Reverse Logistics

 

Logistics is defined by The Council of Logistics Management as “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 origin to the point of consumption for the purpose of conforming to customer requirements.” Reverse logistics includes all of the activities that are mentioned in the definition above with the only difference being that reverse logistics encompasses all of these activities as they operate in reverse.

Therefore, reverse logistics is: 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.

More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of activities as a result of reverse logistics.

Reverse logistics is more than reusing containers and recycling packaging materials. Redesigning packaging to use less material, or reducing the energy and pollution from transportation are important activities, but they might be secondary to the real importance of overall reverse logistics.¹

The Importance of Reverse Logistics

 

The importance of reverse logistics has increased due to the exponential growth of e-commerce which can typically result in an average of 30% returns per year. If no goods or materials are being sent “backward”, the activity probably is not a reverse logistics activity.

Reverse logistics includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls, and excess inventory. It also includes recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery.² Unfortunately a lot of product returns end up being incinerated or in landfill as companies are hesitant to sell into secondary markets based on a belief it may devalue their brand. Secondary markets can provide additional revenue and sales channels to companies from consumers who may not have been able to afford to buy from primary markets, especially true for premium products.

However none of this activity factors in circular systems thinking. At least not yet!

References:

  1. ‘What is Reverse Logistics?’ by Karen Hawks, VP Supply Chain Practice, Navesink, published in Reverse Logistics magazine, Winter / Spring 2006, Reverse Logistics Association.
  2. Ibid
  3. Image ‘Logistics Product Life Cycle‘ – Reverse Logistics Association.
  4. ‘Components of Reverse Logistics’ – Hollingsworth Guide to Reverse Logistics
  5. Remanufacture – Wikipedia
  6. ‘Components of Reverse Logistics’ – Hollingsworth Guide to Reverse Logistics
  7. Ibid
  8. Ibid
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