PROGRAMME DIPLOMA IN LOGISTICS COHORT 1

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STUDENT NAME ASKOOLUM DRISHTEE

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  INTRODUCTION

Traditionally, reverse logistics has been described as the process of transporting a commodity
from its point of consumption to its point of origin in order to recover value or ensure proper
disposal. It is one of the fastest developing areas of business logistics, with the consequence that
the reach and importance of it are constantly evolving. Reverse logistics involves the avoidance
of returns, the reduction of materials in the forward system to allow less items to flow back, and
the potential reuse and recycling of materials and packaging. Thinking about the long-term
effects of the assistance rendered by an international organization in advance will save money
and time, reduce organizational difficulties and mitigate any future impacts on the environment.

 Definition of logistics and reverse logistics

Logistics is defined by The Council of Logistics Management as “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 origin to the point of
consumption for the purpose of conforming to customer requirements.” Reverse logistics
includes all of the activities that are mentioned in the definition above with the only difference
being that reverse logistics encompasses all of these activities as they operate in reverse. The
method of planning, executing and managing the reliable, cost-effective flow of raw materials,
in-process inventory, finished products and related information from the point of consumption to
the point of origin for the purposes of reprocessing or proper disposal is therefore a reverse
logistics process. Reverse logistics is more than reusing containers and recycling packaging
materials. Redesigning packaging to use less material, or reducing the energy and pollution from
transportation are important activities, but they might be secondary to the real importance of
overall reverse logistics.

Reverse Logistic (RL) is flow of materials, equipment, and finished goods from the end-user to
the manufacturer for the sake of reuse, recovery, or disposal (Marisda, 2004). Therefore, RL
continues to play a critical role in SCM, and this new concept is discussed by many businesses.

The 5 R's of Reverse Logistics

All that is changing. Particularly in the automotive, retail and technology industries, where
there is an increase in recalls and customer returns. Companies are concentrating on reverse
logistics, the last and most neglected frontier for supply chain optimization, in an attempt to
squeeze more efficiencies and cost savings from the supply chain. They are optimizing the five
R's of reverse logistics: returns, recalls, repairs, repackaging and recycling. There are more
than five R's to reverse logistics in all actuality (think receiving, recovery, and reconditioning,
re-boxing, resale). However, let's group them into five main categories.

1. RETURNS

Generally, returns are the first step in the flow of reverse logistics. For a variety of reasons,
clients return items. An item can be flawed, damaged, and seasonal, does not meet expectations,
or is simply an excess inventory. Whatever the purpose, getting processes in place for receiving,
inspecting and checking items, along with return material authorization (RMA) verification and
tracking systems, is the key to managing returns effectively. Some businesses find that
decoupling the return and repair processes fully is more efficient.
2. RECALLS

Another manner in which parts and goods are returned is through recalls. Recalls are more
complicated than basic returns, a vital reverse logistics category, since they usually include a
product malfunction or potential threat and may be subject to regulatory legislation, liability
issues or reporting requirements. Usually high-tech products are recalled due to defective
electronics, design issues, battery problems or hazardous conditions. The key is to have systems
in place to receive, repair, resell or redeem failed parts/products, and to transform a potentially
negative customer experience into a positive one that creates brand loyalty wherever possible.

3. Repair (also refurbishment, re-use, or re-manufacturing)

Not all things that are returned go straight to garbage dumps. Manufacturers diagnose the
defect and patch, refurbish or re-manufacture the product to a like-new condition if the defects
are not too serious and return it to stock. Alternatively, producers may produce different
functional components for re-use at the end of their lives.

As producers understand the importance of re-using products from returned items, these
practices are becoming more widespread. This could be to advance aims at sustainability, cost
recovery, or both. Either way, for both modern and re-used or re-manufactured items, retail
shelves are increasingly stocked.

You can invest too much time and money on repair parts or labor without a reverse logistics
process in place to streamline the repair, refurbishment and/or re-manufacturing of these
products and inventory management procedures to go with them. To ensure effectiveness,
visibility and tracking are crucial.

4. Repackaging (for restock or resale in secondary channels)

There are two situations where returned components and goods could be re-manufactured. Most
products are returned because customers are dissatisfied with them, not because they are wrong
with something. These products are typically repackaged and returned to inventory as quickly as
possible when testing reveals "no trouble found."

Parts or products with minor defects may alternatively be repaired, reconditioned and repackaged
for resale. This is an area where important returns can be delivered by co-locating forward and
reverse logistics processes. The same facility can be used to repackage returns for resale using
secondary channels like wayfair.com, overstock.com, with multi-line packaging capacity already
available for packaging new products.

5. Recycling, disposal, and disposition

In every field, but particularly in high-tech, the emphasis on recycling returned or later part
pieces, components and products promotes more sustainable practices. Electronic manufacturers
are gradually seeking safe, cost-effective and environmentally friendly ways of disposing of
them as goods reach the end of their lease term and need to be scrapped. That may mean hiring
recycling companies from third parties to collect/reclaim waste and dispose of assets for them.
For example; High-tech products such as cell phones or circuit boards, where businesses recycle
rare earth metals such as gold, silver, titanium, palladium or copper, are one sector that is seeing
a rise in recycling and reclamation efforts. Companies can reduce costs and mitigate waste by
salvaging, reclaiming and reusing parts.

It can be a dynamic and time-consuming undertaking to set up or perfect reverse logistics

processes. Especially if reverse logistics is not a core competency or you do not have the
resources to commit to it in-house. As a consequence, many companies choose to outsource
management to professional third parties who can help them enhance efficiency, cost savings,
visibility, inventory management and overall customer experience.
 Figure 1 : TYPES OF REVERSE LOGISTICS
(https://www.keyence.com/Images/ss_logistics_b_field_001_1799658.png)

 Some example of reverse logistics across the world

1. Apple

Apple is a great example of a reverse logistics system that has been successful. Apple
produces iPhones and other products, which are then sold worldwide in different shops.
Consumers buy iPhones and enjoy the product before they want their product to be upgraded.
Apple gives buyers discounts on a new product if they turn in their old product when
customers return to a store to purchase the current model.
The old versions are then collected by Apple and the items are taken back to their factories.
This approach helps Apple to use components of its newer products from previous versions,
allowing Apple to be more environmentally conscious and saving money on manufacturing
costs.
2. H&M

The Swedish multinational clothing retail company Hennes & Mauritz AB is known for its
fast-fashion clothing for men, women, teens and children. In all of their stores worldwide,
H&M accepts used clothing. The clothes can be any brand or condition, and H&M can use
the clothes they have gathered to produce an all-recycled line of clothing. This form of
reverse logistics chain enables all types of customers, even though they have not purchased
their apparel from H&M, to get involved with the company.