Reverse Supply Chain, an Integral Part of a Supply Chain Process
Supply chain can be defined as the flow of goods, information, and finances from supplier to manufacturer to wholesaler to retailer to consumer. The Council of Logistics Management define supply chain 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.” The supply chain is also referred to as a value chain as it adds value to the organization by providing what the customer wants and the market demands that too at a low cost.
All organizations have supply chains but just as the companies differ from each other in size and the kind of product manufactured so do the supply chains. The important components of a supply chain are order management, fulfillment solutions, distribution, logistics, warehousing, inventory control, retail packaging, and returns management. These components are different pieces of the supply chain that have to be managed and coordinated in such a way that it adds value to the company in terms of product quality as well as customer satisfaction but at the same time keeping the costs down.
The two important aspects of a supply chain are forward supply chain and reverse supply chain. Forward supply chain is something that we know of i.e., the flow of goods and services from manufacturer to wholesaler to retailer. Traditionally those companies that managed effectively the forward flow of products to customers stayed ahead of the competition. For customers, factors such as high quality products, on time delivery, competitive prices, low damage rates were important and therefore they preferred only those companies that were capable of doing so. Today, customers’ preferences remain the same except that there is one more attribute that they look for in companies when they make purchase decisions and that is the companies must be capable of managing a reverse supply chain as well. They do not prefer companies that do not offer a good returns policy.
Reverse supply chain solution is the movement of goods and services from the customers to the retailers. Reverse supply chain is not an entirely new phenomenon as it has been executed successfully in the automotive industry. The reverse supply chain process was earlier perceived to be a valueless process and it was the fear of regulations that forced most companies to invest in reverse supply chain processes. That is when they realized that reverse supply chain is a good business weapon that reaped benefits when used tactically.
Reverse supply chain is an integral part of any supply chain process. A supply chain process is complete only when it consists of forward and reverse supply chain processes.
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