Abstract
Reverse logistics monitors the movement of items from the consumption point to the company location for recycling, reuse, or disposal. This article examines the consequences of reverse logistics on corporate performance and consumer happiness and its effectiveness in the demand and supply chain. Online purchasing and selling have increased the number of returns, adding to reverse logistics. Incomplete orders, broken products, incorrect packaging, and inaccurate delivery have increased. Due to the high number of returned products, many organizations and sectors have implemented reversal logistics systems. Authorities have found multi-pronged initiatives and policies to monitor reverse logistics in business and make it work properly. Sustainable reverse logistics techniques safeguard the environment, encourage competition, and boost ROI through re-manufacturing. The report evaluates the literature on reverse logistics and identifies the process’s limitations.
Keywords: Reverse logistics, business, supply chain
Introduction
To varying degrees, most companies’ core activities revolve around production, commodities handling and packaging, portfolio record keeping, warehouse storage, and delivery. Business logistics is tracking the distribution of a company’s goods and services from the place of origin to the final consumer (Govindan & Bouzon, 2018). Thus, reverse logistics is concerned with managing the flow of products from the point of consumption back to the manufacturing facility or business premises for reuse, refurbishment, or disposal. The importance and widespread acceptance of the reverse logistics incorporate sector have grown as more companies embrace online marketing and sales. Return rates for online items were three times higher than those purchased in conventional brick-and-mortar outlets (Bhasin, 2019).
Businesses have found reverse logistics to be helpful not just for practical objectives but also for academic inquiry. As a result, it is viewed as a costly, complex, and time-consuming process. With increasing profits and customer satisfaction as the firm’s top priorities, management must think about how to handle customers who are not satisfied for various reasons, such as the product’s features, an incomplete order, a canceled order, or damage to the product during production, packaging, or delivery. Some businesses return as many as 50% of orders (Bhasin, 2019). So, a well-organized product return policy can be beneficial, easy to handle, and crucial to winning back customers’ trust through the company’s reverse logistics process.
Business reverse logistics is hardly a stroll in the park either, necessitating a chain of skilled workers from the customer’s hands back to the factory. Transporting the returned goods, inspecting them for flaws and recording them so that similar situations do not arise in the future, and deciding whether to fix them, recycle them, resell them, or dismantle and dispose of them are all steps in the process (Liao, 2018). Given its importance in the currently highly competitive and quickly evolving business environment, this article will examine the broad topic of reverse logistics. The economic, social, and environmental implications of the reverse logistic exercise will be discussed, along with the many elements of the activity and their contributions to the considerations addressed during company discussions. The study’s overarching goal is to define reverse logistics by focusing on its practical significance in the corporate world and the critical aspects of the process that have already been emphasized.
Analysis of Reverse Logistics on Why, What, and How
Reverse logistics drivers (why)
The first step in reverse logistics is for products to enter the supply chain again, either because they need to be recovered or because of the value they once held. Generally, the person returning the product and the person receiving the product are both attempting to recoup some of the product’s worth (Wijewickrama et al., 2021). We divide the motivating factors into the following three classes: direct and indirect economics, legislation, and extended responsibility.
All remediation efforts that yield monetary gain whether immediately or in the long run are motivated by economics. Profit from recovery actions, such as reducing expenses, reducing material consumption, or procuring valuable spare parts, is discussed previously. Due to marketing, competition, and strategy, a company might benefit from Reverse Logistics even if it does not immediately yield a profit. A business may plan for the future based on assumptions about factors such as pending legislation. A business can make amends with its customers and reestablish a favorable public profile. A sustainable product line can also be an element of customer relationship management, especially with the rise of environmental awareness in today’s culture.
Legislation is any rule of law that specifies that a corporation must reclaim its goods or accept them back, such as package recycling requirements in Europe and the ability to return items purchased online in some nations like the UK (Wijewickrama et al., 2021).
