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Reverse Logistics In Supply Chain Management
November 15, 2014


Define Reverse Logistics

Reverse logistics is the last part of the SCOR model. By definition it means from the point of consumption to the point of initiation, but what?

It can even be a customer’s feedback on a product after consuming or utilizing it so that the company can utilize that feedback in a positive manner in order to improve its product. Secondly, it can also be waste materials that are left over by the consumers, like empty cans, etc and can be utilized by the company in one of or the other.

This is how the loop is of a product cycle is completed, that is from point of initiation to the point of consumption and then finally back to the point of initiation and this is known as closed loop logistics.


Reverse Logistics-closed loop logistics-In Supply Chain Management


What is reverse logistics?

Reverse logistic is a procedure or process which deals the flow of product and service in a backward direction, that is, from the customer to the respective company domains with the help of supply chain to achieve maximum value and customer satisfaction. Some of the examples of reverse logistics are, return of product, repair of a product, recycling, disposal, customer feedback, etc. The advancement in the importance of Green Logistics and Green Supply chain management has created an urge of having reverse logistic.

Forward logistics or simply logistics deals with the movement of product from the point of initiation towards the point of consumption, however, reverse logistics deals the movement of product in an inverse direction. It can also be from customer back to distributor or even back to the manufacturer. Any procedure that is executed after the product is sold to the customer or the final end involves reverse logistics. Sometime reverse logistic can be executed before the product reaches to the customer, for example a defect product is identified at the distributor end or some damage is there. In such scenarios, products can move back to the manufacturer.


Importance of reverse logistics

Reverse logistics plays an important role in not just creating customer satisfaction, but also plays a pivotal role in minimizing environmental issues by reducing waste, recycling and proper disposal of products that can harm the environment.


Return of surplus goods

Some companies provide their downstream members in supply chain with goods in excess, that is, more than their requirement, with a common understanding that the left over goods that are not sold will be taken back by the company providing these goods. In this way the downstream member in the supply chain carry more stocks with the option of returning the surplus goods back. On the other hand, the producer or the company that provides the goods makes their channels / end point more fertile and hence they get an advantage of more sales by reducing or minimizing the probability of having stock outs in the market and an additional advantage of storing their additional productions by downstream members, rather than spending or wasting resources on their own warehouses.


Green reverse logistics – Reusable packaging

One of the major advantage of reverse logistics is usage of reusable packaging. Packing materials that are left over after the consumption of the goods can be brought back to the company to be reused with the help of closed loop logistic system. Some example are, plastic bottles, cylinder, cans, etc.


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