Reverse Logistics: From Opportunity to Success
Filed under: Logistics
In previous blogs, we have covered the advantages of reverse logistics and have examined why it is often overlooked. In this post, we will explore two examples of the use of reverse logistics in order to portray just how successful the implementation of this strategy can be.
What is Reverse Logistics?
Reverse logistics refers to all procedures associated with product returns, repairs, maintenance, recycling and dismantling of products and materials. Overall, it incorporates running products in reverse through the supply chain to gain maximum value.
Benefits of Reverse Logistics
Reverse logistics can play an important part in the growth of an organisation, having many financial, environmental and societal gains. It is important not to overlook, as organisations can markedly improve their customer service and response times, along with environmental sustainability and company social responsibility.
Reverse Logistics Success Stories:
India has a 4-5% return rate, equalling $12 billion worth of products returned each year. One who has taken advantage of these staggering statistics is Hitendra Chaturvedi. Chaturvedi established a business around taking defective waste products, such as electronics and mobile phones and preparing them for resale.
“4 out of every 100 products shipped forward have to reverse their journey…we have created an alternative channel for factory seconds, and we sell them for a least 25% below market prices” said Chaturvedi.
Hitendra Chaturvedi’s business has proven to be so successful that he expects the end of this financial year to see revenue of over $50,000. Chaturvedi explains, “It took us a while to educate customers about retailing factory seconds but we reassured them with a one-year warranty and genuine parts”.
Recycled Solutions UK Ltd
Another case that enforces the benefits of reverse logistics, involves the services provided to construction companies by Recycled Solutions UK Ltd.
Recycled Solutions combine the supply logistics of plasterboard with the collection of the plasterboard waste for recycling. Construction sites using Recycled Solutions back-hauling services have their plasterers place all plasterboard surpluses into numbered waste bags. This is then delivered back to the depot and waste is accumulated until it reaches a sufficient amount to be transferred to a recycling plant
At just one construction site, Recycled Solutions were able to collect 37 tonnes of wasted materials. This equates to around 10% of excess plasterboard being recycled due to the implementation of reverse logistics.
Benefits to the construction site also included:
• Reduction in waste management costs of around $2,000 per year
• Travel reduced by approximately 1,010 km per year when compared to previous collection methods
• Net reduction in carbon emissions of 0.86 tonnes CO2 per year
Reverse logistics can be valuable in increasing product life-cycles, supply chain complexity, maintainable practices and consumer preferences. More value can be extracted from used/returned goods and this reduces labor input, time and costs of raw materials involved in the original supply chain. Reverse Logistics can also increase customer satisfaction and loyalty through paying more attention to faulty goods and repairs of merchandise; including gaining feedback to make improvements and to increase understanding of the real reasons behind product returns.
Information sourced from:
Phadnis, S., Reverse Logistics: Best out of e-waste, The Times of India (2/1/13)
The Old Academy., Reverse Logistics for Plasterboard: A Unique Operation to Manage the Delivery of Plasterboard and Backhaul the off-cuts and Wastage.
Did you find this blog post useful?
Next entry: Improving the Layout of your Warehouse
Previous entry: Forklift Maintenance