Logistics is 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 origin to the end of consumption to conform to customer requirements.
Reverse logistics move goods from their typical final destination to capture value or proper disposal. Remanufacturing and refurbishing activities may also be included as processes resulting from reverse logistics.
Reverse logistics is more than reusing containers and recycling packaging materials. Redesigning packaging to use less material or reducing the energy and pollution from transportation are essential activities, but they might be secondary to the fundamental importance of overall reverse logistics.
Reverse Logistics And The Circular Economy
The importance of reverse logistics has increased due to the exponential growth of e-commerce which can typically result in an average of 30% returns per year. The activity is not reversed if no goods or materials are sent backward.
Reverse logistics includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls, and excess inventory.
It also includes recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery. Unfortunately, many product returns end up incinerated or in landfills as companies are hesitant to sell into secondary markets because they believe it may devalue their brand.
Secondary markets can provide additional revenue and sales channels to companies from consumers who may not have been able to afford to buy from primary markets, especially for premium products.
Reverse logistics in the circular economy is collecting and aggregating products, components, or materials at the end of life for reuse, recycling, and returns.
Reverse Logistics: Aftermarket Supply Chain
Closing the loop with take-back programs and warranties. Product defect returns require reverse logistics to get the product from the consumer back to the manufacturer.
Technology is a major enabler of reverse logistics. Sensors and monitoring devices, asset inventory management, the Internet of Things, and blockchain solutions make it easier to identify, locate, track, store data, and communicate with the products and components that, at some point, require maintenance, repair, or replace.
Waste Elimination, Recovery, and Customer Involvement
Recovering and recycling products is vital to reducing waste. Waste must be eliminated from the beginning of the product design and at subsequent stages so that a brand has a smaller carbon footprint.
Customers are exposed to more information about the consequences of too much product waste on the environment.
If you want to establish a strong relationship with your environmentally-conscious customers, and if you want to save money by reusing and recycling your products, this will be an essential aspect for you to implement into your business.
By having an efficient reverse logistics system in place, you will be able to handle customer returns, especially during the busy holidays, and you will be able to have solutions for how to reuse returned products.
Customers are the center of the supply chain. Therefore, they should be included in the reverse logistics flow. For example, companies can incentivize users to return end-of-use and end-of-life products to get products back.
Benefits For Companies:
First, it sends a message to customers and competitors that the brand is considerate of the environment and strives to reduce waste.
Secondly, it allows the company to profit as much as possible by reusing its products and materials to repurpose them, thus extending their value.
What is Nexity Network?
Nexity Network is building a blockchain-enabled, circular, more transparent, and productive world by rethinking how everything is designed, created, used, and recycled, from the food we eat to the clothes we wear and how we do business.
We are creating the next economy to serve as a bridge for the companies and customers to enable transparently, responsible, and secure product & service flows.
The ecosystem is positioned to solve supply chain complexities, focusing on day-to-day operational activity from environmental damages, visibility gaps to trust between parties, and fragmented data exchange.
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