2. Introduction
Reverse logistics is involved in recapturing effectively finished products or raw
materials from the consumer to the manufacturer for it to be remanufactured and be of value
to the company or to be disposed of. The company should ensure that the materials used in
the packaging are insignificant, and the energy used and resulting pollution that can occur
from transportation are kept to a minimum.
Reverse logistics includes goods returned to be worked upon during the
manufacturing stage. This is before the production of the goods is done. They can be returned
in case the consumer has a warranty and returned for repair or to be remanufactured.
Products can also be returned if they are damaged, out of season, recalls and if it was
in excess. It could also be if the company has recycling programs, the materials that can be
hazardous if disposed incorrectly, equipment that is obsolete and recovering various assets
(Sudalaimuthu & Raj, 2009).
For reverse logistics to be effective, the following strategies should be used:
The company should ensure that the importance of reverse logistics is known and
understood in all levels of the company, especially in the management levels.
The senior management levels should support the implementation of reverse
logistics and come up with teams for the implementation process.
The company should come up with codes representing the reason why each
product is returned, which can be used to come up with solutions in the future.
The company should have a plan on how the products that are returned will be
disposed of.
3. The company should come up with detailed information on how the reverse
logistics process flows.
The company should be precise in coming up with the value of its acquisition.
The company should have the right person who is given the responsibility to
implement the reverse logistics policies in the organization.
The company should also enable the reverse logistics process and the operating
system. This is for the purpose of ensuring that the products acquired are visible and can be
traced throughout the process. Being able to work with all the parties involved ensure that all
processes for the reverse logistics are well developed. It is also necessary to come up with
solutions to problems that may arise and hinder the process from being achieved.
And, finally, the company should ensure that it can produce results and continuously
improve the process. This can be done by setting attainable targets and constantly striving to
improve the already set processes.
Review
Companies that do not practice reverse logistics are lacking in the understanding of
the real benefits that they will attain from the introduction of the system. Reverse logistics is,
nowadays, common especially from carpets and computer industries, which has become
essential to the business.
Organizations are being forced to put up the reverse supply chains by the
environmental regulations body or from pressure from consumers. From 2003, European
Union legislation requires that tire manufacturers who operate in Europe are obligated to
4. recycle at least one used tire every time they sell a new tire. Kodak, on the other hand,
remanufactures its single use camera, once the film has been processed. This has led to the
company recycling more than 210 million cameras in the last ten years in the countries that it
operates from. Other companies are taking advantage of this and using reverse logistics to
establish new businesses. Like Bosch, which is successful in the selling power tools that have
been remanufactured (Guide & Wassenhove, 2002)
The goods acquired from reverse logistics can be used directly, remanufactured, or
recycled. This depends on the products involved and the type of industry that is involved.
Some of the products that are directly resuable include containers, bottles, packaging
materials, or clothes. Industries that are most likely to be offered this service include logistics
service providers that are most likely to return handling and packaging materials.
Remanufacturing makes the returned goods become new products by re-using some of the
materials for the production of other goods that are produced by the company. Industries
involve vehicle and aircraft engines industry, equipment used in hospitals, mobile
phones,tires, computers and industrial equipment. Recycling seeks to reduce wastage and
creates raw materials that can be used to produce other products.
Accordingly, an estimated 6 percent of goods manufactured by a company will most
likely be returned. Dell Computer Corp. has found that, from its online sales 5 percent of the
goods were returned, whereas CompUSA’s has a 10 percent return. This then makes the
return rate for all products sold to average at around 8 percent (Moore, 2005).
Yantra PureEcommerce has also adopted the process, and consumers who want to
return their products initiate the process over the telephone or online. The company then
arranges with suppliers to collect and transport the product. Levi Strauss sought the services
of reverse logistics provider, Genco, that came up with a fast processing time for returned
5. products by ensuring that the paperwork on the item was done before the item reached the
company. Once the product arrived, the company matches the item with the paperwork
already done. This ensures that the returned item is on its way back to the consumer within 72
hours of having been processed (Moore, 2005).
