The Process and Challenges of Reverse Logistics

Reverse logistics in a warehouse setting involves 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 point of consumption to the point of origin for the purpose of recapturing value or proper disposal.

In layman’s terms, reverse logistics involves moving goods from their typical end destination for the purpose of increasing value or for proper disposal. Reverse logistics includes the management and sale of surplus inventory or raw materials, as well as the returns of leased equipment, machines and other hardware.

Because reverse logistics involves product or materials moving at least one step back in the supply chain, it can pose challenges. But reverse logistics can also deliver certain benefits. In this guide, learn about the process of reverse logistics, its benefits and its challenges.

What is the Process of Reverse Logistics?

In reverse logistics, goods move from the end consumer back to the seller or manufacturer. The most common example of reverse logistics is when a consumer returns a purchased item for a refund. The returned products may be resold or disposed of permanently.

In recent years, reverse logistics has become a key component of any successful streamlined supply chain. In a warehouse environment, reverse logistics pertain to any of the following activities after the initial purchase:

  • Returns
  • Remanufacturing
  • Refurbishing
  • Unsold goods
  • End-of-life
  • Delivery failure
  • Equipment rentals/leasing
  • Equipment repairs/maintenance
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Challenges of Reverse Logistics

Reverse logistics is not without challenges. One of the most common is tracking the profitability of the reverse logistics process. Depending on the items, it’s not always profitable to ship products back to a distribution center because the value of a product may be less than the cost of shipping.

Another common challenge is having the necessary infrastructure to track an item’s warranty status. It’s also important to ensure any repair process is cost-effective.

Differences Between Reverse Logistics and Traditional Logistics

 

Reverse logistics deals with recapturing value from products, parts and materials that have been returned from the end consumer.

Traditional logistics, on the other hand, deals with the flow of products from the manufacturing factory all the way to the consumer.

The reverse logistics process usually involves returns, recalls, repairs, repackaging for restock or resale, recycling and disposal. Traditional logistics involves direct order fulfillment, hub services, pick-and-pack services and shipping.

Retail and e-commerce businesses use traditional logistics for moving products to customers, but not all use reverse logistics.

Companies that collect and reuse some part of their distributed goods usually use reverse logistics, which can translate to anything from a spring water company that collects and recycles used bottles to a shipping service that allows customers to reuse boxes or recycles them to make new ones.

Apple is one of the best examples of reverse logistics. The company encourages customers to trade in their old devices for discounts on new products. The returned items are then sent back to factories, broken down and recycled into new parts that are used in the production of new devices.

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Find out how Prologis can improve your global logistics, whether your company’s operations use traditional or reverse logistics.