Reverse Logistics – the Opportunities outweigh the Challenges
Complex and disjointed, but Reverse Logistics represents big opportunities for value creation.
Reverse Logistics includes the key processes involved in moving product back through the supply chain to accommodate overstocks, returns, defects and recalls and is defined by the Center for Logistics Management at University of Nevada as “the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal”.
For product returns, Accenture report that on average it takes 12 times as many steps to process returns as it does to manage outbound logistics. The additional steps include activities such as assessing, repairing, repackaging, relabeling, restocking, reselling, recycling and refurbishing, which can result in the cost of reverse logistics being four to five times those of forward logistics.
However, best-in-class practitioners can directly correlate their reverse logistics expertise and systems to positive impacts on Customer Satisfaction, Brand Equity, Competitive Differentiation and Profitability.
Reverse logistics is big business - in the USA it is estimated that manufacturers and retailers are now dealing with $100 billion of products goods being returned on an annual basis. Here in Asia, product returns are destined to expand exponentially, driven by two rapidly accelerating consumer trends – online shopping and the proliferation of electronic gadgets.