ok, so that is quite a bold statement that reverse logistics is the real future
As the current global focus is on net-zero, diverse supply chains and agile operations I am sure that a few of you are wondering why I have elevated Reverse Logistics to lofty heights.
So, What is Reverse Logistics?
A brief bit of History
It’s easier to go back to the beginning (promise not too much on history) but reverse logistics started when Amazon was created or at least the concept of the e-commerce world.
Before Amazon online ordering was not a done thing, maybe some very specific products but not in bulk and not in volume, and although customers had the right to return products it was still transacted under standard operations because again it wasn’t a volume business.
Along came Amazon which really unlocked a huge piece of potential for the internet and suddenly there was a need to think about returns more seriously. As customers were being tempted away from the high street with the promise of ease and free returns should the items not be acceptable
This was very different to a high street purchase as you couldn’t return if the items were too big or not the right colour as it was a case of bought as seen, also if you went and bought you were expected to go back and return.
As amazon grew and online transactions became another form of purchasing the concept of returning items became an accepted element of the transaction.
The surge in online ordering provided a very distinct problem that also increased the importance and relevance of reverse logistics.
As the world started relying even more on sourcing from a globalized marketplace and items were no longer built to last, the countries where the buyers (consumers) were located were facing a unique challenge, the landfills were becoming dumping grounds for non-biodegradable items.
Local councils were struggling with the increased pressure on the waste management services and couldn’t see how they could pass back the costs. This gave rise to several initiatives from Governments that put the responsibility of waste back on the manufacturers regardless of where they were located.
A happy side effect of this and maybe the true start of the net-zero drive is that it put the focus on the manufacturers to recycle some of the more expensive parts from the products. The metal elements in your phones are worth a lot of money and as they never expire so can be reused over and over again.
maybe my point about the real future is becoming a bit more understood
So companies started having to look at how they can “reverse” the logistics mechanism so they can get the value of the product without impacting their profit (I know I am quite cynical in my old age).
- Re-sell the items again (subject to quality control)
- Recycle the important parts
- Where and how is the recycling done (APPLE robot anyone??)
- How to dispose of what can not be salvaged and reused
- Sustainable, Environments
- Low costs
This is an oversimplification of the term reverse when the concept is very complicated.
So Why is it the Future?
Most supply chains (or at least the effective ones) are driven based on using data to plan, execute and manage with the focus on taking out the unknown.
So, how can companies build reverse logistics models when the actual trigger of someone wanting to return an item is completely outside of their view.
eg a buyer decides if they want to return an item, for what reason and from where (the buyers may not live where the item was bought)
Also, how do you manage the pricing, the inventory stock levels, the quality of the pieces, separate holding areas in the warehouse and the state of acceptance for the return, while also managing the customer’s expectation as you still want them to be customers in the future?
So the service quality in reverse logistics is more important, remember they are returning an item so may already feel aggrieved that the product wasn’t up to expectations
Useful Points that need to be considered.
- Collect: Pickup from where ever it is in the UK
- Costs, timing and resources
- Deliver to a defined facility
- Is this a middle facility or the final facility
- If it’s the middle facility how to move to a final facility
- Where is it stored while waiting
- Is there any paperwork
- How are you ensuring the quality
- When received at the final facility
- How are they inspected
- And decided on the next action
- How are they sored
- When are they moved on
- The reverse could continue
- How are they recorded in the ERP system
- If it’s not in a system does it really exist?
- If it’s not in the system how can it be managed?
- Collect: Pickup from where ever it is in the UK
And the cycle continues, remember though that as opposed to the standard movement of inventory cargo that is often batch produced and can be mass handled, with returns every piece needs to be handled uniquely.
There are many pictures online for those with the patience to search however I hope that I have added some depth to the term reverse logistics and maybe changed the picture of what is reverse logistics.
Have I convinced you of the importance or do I need to go a bit further?
The reason why I have elevated reverse logistics to the pinnacle of the future is that it is the truest detailed model that captures all the other elements.
If an efficient version can be delivered and although some may be close. Then we may have a chance of delivering an effective sustainable economy that is built on the circular movement of the items.
As we move to sustainable, diversified and agile supply chains there is probably not a clearer depiction than of a reverse logistics model
- The need to keep costs down puts a lot of focus on maximising the effectiveness at every step in the path, reducing movement and activity create innovative ways of solving the problem.
- The input of returns back into companies’ use means they are ultimately getting more from the original product
- Different raw materials
- The unknown triggers of a return mean that the complete reverse logistics have to be built on flexibility so that it can respond to where ever the demand comes from
- Maybe worth pointing out that being agile doesn’t mean that you need to be quick (food for thought who defines quick?) but can move effectively and efficiently (both not always about time) to satisfy the requirements.
If the characteristics that make up a successful reverse logistics are the requirements for moving current supply chains forward, we then maybe have some of the answers already to make a more sustainable impact now.