What is Reverse Logistics?

Logistics is defined as the complex process of moving a product from the manufacturer, through the channels of distribution, and finally arriving in the hands of the consumer. As technology advances and transportation becomes more streamlined, convenience for the consumer has become an industry norm. Logistics is critical for most businesses to get their product into the hands of the consumer, but what occurs when the customer returns a product to the distributor or manufacturer? This is where reverse logistics' role begins.

Reverse logistics is the supply chain management process that helps return a product to its original manufacturer, distributor, or third-party service provider. Merchandise moves backward, or in reverse, through the traditional logistical supply chain. These products can be either repaired/refurbished and resold or if deemed unrepairable, recycled. The goal of reverse logistics is to maximize the value of a company's assets, create a more efficient supply chain, and build better relationships between a company and its clients.

A company can benefit immensely from a structured reverse logistics program. A robust program can increase client satisfaction by allowing them to easily return merchandise, have the products repaired, serviced, or repackaged, and decrease waste by reusing or recycling merchandise that would normally go to a landfill. This can save a company's money by minimizing the amount of money lost when a product is returned.

Sustainability is another advantage of creating a comprehensive reverse logistics program. According to globalewaste.org, the United States generated 6,918 kilotons(7,625,789.65 US tons) of e-waste in 2019. 85% of this waste was sent to a landfill. The e-waste includes precious metals like copper, iron, gold, silver, and platinum. The return, repair, reuse, and/or recycling of products that produce e-waste, through a reverse logistics program, can serve to reclaim those assets and help reduce a company's carbon footprint. A number of companies that specialize in reverse logistics, especially ones that handle electronics, undergo rigorous audits to maintain sustainability certifications. A reverse logistics strategy is beneficial for all industries, not just electronic manufacturing.

A company's sustainability is becoming increasingly important in today's business world. A reverse logistics strategy can provide a better way to handle waste, as well as improve competitiveness through supply chain efficiency and cost management. If your business does not have a reverse logistics strategy, now is the time to think about implementing one.

Does your company manufacture or sell telecommunications equipment, servers, data storage devices, and/or other high-value electronics? Learn about how Palco can improve your supply chain operations, asset recovery, and life-cycle management. Learn More →