Reverse logistics play a significant role in the profitability of a warehouse that operates in the retail or e-commerce order fulfillment industry because it maximizes asset recovery, optimizes supply chain efficiency, reduces costs and improves customer experience.
A prime example of the importance of reverse logistics is evident during the holiday season. For the holidays and the first few months afterward, consumers return more items than any other time of the year. If a company isn’t equipped with a reverse logistics strategy, it risks losing revenue and future consumers.
How Reverse Logistics and Sustainability Work Together
As important as reverse logistics is to keep operating costs low, it is an equally important component in a company’s sustainability practices. Because the goal of reverse logistics is to maximize value from assets, it makes recycling products and materials a focal point. As a result, reverse logistics ensures a company produces less waste.
Reverse logistics activities—such as repair, refurbishment, repackaging, recycling and material harvesting—can reduce a company’s environmental, social and economic impact. At the same time, it can increase a company’s profitability and asset utilization. In this way, reverse logistics is essential for companies wanting to improve sustainability because the two are intertwined.
What is Reverse Logistics?
Reverse logistics is a system of processes to move products, parts or materials from the end consumer or warehouse back through any stage of the supply chain.
Where traditional, or forward, logistics addresses the flow of product from manufacturer to consumer, reverse logistics deals with product returns
Reverse logistics also includes the return of leased equipment or unsold inventory, as well as the disposal or recycling of unused materials.
Reverse logistics can involve a series of different processes, depending on the company, but it is made up of two primary core components:
Returns management
Remanufacturing/refurbishing
The Benefits of Reverse Logistics
When reverse logistics is implemented properly, it can benefit a business in several ways. It helps reduce administrative, transportation and support costs while increasing product velocity. It also plays a key role in improving customer satisfaction because people appreciate an easy and effective return policy, which can lead to improved retention rates and higher profit potential. Reverse logistics also helps improve the efficiency in supply chain operations because it optimizes product traffic in both directions.
Now is the time to implement a reverse logistics strategy if you don’t have one in place. A reverse logistics strategy can help your bottom line, improve competitiveness and establish more sustainable operations. Learn about how Prologis designs sustainable warehouses to benefit your supply chain operations.