Sierra Trading Post has, on the other hand, put in place preventive measures to ensure
that the products it sells are not returned. They have a shoe specialist specializing in size and
fit. It also ensures that its catalogue has shoes, in all colors and shades, elaborately covered.
Finally, its employees from time to time are asked to try on shoes that are in the catalogue
and to give their feedback together with how to better its services. Canon computers found
that most of its returned products were due to errors from pricing or their delayed shipping.
Improving on this reduced the total returns to a minimum.
Oxford University has bettered its services on the returned items, taking four days to
process returns as against the four weeks it used to take. This has been possible due to the
availability of information and being able to process the returns first.
Products that are returned may be due to the complexity of the product’s
manufacturing process, such that the production process not going as originally planned,
persons in the production not being qualified enough, and decisions made at the production
stage being incorrect (Moore, 2005).
Some organizations that do not value reverse logistics are finding it hard to penetrate
the market. They are marginalized by companies that have already integrated reverse logistics
into their system. The companies understand that forward manufacturing has to be
complimented by reverse logistics. When considering the product quality, ensuring that the
product can compete in the market effectively with deliveries that reach the consumers on
6. time, warranting that the rate of damaged goods is kept to a minimum. These companies do
not do business by refusing to buy raw materials or outsourcing the services of suppliers.
Some of the companies that have used reverse logistics believe that they have greatly
improved customer service and that the income from reverse logistics is notable. To
successfully provide the reverse logistics services, the company should ensure that forward
manufacturing and reverse logistics exist hand in hand. The combination of the two processes
can give the company better results. The company can use the same equipment and
workforce to work on the returned goods as those from forward manufacturing. Therefore,
the company does not spend extra on the reverse logistics chain, helping in reducing
unnecessary costs (Ait-Kadi, Chouinard, Marcotte & Riopel, 2012).
The reverse logistics program should aim at the collection and processing of returned
goods only for by-products that could not be controlled. Preventive measures should be done
before the goods are sent to the customer, hence, saving shipment and other miscellaneous
costs. Details, such as the date of expiration, damaged goods, the incorrect goods or quantity
ordered should be checked and should not be a concern for the reverse logistics process. The
company should work to improve its service delivery to ensure only uncontrollable returns.
The company should also consider the life cycle of a product. If it is short, then they
should speed up the process as it might result to more losses if the product stays too long on
the reverse logistics process. Otherwise, its value will decline, and so will the prices.
The company should work on the communication systems in the company. This will
help the company to be informed on customer demands. It also opens up communication
lines between the company and the suppliers and transporters for the timely collection and
delivery of returned goods.
7. Methodology
Companies that have embraced the reverse logistics process have been able to
significantly reduce the costs they incur from operations as a result of recycling their
products. When the company is just starting in this process, challenges are expected to be
encountered. To correctly come up with correct decisions, the company needs to put into
consideration a few important factors.
Product acquisition involves the collection of the product from the customers to
deliver back to the manufacturer. The state, the value and the time it takes for the collection
should be planned for so as the company does not find itself with lots of products that it is
overwhelmed. This makes it almost impossible for the company to remanufacture the
products it acquires efficiently. To effectively collect the products, the company can organize
collection points with its retailers and distributors. The products collected are then taken to a
central point where they are inspected, classified, and worked on. It should come up with a
fast way to ensure that the products reach the manufacturers at a timely speed, to discourage
further depreciation of the product being transported.
The company should also come up with effective handling methods, giving
consideration to the products being handled. The inspection and disposition of the collected
products should be tested, categorized and their state of quality noted. This can prove to be
very involving and, therefore, the company should come up with the necessary technology to
speed up the whole process. It should make decisions on products that need to be reworked
early on as this will reduce the costs incurred from their shipment and handling. This also
ensures that the products are remanufactured and taken back to the market.
8. By reconditioning the product, the value for the goods collected is attained. The
company extracts some parts that are used to recondition other goods or the product is
remanufactured and put back into the market. The company should come up with correct
decisions so as to ensure that the correct diagnosis is done on the product. This then ensures
costs do not accrue and the product’s value increases.
