Reverse logistics in a warehouse setting involves the process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.
In layman’s terms, reverse logistics involves moving goods from their typical end destination for the purpose of increasing value or for proper disposal. Reverse logistics includes the management and sale of surplus inventory or raw materials, as well as the returns of leased equipment, machines and other hardware.
Because reverse logistics involves product or materials moving at least one step back in the supply chain, it can pose challenges. But reverse logistics can also deliver certain benefits. In this guide, learn about the process of reverse logistics, its benefits and its challenges.
2. IN A COMPETITIVE ENVIRONMENT, THE PHILOSOPHY OF ACCEPTINGPRODUCT
RETURNS AS AN EDGE OVER COMPETITORS HAS RESULTED INHUGE
CHALLENGES TO LOGISTICS MANAGEMENT
TODAY, LOGISTICAL SUPPORT MEANS GOING BEYOND 'FORWARDLOGISTICS' TO
INCLUDE PRODUCT RECALL, PRODUCT - DISPOSAL ANDPRODUCT RECYCLING
ETC.
THE LOGISTICS OBJECTIVES INCLUDE REVERSE MATERIALS FLOW SYSTEMTO
EXTEND LIFE CYCLE SUPPORT TO THE PRODUCTREVERSE LOGISTICAL
COMPETENCY IS THE RESULT OF WORLDWIDEATTENTION TOWARDS
ENVIRONMENTAL & ECOLOGICAL PROBLEMSo
3. REVERSE LOGISTICS A COMPETITIVE TOOL
TOO REMAIN COMPETITIVE AND DIFFERENTIATED, THE ORGANISATIONACROSSTHE
WORLD ARE SHOWING SPEED AND RELIABILITY INSERVICE OFFERINGS SUCH AS
REPLACING DEFECTIVE GOODSREPAIRING OF USED PRODUCTS
REFURBISHING THE RETURNED PRODUCTS
CALLING BACK SUB-STANDARD OR HARMFUL GOODS
DISPOSING-OFFPRODUCT WASTE
THESE SERVICES ADD TO THE COMPETITIVENESS OF AN ORGN.OPERATING IN A
REGULATORY ENVIRONMENT & CREATE CUSTOMERVALUE BY PROVIDING A CLEAN
ENVIRONMENTTHROUGH REVERSELOGISTICS SERVICES WITHOUTANY EXTRA COST TO
THE CUSTOMER.
4. DEFINITION
REVERSE LOGISTICS MAY BE DEFINED AS A PROCESS OFMOVING GOODS FROM
THEIR PLACE OF USE, BACK TO THEIRPLACE OF MANUFACTURE FOR RE-
PROCESSING, RE-FILLING,REPAIRS OR RECYCLING / WASTE DISPOSAL
.IT IS A PLANNED PROCESS OF MOVEMENT OF GOODS IN REVERSEDIRECTION IN
AN EFFECTIVE AND COST EFFICIENT MANNER,THROUGH AN ORGANISED
NETWORK
5. IT IS AN INTEGRATED SYSTEM IN AN ORGANISATION'S
SUPPLYCHAIN MANAGEMENT
REVERSE LOGISTICS REFERS TO THE SKILLS OF
LOGISTICSMANAGEMENT TO REDUCE, MANAGE &
DISPOSE-OFF WASTEARISING FROM PRODUCTS & INPUTS
6. REASONS FOR REVERSE LOGISTICS
RETURN OF GOODS FROM CUSTOMER FOR NON
PERFORMANCE.
SHORT TERM RENTAL RETURNS
RETURNS SENT TO MANUFACTURER FOR REPAIRS /
RE-FILLING.
REUSABLE CONTAINERS / PACKAGESRETURN OF
INPUTS NOT USED BY MANUFACTURER /
7. GOODS NOT SOLD BY DISTRIBUTOR
EXCHANGEE OF NEW PRODUCT FOR THE OLD ONES.
GOODS SENT FOR UP-GRADATION / MODIFICATION.
