Reverse Logistics, a Strategic Activity of All Enterprises
Compared to earlier times, today enterprises no longer consider reverse logistics as a pain in the neck. Instead, it enjoys strategic importance among enterprises as reverse logistics is considered as a means of generating revenue, profit, and competitive differentiation. Hence, supply chain management today involves reverse logistics as well.
Reverse Logistics and Returns management are terms that are used interchangeably but the fact of the matter is returns management is one of the important aspects of reverse logistics. Its other important activities are repair, recycling, reuse, recalls, refurbishing, source reduction, product substitution, remarketing, disposition of products to name a few. The important functions of the reverse logistics channel are collection and sorting, storage, transportation and distribution, compaction, shredding and identification, processing or filtration, retro-manufacturing and full disposal.
According to the Aberdeen group, reverse logistics is actually a process that involves four important stages namely
- Logistics
It deals with authorizing return, recovering, sorting, testing, repairing, remanufacturing, reconfiguring, restocking, reshipping, and disposing of materials.
- Sales/Marketing
It is remarketing refurbished products and parts for resale through liquidation or adjacent channels.
- Finance
It is validating in-warranty repairs and recovering appropriate costs from suppliers.
- Customer Service
It is receiving in-bound customer calls and ensuring compliance with service contract commitments.
Today reverse logistics is a strategic activity of almost all enterprises as it helps to
- Recapture lost revenue
- Reduce operating costs
- Improve product uptime
- Enhance quality
- Retain customers
- Comply with environmental regulations
- Elevate brand loyalty
- Increase customer satisfaction
- Boost revenue
Quite a few enterprises manage reverse logistics in-house but majority of them depend on supply chain solution providers for managing their reverse logistics. These third party logistics providers help enterprises to
- Remarket complete systems and major components
- Transform old assets into valuable investments
- Monetize depreciating assets
- Find reusable solutions for unutilized assets
- Save the cost of warehousing stock that has gone stale
Moreover, collaborating with supply chain solution providers help enterprises to focus on their core competencies.
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