Reverse logistics refers to all procedures associated to product returns, repairs, maintenance, recycling and dismantling for products and materials. Overall it incorporates running products in reverse through the supply chain to gain maximum value.
Why is it important to deal with organisations who implement reverse logistics?
Organisations that implement reverse logistics are able to improve customer service and response times; reduce environmental impact by reducing waste and improve overall corporate citizenship.
Here are 6 reasons why organisations overlook the importance of reverse logistics:
- Reverse logistics is only seen as an expense to an organisation. But it can be profitable; reusing and recycling can often reduce costs.
- Reverse costs are less clearly visible and therefore not looked upon as a priority; often organisations avoid difficult problems.
- It is difficult to forecast for reverse flow of the product and to know exactly what and how much merchandise will be returned by the customer, therefore return flow needs to be recorded and planned so it can be estimated and managed effectively.
- Organisations only look at faulty customer returns, not the total volume of returned products such as end-of-life strategies for products that are perfectly functional but replaced with newer versions of the product. Therefore these organisations miss the total volume of reverse flow which if managed properly can lead to large gains.
- Many organisations do not have the expertise, manpower or infrastructure for processing returns and expanding to start up a new operating system of returns. These organisations should consider outsourcing to a qualified third party logistics organisation (3PL).
- Reverse logistics is often seen as more complicated and less structured than the normal supply chains due to variation in product quality, defect rates and maximum life span. This doesn’t mean organisations shouldn’t try and tackle the challenge. By creating structured flow path ways for different product scenarios most of these problems can be handled.
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