RECYCLING OF PRODUCT
8. SCOPE OF REVERSE LOGISTICS
REVERSE LOGISTICS, THOUGH CONSIDERED AS A
DRAIN ONCOMPANY PROFITS, IN TODA
Y'S
COMPETITIVE MOREAND
MANUFACTURING
MARKETS, MORE
FIRMS ARE PLANNING OF
INCORPORATING THE REVERSE LOGISTICS SYSTEM
IN THEIR SUPPLY CHAIN PROCESS
FOR FOLLOWING REASONS:
10. THE REVERSE LOGISTICS NETWORK CAN BE USED
FOR VARIOUSPURPOSES SUCH AS REFILLING,
REPAIRS, RE- FURBISHING,RE- MANUFACTURING
ETC. DEPENDING ON THE NATURE OF
THEPRODUCT, UNIT VALUE, SALES VOLUME AND
DISTRIBUTIONCHANNELS.
11. REP
AIRS AND REFURBISHING
REPAIR IS A REGULAR FEATURE IN SERVICE
BASED PRODUCTSUNDERA WARRANTY
PERIOD AND ALMOSTALL
CONSUMERDURABLES NEED REP
AIRS ON A
REGULAR BASIS.
12. REFURBISHING IS DONE TO GOODS RETURNED BY DAMAGE,
DEFECTSOR BELOW PAR PERFORMANCE DURING THE
WARRANTY PERIOD.
MANUFACTURER ESTABLISH THE REVERSE LOGISTICS
SYSTEM, NOTONLY FOR OFFERING FREE SERVICE DURING
THE WARRANTY PERIODBUTALSO FOR EXTENDING THE
SERVICES BEYOND THE WARRANTYPERIOD ON A
CHARGEABLE BASIS.
13. THE SYSTEM OPERATES THROUGH THE COMPANY'S
SERVICECENTERS WHERE REPAIR AND
REFURBISHING TAKES PLACE.
COLLECTION OF DEFECTIVE PRODUCTS IS DONE,
THROUGH THEDEALERS' NETWORK. THESE
COLLECTED PRODUCTS ARE SENTTO THE NEAREST
SERVICE CENTRE FOR OVERHAUL, REPAIRS
ORREFURBISHING.
14. RE-FILLING
REVERSE LOGISTICS IS INTEGRATED TO THEIR
CHAIN BECAUSE OFTHE REUSABLE NATURE OF
PACKAGES SUCH AS GLASS BOTTLES,TIN / PLASTIC
CONTAINERS & METAL CYLINDERS ETC.
IN CASE OF SOFT DRINKS, THE DELIVERY VAN
DELIVERS FILLEDBOTTLES TO RETAILERS (A, B, C)
ENROUTÈ AND COLLECTSTHE SAME NUMBER OF
EMPTY BOTTLES FROM THEM FORDELIVERY TO THE
FACTORY.
15. NO EXTRA TRANSPORTATION COSTS ARE INVOLVED
IN THE PROCESSAS THE SAME DELIVERY VAN
ORIGINATES AND TERMINATES ITSJOURNEY AT THE
FACTORY WHERE THESE REUSABLE BOTTLES
AREREFILLED FOR RE-DELIVERY TO CUSTOMERS.
THE ARRANGEMENT IS DONE THROUGH A HUB AND
SPOKEDISTRIBUTION SYSTEM.
16. PRODUCTS RECALL
THIS IS AN EMERGENCY SITUATION WHEREIN THE
PRODUCTSDISTRIBUTED IN THE MARKET ARE CALLED BACK TO
THE FACTORYBECAUSE OF ANY OF THE FOLLOwING REASONS:
PRODUCT NOT GIVING THE GUARANTEED PERFORMANCE
QUALITY COMPLAINTS FROM MANY CUSTOMERS
DEFECTIVE PRODUCTS CAUSING HARM TO HUMAN LIFE
PRODUCTS BEYOND EXPIRY DATE
PRODUCTS WITH DEFECTIVE DESIGN
17. RECYCLING AND WASTE DISPOSAL
LEFTOVER MATERIALS, USED PRODUCTSAND WRAPPER /
PACKAGESWASTES ARE CAUSING ENVIRONMENTAL
POLLUTION & CREATINGPROBLEMS FOR DISPOSAL.
