The concept of reverse logistics is related to reuse of materials used in a supply chain. While logistics is involved with reaching the goods to the customer, reverse logistics is involved with sending some goods at least one step back i.e., to the distributor or to the manufacturers in a supply chain. Reverse logistics has an important role in the competitiveness, pricing and profit/loss of an industry.
Sometimes remanufacturing is required in the supply chain. Reverse logistics is the prior step to do this. Concerns over green supply chain management makes remanufacturing and refurbishing to some extent more relevant. Some small processing after the sales may involve reverse logistics. For leasing companies reverse logistics is a more regular process. The product may need to travel in reverse through the entire supply chain network to retain use of any service from the defective goods.
After sales service and returns management are sometimes related to the logistic companies. Logistics companies return to the position where the goods are repaired or resold in a timely manner. There should be a return management best practices. As a result, returns process is addressed in a way that operational and customer retention issues properly handled in a business. Returns avoidance, gate keeping, disposal and other supply chain issues are related with reverse logistics. In some businesses, returns management is an inevitable issue, which gives an important link between marketing and logistic department.
Closed Loop Supply Chains:
There are closed loop supply chain networks that include returns processing and manufacturer has the intention to capture additional value and integrate all supply chain activities. These closed loop supply chains are reusable packaging, i.e., reusable pallets, bottles and packages etc. On the other hand, returned goods are returned to the origin and added to the inventory again.
Reverse Logistics related functions should be done in a cost effective way. So that a supply Chain is properly managed would not be out of be out of business. They can amicably work with competitors. It is often necessary to partner with multiple organizations, leverage best practices, improved profit margin, precision management etc. Manufacturers must consider spare parts cost, within warranty or without warranty issues also.
High Value Products:
Major activities are return of used or deteriorated products, repair, disposal etc. Third party logistics providers give asset related services and operate in repair depots. Other third parties work in manufacturer and wholesale level. Providers used to comply with broader service operations.
In this case, major activity is in the area of validation under recycling, environmental compliance etc. Third parties usually work in niche and waste specialization area. In about more than 40% cases, third parties need to penetrate and they need good understanding of environmental regulations.