25 Things You Should Know About Reverse Logistics

what is reverse logistics

To understand reverse logistics better, here’s a look at the top 25 things you should know about reverse logistics and the reverse logistics process to get a clear insight.

1. What is reverse logistics?

Reverse logistics is the opposite of the supply chain process. In reverse logistics, the goods move from the customer back to the seller or manufacturer. It can include returns from e-commerce and retail shop, as well as components for refurbishing and remanufacturing. The products may be resold or discarded permanently.

2. What is returns management?

Returns management is the supply chain management process that companies use for all activities related to returns, reverse logistics, gatekeeping, and avoidance within the firm and across all elements of the supply chain. It’s the equivalent of managing outbound shipments.

3. When is reverse logistics used?

Reverse logistics is used when goods are moved from the end-user to another location to recapture value or for final disposal. The product may be returned because it doesn’t fulfill the customer’s needs or it has reached the end of its service life.

4. What are the different types of reverse logistics?

Reverse logistics can relate to any of the following activities after the initial purchase:

  • Returns
  • Delivery Failure
  • Remanufacturing
  • Refurbishing
  • Packaging
  • Returns avoidance
  • Unsold goods
  • End-of-life
  • Rentals & leasing
  • Repairs & maintenance

5. What is reverse logistics in retail?

For retailers, reverse logistics typically begins at the customer service desk when a customer sends back an item they have purchased but no longer wants or the product is damaged. The retailer must move products back up the supply chain to regain value. Some products could simply be reshelved. Other products must go back to a distribution point for fulfillment or send it to a liquidation center. In some cases, the product may have to be thrown away or recycled. The customer expects to have the purchase price refunded quickly and without question.

6. What is reverse flow in the supply chain?

Reverse logistics also are known as reverse flow in the supply chain. This includes planning, implementing, and controlling the efficient inbound flow, as well as the storage of goods and related information to recover value or proper disposal.

7. How does reverse logistics impact supply chain management?

Companies must plan and execute strategies to manage products beyond manufacturing and the final sale. These processes can include repair, warranty recovery, redistribution, value recovery, end-of-life recycling, or any combination of these activities. Depending on the volume, a separate reverse supply chain may be established.

8. What is a closed-loop supply chain?

A closed-loop supply chain is one that generates zero waste. All materials are entirely reused, recycled, or composted. The term includes corporate take-back programs, where producers of a product also take responsibility for its disposal.

9. What is the difference between a closed-loop supply chain and reverse logistics?

A closed-loop supply chain is when you recover a product from a customer in exchange for value and recycle the product for later use. This is common in automotive components such as starter or alternator cores, which are then refurbished and resold. The repair shop also receives a financial incentive for turning in the core. Reverse logistics may include a closed-loop system, but it is also the return of items from consumers or product overstocks as well as the collection of recyclable materials to eliminate waste.

10. Why is reverse logistics needed?

Reverse logistics complete the product lifecycle to support reuse and repurposing of products and materials. You can recapture value by reselling items as-is, refurbishing them, or selling to a discount liquidator.

11. How do reverse logistics start?

The process depends on the business, but essentially reverse logistics involves any process or management after the purchasing of the product. It starts with a reason for a return, and the customer contacts the concerned team to initiate the return. For many retail products, the manufacturer asks the end-user to contact them directly rather than returning the product to the store. The concerning team arranges for shipping of the returned product, which could involve sending a shipping label for a parcel pick up or arranging for truck pickup for larger items. The returned item should behave at the same level of visibility that an outbound package has.

12. What is the reverse logistics process?

The process will vary widely among industries. For example, retailers may bundle pallets of returned garments for shipment to a liquidator. A machine tool manufacturer may accept tools for re-sharpening and offer a core return discount. An e-commerce retailer may accept returned goods at a separate facility or specific docks for restocking or liquidation. Each item should be tracked with the same level of visibility and transparency as an outbound shipment.