Extended responsibility refers to a set of guiding principles that, in this context, encourage a business or organization to become ethically involved in reverse logistics. It is not uncommon for there to be more than one motivation behind a reverse logistics operation (Wijewickrama et al., 2021).
Reasons for returning goods
The typical supply chain order is reflected in the order in which the return reasons are presented: from the manufacturer to the wholesaler/retailer to the end users. As a result, we categorize returns as either coming from the manufacturer, the distributor, or the consumer.
Manufacturing returns
The term “manufacturing returns” encompasses all situations where materials or finished goods must be retrieved throughout the manufacturing process. There are many causes for this phenomenon. During production, there is always the chance that some raw materials will be wasted, some intermediate or final products will fail quality tests and need to be redone, or some finished items will be left over. All but the second fall into the “faulty” category, while the first and third represent the “not needed” group (Wijewickrama et al., 2021). The overage of raw materials, the results of quality assurance, and the scraps from production are all components of manufacturing returns.
Distribution Returns
Distribution returns are all returns initiated by a supply chain player, including the producer, during product distribution. Terms like “commercial returns,” “stock adjustments,” and “functional returns” are included. Recalls are conducted when there is a concern for a consumer’s safety or health and are often initiated by the product’s maker or supplier. Retailers and wholesalers often return unsold inventory or products shipped in error to the original supplier (wholesaler or manufacturer). These transactions are considered commercial returns.
The latter category includes items that have now gone out of dates, such as food and medicine. When a link in the supply chain moves inventory between nodes in the network, such as between warehouses and retail locations, an adjustment must be made. Functional returns include anything in the supply chain that must move back and forth because of the nature of its function. Pallets are a common distribution carrier; their primary purpose is to transport goods from one location to another, and they can be reused multiple times.
Customer/User Returns
Consumer-initiated returns, or customer returns, occur when a customer sends back an item since they have used it. End-of-use, end-of-life, warranty, repair, and service are only a few of the valid returns grounds. When a customer’s demands or expectations are not satisfied, a refund guarantee allows them to back out of the purchase, often within a limited period after receiving the product. Return by the customer can be due to negative preferences. Several companies offer some form of refund for products that are sent back by customers. The subsequent two explanations concern problems are arising when using the product.
Customers who purchase a product with a warranty can send it back if it is not up to par with the manufacturer’s stated quality. There are instances when customers send back products in hopes of getting repairs done, a replacement, or a refund, all of which require the original product to be recovered. Customers who purchase a device after the warranty period has ended still have access to support for ongoing upkeep and repairs. However, they are no longer entitled to a free replacement. Products can be serviced by the customer, at their location, or by the manufacturer. Spare parts are returned in the former scenario since it is difficult to predict in advance which parts will be required for the repair.
What: Types and nature of returned goods
Recoverability appears to be affected by three features: product composition, product use pattern, and product deterioration. Product composition involves four aspects: disassembly ease, constituting elements homogeneity, dangerous materials presence whereby they are removed before recycling the product, and transportation ease. These factors often impact the financial viability of reverse logistics operations. They decide if it is better to demolish the product’s structure and recycle the materials or to deconstruct and retrieve the parts. These features are integral to the product and are decided during the design stage. That is why it is crucial to think about product recovery whenever you are making something.
The amount of wear and tear on a product is proportional to how the product was used; therefore, understanding how the product was used will help inform collecting decisions. Use-case specifics include two categories: usage location, the more popular areas that make collection more of a challenge, and the distinction between continuous long-term use and short, irregular use, such as in the case of hiring, based on the intensity and duration of the use.
Characteristics of deterioration influence whether a product retains the sufficient capability to be repurposed as a whole or in pieces, which significantly impacts the recovery option. The following factors are significant;
Inherent deterioration: how quickly does the product degrade due to use? If a product is wholly consumed while in use, like gasoline, or ages quickly, such as a battery, reuse choices are restricted, and recycling could be the only alternative.
