Reverse logistics has to be further take into consideration, as it ensure the endcustomer satisfaction, as well as it ensure the availability of products in the aftermarket. The importance of reverse logistics in your supply chain. Pdf some reasons to implement reverse logistics in companies. The importance of reverse logistics in your supply chain network.
There are several reasons why reverse logistics are vital. It is the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, inprocess inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of. Analysis of barriers for reverse logistics international journal of. In reality, reverse logistics costs are less than 4% of total supply chain costs for most companies. The fifth chapter covers the significance of relationships and reverse logistics processes in management of defective products flows in polish manufacturing. Why logistics is so important to supply chains any successful business leader will acknowledge the crucial importance of effectively organized logistics. However, no research has been conducted with the focus on the design of an epidemic reverse logistics network for dealing with medical waste during. Reverse logistics is defined as the process of moving goods beyond their typical final destination for things like reuse, capturing value. Therefore, they just focus on trying to reduce the cost of returns processing.
Besides being a part of reverse logistics, it was hard to find in literature a precise differentiation. Reverse logistics programs are typically complicated by a number of factors. Companies have to accept returns in the shape of products or materials as a legal obligation. While many companies consider the return process to be a necessary evil that shouldnt. Reverse logistics is a fairly new concept and not until recently have researchers and logistics companies tried to focus on its effects on the managerial decisions. Here are a few reasons why reverse logistics are so crucial to business. Smith, 2005, demonstrated the reverse logistics programs.
As organizations offer warranty along with sale of items, and to minimize the cost of warranty and. Returns management, often referred to as reverse logistics is the management of returned items to your company. While traditional logistics seeks to organize forward distribution, that is the transport, warehousing, packaging and inventory management from the producer to the consumer. Imagine a company integrating a new transportation management system tms that doesnt communicate with an existing billing system. The benefits of an efficient reverse logistics systems.
Logistics is the means to transport the goods from. Competition and marketing motives, direct economic motives and concerns with the environment are some of the important reasons. In attempting to better manage the constant flow of returned goods, manufacturers have identified target areas key to streamlining the reverse logistics. This includes the ideas of recycling where possible, repairing when it is plausible, among other ideas to extend the products lifecycle. Product recalls pr has become an important concept in todays supply chain operations. As a result, a specialist reverse logistics provider is usually in a better position to dispose of a product in a. Reverse logistics in the pharmaceutical industry is so. Reverse logistics is a broader concept for overall supply chain optimization, which aims to support closedloop supply chains by the improvement of such activities as product design, supply chain design, and product recovery. Most companies now look at reverse logistics as holding an important strategic role, but this function has yet to gain the status of a strategic variable. The importance of reverse logistics we offer specialized reverse services for technology and it products. Management of these service activities can form an important part of corporate strategy. Also in recent years customer satisfaction has been considered a very important.
Benefits of an efficient reverse logistics process arcbest. A reverse logistics strategy provides a path for removing the existing equipment to make way for the next era of equipment in the case of end of life products or new upgrdes. In 2017, the ecommerce return rate was 18 to 25 percent roughly three times that of brickandmortar stores, rila data shows. Logistics as a business concept evolved in the 1950s with the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain. Research executive summary 3 research executive summaries series tools to manage reverse logistics figure 2. Logistics and transport management master thesis no. Poor fit, wrong color, changed mind whatever the reason, the fact is that online retailing has an extraordinarily high volume of returns. Logistics is also known as physical distribution management. In a sense, reverse logistics could be considered the greenest part of any business logistics strategy. Section 3 discusses economic, environmental and operations problems in reverse logistics.
Pdf this article aims to present a reflexion on some of the main reasons for. Therefore, we can say that it is a process of a costefficient method of planning, implementing and managing the flow of goods or material from the point of. How you manage returns will influence the overall management of your warehousing and storage, inventory, depreciating goods and soiled items. Any logistics involved after the point of sale to recapture value and ensure proper disposal of the returned product, is called reverse logistics. In the war theater, logistics applied to the process of supplying equipment and supplies to troops. An average retailers reverse logistics costs for consumer goods. Reverse logistics repub, erasmus university repository. Pdf reverse logistics in transportation jose antonio v a. The areas and the steps involved in reverse logistics are illustrated in figure 2.
