The Reverse Logistics is a collaboration of manufacturers, retailers and academics in getting the products back from the customers which are fit for disposal or products which have crossed its expiry dates back to OPMs is called Reverse Supply Chain Management.
Reverse Logistics is the process of moving goods from their typical final destination to another point, for the purpose of capturing value otherwise unavailable, or for the proper disposal of the products.
Reverse Logistics activities include:
- Processing returned merchandise for reasons such as damage, seasonal, restock, salvage, recall, or excess inventory;
- Recycling packaging materials and reusing containers;
- Reconditioning, remanufacturing and refurbishing products;
- Obsolete equipment disposition (EHM: Environmental Hazardous Materials)
- Hazardous material programs(WEEE: Waste Electrical and Electronic Equipments)
- Asset recovery.
With most companies, handling Product Returns also includes an important transaction with the customer who is returning the goods. This may involve the shipment of a replacement in the case of goods returned for a warranty issue. For other customers, it may also involve the issuance of a credit or refund.
The SCOR Model (Supply Chain Optimization Review) developed by the Supply-Chain Council now includes Reverse Logistics.
Traditional Supply Chain improvement strategies have tended to focus on the forward logistics processes. New forces and an understanding of the connection to revenue and customer satisfaction are moving Reverse Logistics higher in the supply chain agenda. But this model for getting realized in current world of FSCM implementation would take time will still take time. As the return process i.e, the RSCM does not come with FSCM logistics. This involves hiring RSCM third parties as said.
Reverse Logistics Opportunity
It is time to rethink Returns. Reverse Logistics is an excellent strategic source of value added revenues. Manufacturers, Distributors and Retailers are struggling with the Reverse Supply Chain. Industry experts suggest the annual costs of Reverse Logistics total $35 billion. Product Returns handling is an important process of the supply chain that is not well handled even today even with world’s number one product sellers. Economic pressures for corporate profits are forcing manufacturers and retailers to look very hard at cost controls. Reverse Logistics is one of the few remaining opportunities that has NOT yet received much attention.
Many Manufacturers and Retailers are looking to outsource Reverse Logistics and Product returns since it is not a strategic part of their business. But this could be cut down and the same cost can be used in implementing RSCM. They currently have very inefficient, slow and expensive processes for handling returns. Few tools or systems exist to assist in handling returns effectively. Considerable value is lost when these Returned Assets are not processed quickly and completely.
Traditionally, with a solid understanding of Reverse Logistics needs and processing, Reverse Logistics represents a quick and excellent source of high volume transaction fees that can be generated from your existing facilities and skill sets.