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Every time you order something online and return it the next day, you benefit from reverse logistics.
But what is reverse logistics? Let’s explore the reverse logistics meaning, examples and its importance. We’ll see with reverse logistics examples how it can help your business and enhance customer experience.
Reverse Logistics Meaning
As consumers, we often take returns for granted without thinking of what happens once we send back an item. That’s where reverse logistics comes in.
Reverse logistics in supply chain management can be defined as a system used to ensure that the final product is handled with care when returned. If the user returns the product for inspection, repair or replacement, those goods need proper management for optimum use of resources and the best customer experience.
Many businesses have a process for providing after-sales care to their customers. This can cover many eventualities. All products will be different, so the reverse logistics process needs to handle any of these instances.
The features of reverse logistics are –
- It covers the return of damaged or unwanted goods and handling them in a way prescribed by management
- Reverse logistics in supply chain management can trace where products have been sold; they may inspect these for quality control
- The importance of reverse logistics is that it ensures profits are maximized, waste is minimized and the customer experience is as good as it could be
Now that we understand the reverse logistics definition, let’s look at how it works.
Types Of Reverse Logistics
Reverse logistics covers a range of processes. Let’s look at the types of reverse logistics:
Receiving Returns
The organization that sells the product may have several modes of accepting returns. For sales from brick-and-mortar outlets, returns usually happen at the same site. For online retail or sales, they send the returns back through the same delivery channel.
Processing Returns
To ensure proper handling of returns, all items must be received, logged and checked. It will confirm whether any problems have occurred during transport or storage, allowing appropriate actions to be initiated.
Resale Of Returns
Once the goods are received, what does the business do with them? Suppose they are returned to the supplier with no problems. In that case, they are made available for resale to other customers, and the original customer is offered a refund or a replacement product.
Refurbishing Returns
If a product has been damaged, it will undergo minor repairs before going up for sale again. The organization can then sell them as refurbished or discounted items. For reverse logistics examples of this practice, look at Indian furniture brand Urban Ladder, which sells pre-owned, sometimes slightly damaged items on another website at a discount.
Salvaging Returns
The salvaging process involves either repairing products that cannot be sold as new or refurbishing products to a usable state and then selling them as second-hand goods.
Donating Returns
Products may also be donated to a charity if the supplier cannot use them.
Return Recycling
Products that are broken or worn out may still have value. They may be unfit for use, but they can be broken down for parts and used in another form or sold for scrap.
Recall Returns
The importance of reverse logistics can be seen when problems arise. Occasionally, a business will ask buyers to return a product because of safety concerns, or for technical issues, in a process sometimes called a recall. Here, they may inspect the products for issues and fix them, issue an advisory or provide refunds for the defective goods.
The returns, recalls, recycling, repackaging and repair processes are collectively known as the 5 Rs of reverse logistics. The 5 Rs of reverse logistics are the core processes most crucial to organizations.
Benefits Of Reverse Logistics
The need and benefits of reverse logistics are clear. Not optimizing these processes will affect businesses adversely. Here are the key reasons every organization should pay attention to reverse logistics:
- It improves customer experience and encourages repeat business. The expectation is one of seamless returns and repairs
- It reduces waste, thus benefiting the bottom line
- It reduces the environmental footprint of the organization by reselling, reusing and recycling
- Product recalls protect the health and safety of customers, which improves the organization’s reputation
- It closes the loop on potentially hazardous products going out into the environment
Depending on the scope of business, organizations may realize several benefits of reverse logistics. It can even be good for public image. Reverse logistics examples of this include H&M, the clothing brand that accepts donations of old clothes against store credit, which helps combat criticism of its fast-fashion business model, which results in significant clothing waste.
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