In this process, forward logistics become more divergent the further away the end-user is from the source of raw material.
By contrast, reverse logistics get used products from the end-user back to the manufacturer. To reduce costs it has to be convergent.
This is the principle used by many recycling facilities. It is easy to adapt this same principle to commercial wholesale and retail businesses to good effect.
If you would like to improve your reverse logistics operations, we would be happy to help you work out a strategy that works for you. Contact us today!