They understand that implementing seamless logistics is a key element in keeping pace with customer demands and outperforming competitors. An average retailers reverse logistics costs for consumer goods are equal to 8. In attempting to better manage the constant flow of returned goods, manufacturers have identified target. Accordingly, reverse logistics topics have increased in relevance both in practice and the academia see e. The underlying philosophy behind the logistics concept is planning and coordinating the material flows from source to user as an integrated system rather than managing the goods flow as a series of independent activities. This is exacerbated by the multiple entities customer, manufacturer, reseller and disposer that need to partner to develop a smooth reverse logistics program.
Reverse logistics are the means to having an efficient supply chain and, therefore, efficient asset recovery. Waste has always been a contentious issue with everchanging legislation. Reverse logistics network design for effective management. The importance of reverse logistics is increasing for a number of reasons. A reverse logistics decisionmaking model is developed to guide the process of examining the feasibility of implementing reverse logistics in thirdparty providers such as transportation companies. Reverse logistics areas of activity and reverse steps. Logistics is an activity carried out by many different companies for the physical distribution of goods.
While scheduling and tracking shipments becomes easier, employees still have to manually take the information down from the tms and upload it into the accounting system. The reverse logistics that directly impact supply chains the most are the return of products from the end consumer back to the manufacturer. Communication is key when optimizing logistics networks. Research executive summaries series tools to manage reverse logistics overview of project reverse logistics has become an area that retailers and manufacturers cannot ignore. Due to the increase of drug product recalls in the last decade, reverse logistics has increased its importance in the pharmaceutical industry, as environmental concerns are also one of the hot. Importance of reverse logistics for retail acts intechopen. Product recalls as an important category of reverse logistics. But do you know the importance of returns management. However, now due to consumer awareness, law enforcement on disposal of certain goods makes it very important for companies to manage an efficient reverse logistics. Logistics and transport management master thesis no 2003. This aftermarket activity involves activities like refurbishment, replacement, remanufacturing, scrap and even excess inventory, etc.
This is one of the many factors that motivate ecommerce providers to outsource their reverse logistics setup. However the lack of awareness on the benefits of the rl both from economic and environment angles is a major factor creating the resistance to complement the. A good reverse logistics program generates maximum value from each item returned. Managing reverse logistics to improve supply chain. Logistics, either forward or reverse, can have a significant impact on the asset recovery of business. Reverse logistics managed services reverse logistics in the circular economy along with design, collaboration, and business models, reverse logistics plays a critical role in the circular economy. Reverse logistics stands for all operations related to the reuse of products and materials. The study also tries to look at the environmental aspects of reverse logistics. Nowadays, companies are even getting iso certification for their returns process. Impact of reverse logistics applications on customer. The cost of purchased materials and supplies is a significant. The objective of this study is to look at the current level. Sep 12, 2019 a reverse logistics consists of all the activities which are included in the logistics, but in reverse logistics, all activities mentioned above are performed in reverse direction.
A significant part of reverse logistics involves trashing the goods collected from customers. Therefore, reverse logistics is the process of planning, implementing, and controlling the efficient, costeffective flow of raw materials, inprocess. Logistics capabilities were looked at as a strategic variable during the late 1970s and 1980s. These goods have to be transported to the distributors and dealers and lastly to the end consumer. Importance of communicating processes in reverse logistics. Reverse logistics rl is an innovation able to bring about immense benefits for organisations in a wide range of industries through enhancing the performance of supply chain procedures. Feb 22, 2016 understanding the importance of reverse logistics, its neglect in the corporate world opens a chance to generate and accomplish customer relationships and build customer loyalty. The role of reverse logistics in the concept of logistics. Basically, reverse logistics in the supply chain revolves around dealing with end of life, malfunctioning, or hardware upgrades. Companies today acknowledge the importance of the reverse flow, even. Fmcg, consumer durables, and many other industries regularly manufacture goods.
Importance of reverse logistics supply chain minded. Contribution by shraddha kulshrestha supply chain consultant at bristlecone. Reverse logistics is an integral component of the supply chain and manufacturers have come to realize that an effective reverse logistics program is an important and strategic part of their business profitability and competitive position. Some reasons to implement reverse logistics in companies core. Understanding the importance of reverse logistics, its neglect in the corporate world opens a chance to generate and accomplish customer relationships and build customer loyalty. Reverse logistics can include gaining feedback to make improvements and to improve the understanding of real reasons for product returns from looking at the advantages and importance of reverse logistics. Paperwork and poor workflow processes tend to plague reverse logistics operations.