13. What is the difference between reverse logistics and forward logistics?

Forward logistics, or traditional logistics, is about getting your product to market and uses automated information systems to track items. The forward supply chain encompasses product development, manufacturing, distribution, and fulfillment to end-users. Reverse logistics is for all operations related to moving goods from the end-user to recapture value from the products or for proper disposal.

14. What are the components of reverse logistics?

The three components of reverse logistics management consist of Return Policy and Procedure (RPP), Remanufacturing or Refurbishment (ROR), and Waste disposal (WAD).

15. What is the cost of implementing a reverse logistics plan?

Reverse logistics vary depending on the scope of the program, the 3PL provider, and the needs of the business. Each solution is customized based on the client’s needs. Without a reverse logistics strategy, a company will miss out on potential asset recovery revenue and customer satisfaction because it does not have a system in place for recycling, reusing, or safely disposing of returned products. A successful reverse logistics solution increases customer satisfaction and brand loyalty because customers are better able to make returns or get a replacement product within a reasonable time.

16. What are the challenges in reverse logistics?

One of the main challenges is to track the profitability of the reverse logistics process. In many cases, it doesn’t make sense to ship products from the consumer back to the distribution center if the value of the product is less than the shipping cost. Depending on the distribution model, a company may have to tie up with dealers or distributors to manage returns. The company will need the infrastructure to track warranty and routing status and ensure any repair process is as cost-effective as possible.

17. How can reverse logistics be improved?

One of the best ways to manage reverse logistics is to minimize returns in the first place. That may require improvements to reduce product damage while shipping. Returns policies could be tightened to disincentivize returns of low-value products. Establish a separate reverse logistics group to control all processes rather than operating through the outbound logistics group.

18. What is the best way to manage high volume returns?

Developing a plan and a separate reverse logistics chain is the best way to manage high return volume. By working with an experienced reverse logistics partner, you can enjoy the benefits of specialized knowledge and attention to detail while not interfering with your outbound fulfillment operations.

19. How can reverse logistics create value?

You can gain customer trust with an easy-to-use return process and policy, increasing customer loyalty, and repeat business. You can recover value from assets that might otherwise be lost, reducing the need for additional manufacturing while keeping items in stock.

20. Can outsourcing reverse logistics create a streamlined reverse logistics process?

Outsourcing reverse logistics to a 3PL can create a streamlined process focused on reverse logistics. It’s not an afterthought to the outbound logistic flow but rather its own process with management oversight.

21. How does reverse logistics work in the pharmaceutical industry?

Typically manufacturers control the reverse logistics flow in the pharmaceutical industry due to the regulatory concerns for prescription medications. If a product is expired or is a temperature-controlled product like insulin that experiences a temperature excursion, it will be returned to the manufacturer or its designated representative for disposal.

22. What are inbound and outbound logistics?

Inbound logistics refers to the transport, storage, and delivery of goods coming into a business. On the other hand, outbound logistics refers to the shipment of final products to end-users or distribution centers. It is associated with the concept of supply chain management, as managers work to maximize the efficiency of distribution networks while minimizing transport and storage costs.

23. How should e-Commerce companies manage their reverse logistics to recover the cost?

First, build processes and products that minimize the overall return rate. Many of the same technologies used to optimize outbound shipping can be used with reverse logistics. Each return courier should be directed and tracked to the right destination, whether it’s the point of origin, another retailer, or another distribution point. Understand your reverse shipping and handling costs so you can make the best decisions on the returns.

24. What is the best way of handling reverse logistics in the e-retail marketplace?

Handle reverse logistics to gain customers’ trust and to maintain your business reputation while analyzing the main cause for returns. You must have an efficient system in place to handle returns processing and disposition to get the maximum output from it. You must have the process in place before you can begin to understand the reasons driving the return rate. Only then can you can use data to make changes that can reduce returns effectively.

25. How can I make my reverse logistics work best for me?

To get the best out of the reverse logistics system, you require a strategy and an experienced 3PL partner that can manage the system and prove beneficial for your company rather than merely looking at it as a cost center.

If you’re looking for a 3PL company to handle all your inbound and outbound shipments, contact Tenaxx Logistics today.