Reparability: Can a product be repaired or modified to a better state with relative ease? Is a simple fault diagnosis achievable? Rotatable objects, such as rechargeable batteries, can be quickly restored to their original state. This factor has a significant effect on service and guarantees returns. Repairs tend to be labor-intensive and become increasingly costly, and recycling is frequently employed.
Homogeneity of deterioration: do all parts age at the same rate or not? The former is preferred, but it is not always feasible. The item may be eligible for re-manufacturing or parts recovery in the latter scenario.
Deterioration of the economy due to introducing new items: products such as computers may become outdated when their functionality is obsolete. This allows for reuse on a secondary market or the recovery of parts.
How: Actors and processes of reverse logistics
The “how” perspective explains how reverse logistics works in practice, i.e., how stakeholders recover the product’s value. Actors may include receivers, collectors/processors, and returners. The next group of actors in reverse logistics involved in processing and collection is the independent intermediaries. Every actor has a distinct objective, such as the manufacturer may do recycling to prevent jobbers from reselling the product at a lower price. There are several types of recovery; product recovery dealing with the reuse of the original market, e.g., containers; component recovery dealing with re-manufacturing; material recovery dealing with recycling; and energy recovery, which involve burning a product and capturing the released energy.
In reverse logistics, four primary procedures exist. Redistribution occurs after collection, inspection, selection, sorting, reprocessing, direct recovery, and distribution. The term “collection” describes the process of transporting goods from the client to the place of recovery. Here, we inspect the goods, evaluate their quality, and settle on the best recovery method. The terms “direct recovery” and “indirect recovery” are used interchangeably to refer to the same process. Repair, refurbishment, re-manufacturing, retrieval, recycling, and incineration are all examples of reprocessing (Liao, 2018). Last but not least, redistribution is the act of reintroducing the reclaimed items into the market. Items are inspected, selected, and sorted according to the recovery option, and then within each recovery option, products are categorized according to quality level and recovery pathway.
Conclusion
Reverse logistics is concerned with managing the flow of products from the point of consumption back to the manufacturing facility or business premises for reuse, refurbishment, or disposal. The study’s goal was to define reverse logistics by focusing on its practical significance in the corporate world and the critical aspects of the process that have already been emphasized. The essay analyzed reverse logistics on why what, and how. We discuss the motivations behind businesses and organizations engaging in Reverse Logistics (both at a strategic level and the underlying causes of reverse flows) and the outcomes of this activity (return reasons). The essay discusses the features of the product that make a recovery desirable or necessary and provides real-world examples to illustrate the points. This article details the processes and actors involved in Reverse Logistics; how value is recovered from products.
References
Bhasin, H. (2019). Reverse Logistics: Meaning and Examples of Reverse Logistics. Marketing91. Retrieved 24 November 2020, from https://www.marketing91.com/reverselogistics/.
Govindan, K., & Bouzon, M. (2018). From a literature review to a multi-perspective framework for reverse logistics barriers and drivers. Journal of Cleaner Production, 187, 318-337. https://doi.org/10.1016/j.jclepro.2018.03.040
Jayasinghe, R. S., Rameezdeen, R., & Chileshe, N. (2022). Modeling the cause and effect relationship risks in reverse logistics supply chains for demolition waste. https://doi.org/10.1108/ecam-10-2021-0853
Liao, T. (2018). Reverse logistics network design for product recovery and re-manufacturing. Applied Mathematical Modelling, pp. 60, 145–163. https://doi.org/10.1016/j.apm.2018.03.003.
Wijewickrama, M. K. C. S., Chileshe, N., Rameezdeen, R., & Ochoa, J. J. (2021). Information-centric influence strategies for quality assurance in reverse logistics supply chains: external stakeholders’ perspective. Benchmarking: An International Journal. https://www.emerald.com/insight/content/doi/10.1108/BIJ-05-2021-0276/full/html
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