IN MANY COUNTRIES, GOVERNMENTS ARE DEVISING
REGULATIONS TOMAKE MANUFACTURERS RESPONSIBLE FOR
MINIMISING WASTE BYWAY OF RECYCLING PRODUCTS.
18. RECYCLING PROCESS
COLLECTING WASTE MATERIAL & DELIVERING THEM TO
ENTITYRESPONSIBLE FOR RECYCLING
PROCESSING RECYCLABLES To CREATE SECONDARY INPUTS
USING SECONDARY MATERIALS FOR MANUFACTURING NEW
PRODUCTS
RETURNING THE PRODUCTS TO THE MANUFACTURER
FORRECOVERING THE INPUTS FOR RE-USE
19. RE-MANUTACTURING
MANUFACTURERS IN DEVELOPED coUNTRIES ARE PUTTING
INPRACTICEA NEW CONCEPT OF RE-MANUFACTURING.
DURING THE USAGE OF THE PRODUCT IT UNDERGOES
WEAR & TEAR.
WORN OUT PARTS ARE REPLACED WITH NEw ONES AND
THEPERFORMANCE OF THE PRODUCT IS UPGRADED TO THE
LEVEL OF AVNEW ONE.
SIMILARLY, EQUIPMENT SOLD CAN BE CHECKED AFTER USE
TO THEREMANUFACTURING PROCESS AND BE BROUGHT
BACK TO THEREMANUFACTURING UNIT.
20. SYSTEM DESIGN
CONSIDERATIONS(DRIVERS IN REVERSE
LOGISTICS)
THE SUCCESS OF REVERSE LOGISTICS SYSTEM IN
ACHIEVINGTHE DESIRED OBJECTIVES DEPENDS ON THE
EFFICIENCY ANDEFFECTIVENESS OF FOLLOWING SUB-SYSTEMS
PRODUCT LOCATION
THE FIRST STEP IN THE CALL BACK PROCESS IS TO
IDENTIFYTHE PRODUCT LOCATION IN THE PHYSICAL
DISTRIBUTION SYSTEM OFTHE FIRM.PRODUCT LOCATION
BECOMES MORE DIFFICUL
TAFTER IT IS SOLDAND HANDED
OVER TO THE CUSTOMER.
21. PRODUCT COLLECTION SYSTEM
PRODUCT LOCATION IS IDENTIFIED, THE COLLECTIONMECHANISM GETS INTO
OPERATION.THIS CAN BE DONE EITHER THROUGH COMPANY'S FIELD
FORCE,CHANNEL MEMBERS OR THIRD PARTY. HOWEVER, PROPERINSTRUCTIONS
HAVE TO BE GIVEN TO MOTIVATE THE CUSTOMER FORRETURNING THE PRODU
RECYCLINGG / DISPOSAL CENTRES
THESE MAY BE THE COMPANY'S PLANT/ WAREHOUSES OR SOMEFIXED LOCATION IN
THE REVERSE LOGISTIcS NETWORK.THE CALLED BACK PRODUCTS ARE INSPECTED
BEFORE THEY AREFURTHER PROCESSED FOR FURTHER REPAIRS,
REFURBISHING,REMANUFACTURING OR WASTE DISPOSAL.
22. BARRIERS TO GOOD REVERSE LOGISTICS
LEGALISSUES
UNDER INDIAN REGULATIONS EXCISE PAID GOODS ONCE SoLD BYTHE
MANUFACTURER CANNOT BE BROUGHT BACK TO THE PLANTWITHOUT
PROPER DOCUMENTATIONAND DECLARATION TOEXCISEAUTHORITIES.
THIS IS A VERY CUMBERSOME & TIME CONSUMING PROCESS ANDNON-
COMPLIANCE MAY MEAN THATTHE MANUFACTURER WILLHAVE TO FACE
LEGALACTION.
MANY ORGANIZATIONS TERM REVERSE GOODSAS "JUNKANDTHEY
DON'T WANTTO WASTE THEIR RESOURCES ON THESEJUNKS’.
THE GOODS ARE CONSIDERED UNWORTHYOF ANY INVESTMENT