In distribution and sales, a company seeking to sell its remanufactured product should
do a market analysis to ensure that the market for the recycled products exists or if it needs to
create one. A new market needs more investment in marketing as it targets both the original
consumers of the product and those who cannot afford the new products. It should educate
the potential consumers on the products that are recycled and allow them to make a choice.
The reverse logistics process starts when the products go back to the supply chain for
recovery or for it to be reclaimed. The reason why the company accepts the items that are
being returned is due to the financial gains, whether direct or indirect, as well as the policies
that stem from the company’s extended responsibility. Companies are using reverse logistics
as a marketing tool to beat competition as well as for other reasons. They also are trying to
protect their market base by preventing other companies from accessing their technology and
enter the market. They also do it to win over their consumers (Kleber, 2006).
Results and benefits
The company and its distribution line have not been designed to handle back flows so
they have no knowledge on how to handle them. The returns are not properly packaged as
those from the forward manufacturing. The company should come up with clear guidelines
on the priority to be given to these products and the proper ways to handle it.
9. The company should also employ better quality logistics on the forward operations.
This reduces the returns once the product reaches the consumer. The best policy should be to
have no returns from the consumers to the company. Returns take up time and costs that
could have been reduced, given the proper logistics on the forward operations. The company
should set aside resources that will help in the implementation of the reverse logistics
process.
The customers’ satisfaction and loyalty is achieved when the customers are retained
as this gives them the assurance that faulty products are accepted by the company. The result
is the customer feeling valued and there isn’t any bad experience which would result in the
company losing customers. It also results in reduced repairs, parts that need to be replaced,
and the transportation costs. The company can keep costs down and continue the forward
manufacturing process.
The company can also get customers’ feedback and enable them to work out the
problems. This gives the customers more confidence in the company. The company, by
knowing the reasons why the goods were returned, can then get to the root causes of the
problems and make sure that they do not recur in the future.
Through reverse logistics, the company sets itself apart from its competitors, creating
a larger customer base, hence, resulting in increased sales.
Conclusion
Companies that have integrated the reverse logistics have found that when they come
up with products that have a short life cycle, this tends to affect the product’s value, making
10. the product age and lose its value at a faster rate. The company is responsible for its goods
and end up giving warranties and after-sales services to its clientele.
From the growing global concern over the protection of the environment, the
companies are forced by the environmental bodies and consumers alike, to be responsible for
their goods. The companies become very involved in the retrieval and collection of their
products.
From the recycling and remanufacture of their wastes, companies are able to set up
new businesses and increase their income. This works to reduce pollution of the environment
and creates job opportunities for those involved, either directly and indirectly.
For a company to be successful when implementing the reverse logistics, they should
balance the process with forward manufacturing. This closes the loop and helps the company
attain more profits and incur less wastage.
Reverse logistics practices have been used by businesses for a long time now, but
these practices that have been introduced work to ensure that it is now practiced
professionally due to its practicality.
Reverse logistics should be able to give maximum returns from the goods and
materials that are returned to the company. It serves to minimize the costs that the company
will incur should a product be returned. It also minimizes the impacts on the environment
should the product be discarded. This means that the products do not pose hazards to the
environment.
Reverse logistics is warrants that the company’s products and services to its
customers is of quality and customer satisfaction is the topmost priority.
11. References
Ait-Kadi, D., Chouinard, M., Marcotte, S., & Riopel, D. (2012). Sustainable reverse logistics
network: Engineering and management. Hoboken, NJ: Wiley and Son.
Guide, V.D.R. & Wassenhove, L.N.V. (2002). The reverse supply chain. Harvard Business
Review, 80 (2), 25-26.
Kleber, R. (2006). Dynamic inventory management in reverse logistics. Berlin: Springer.
Moore, R. (2005). Reverse logistics: The least used differentiator. San Francisco, CA: United
Parcel Service of America.
Sudalaimuthu, S., & Raj, A. S. (2009). Logistics management for international business: Text
and cases. New Delhi: Prentice Hall of India.
