What is reverse logistics?
Reverse logistics is a strategy in supply chain management where distributed goods, or some part of the good, is reused. The term ?reverse logistics? comes from the idea that once the good is transported through the entire supply chain, (supplier, to manufacturer, to customer, to final customer) the reusable portion of the good then travels upstream through the supply chain in the reverse order. More simply stated, any movement of a product within its supply chain after the end customer purchases it is considered to be reverse logistics.
How can I use reverse logistics?
Typically, companies and businesses use reverse logistics to implement proper product disposal, to retrieve parts, or to refurbish used products. The following ideas are great for applying reverse logistics into your company?s supply chain management:
Environmental Initiatives – If you are a company that prides itself in being environmentally friendly, then reverse logistics is an excellent strategy for your supply chain. For example, many products can damage the environment if put in landfills. Reverse logistics provides a way to ensure Â ?products are properly disposed in a way that reduces harmful waste. Also, reverse logistics is useful with recycling initiatives. Dasani is an excellent example of this as they have placed Dasani Bottle Bins across college campuses. Consumers can place their bottles in the bins, which then provides Dasani with the opportunity to retrieve the used bottles and recycle them. There are countless examples of this, including recycling cell phones for their metal parts that go towards energy and mining services.
Profitable Returns – Reverse logistics gives a member of the supply chain an opportunity to receive a return from the end-product sold. For example, Apple purchases their customers? older iPhones for the internal parts. This reverse flow starts off when customers sell their phone back to the Apple store. Apple then gives the used iPhone to the manufacturers where they are able to retrieve the useful parts. Since the original assembly of the iPhone is considered to be a sunk cost (a cost that is no longer relevant), the parts are seen as an additional source of revenue given their monetary value jx0rwoa.
Defects and Recalls – Unfortunately, there are many instances when companies are required to enforce a recall on a defective good. Johnson & Johnson is known for its Tylenol recalls due to poor quality-control at the manufacturing plants. By understanding and efficiently using reverse logistics in their supply chain, Johnson & Johnson could save itself thousands of dollars when returning the Tylenol back to the manufacturer.
Why is reverse logistics important?
Reverse Logistics is important because of the successful impact it has on supply chain management, contributing to a company?s overall success. Experts say that companies no longer compete with companies, but rather supply chains compete with supply chains. Now would be a good time to review your company?s supply chain management to see how implementing a reverse logistics strategy can benefit you.