The importance of returns management reverse logistics. A reverse logistics consists of all the activities which are included in the logistics, but in reverse logistics, all activities mentioned above are performed in reverse direction. The importance of reverse logistics july 2, 2014 admin leave a comment reverse logistics is one of the most frequently overlooked elements of the complete business operations cycle, yet it presents enormous opportunity for companies skilled in it. Reverse logistics in the pharmaceutical industry is so important. Earlier companies did not pay much attention to reverse logistics. And while maximizing efficiency is always important, reverse logistics can also provide a wide variety of opportunities for improvements, from customer service and returns processing to supplier. Recovering lost profits by improving reverse logistics 5 impacting the bottom line many executives compare the amount of money spent processing returns to other supply chain activities and conclude that investing resources elsewhere would yield greater results. Supply chain management, reverse logistics, closedloop supply chains. The purpose of this research is to identify the barriers faced in the adoption of reverse logistics rl and the respective overcoming schemas provided by the logistics centers lcs. Blog posts 5 reasons why a 3pl should manage your reverse logistics. Reverse logistics assessment in the automotive industry. Section 5 addresses the components requirement planning crp procedure for the optimization of reverse logistics. This white paper examines the reverse logistics maturity model and its application in the lighting industry.
Why reverse logistics needs to become a core competency. Companies today acknowledge the importance of the reverse flow, even though. These activities management calls as reverse logistics. As a result, a specialist reverse logistics provider is usually in a better position to dispose of a product in a manner that is compliant with regulation. Companies can see between 4% 30% of their products returned by customers and total uk retail returns have been valued at around. Defining the parts once the context of demand management and customer experience are defined, an operational improvement agenda can be pursued. For the green distribution and marketing, on the other hand, only economic performances of hospitals are positively supported from our empirical data. Reverse logistics is like cleaning up the morning after a big party a mess that no one really wants to face, resulting from things that are left over or illused from the day before the notion of reverse logistics isnt new, of course.
Impact of reverse logistics applications on customer satisfaction. Perhaps due to its rapidly growing in importance role, the concept of reverse. The impact of green logistics practices on firm performance. Moreover, it explores how reverse logistics can be.
In many companies, reverse logistics still is not considered very importantthough as we said this is changing. Reverse logistics is the process of moving goods back through the supply chain for refund, repair, replacement or recycling. Pdf growing importance of reverse logistics samir k. Harnessing technology to create visibility with the organization will coordinate these critical components of the reverse logistics lifecycle. Some reasons to implement reverse logistics in companies oatao. Meeting the reverse logistics challenge supply and demand. Apr 03, 2012 the term, logistics, and its actions originated with the military. Reverse logistics an overview sciencedirect topics. The first by stock 1992 recognized the field of reverse logistics as being relevant for business and society in general. There are many advantages of reverse logistics such as financial.
The function has been around since the phoenicians began shipping amphorae of wine to rome in 1,500 bc the movement of product invariably results in the. Reverse logistics provide a way to extract the maximum value from products at the end of their life cycle. Summary this paper describes the state of the art of reverse logistics rl, highlighting the importance for the development of communities where there is no other possibility. There are many advantages of reverse logistics such as financial gains along with social and environmental benefits. Learn how it can increase efficiency, improve customer service and more.
Reverse logistics in the pharmaceutical industry is so important its that time of the year again when colds and coughs start to go around. The author explains that reverse logistics is concerned with the return of postsale goods to the business or production cycle by adding value in diverse forms. This is because of the risk of obsolescence, or usability, of the returned goods. Reverse logistics are often more timesensitive than getting the goods to the customer in the first place. Our goal is to offer customized solutions to our customers, optimizing costs and providing practical solutions which integrate reverse logistics within your daily activities with total security, transparency and traceability. As a matter of fact, reverse logistics is too often viewed as a headache, an expensive and recurring headache. The second installment delves into the importance of data analytics, highlighting how changing worker demographics can be leveraged to overhaul the reverse logistics process.
Aug 24, 2011 but more recently reverse logistics has begun to lose its necessary evil status, and analysts and industry veterans point to several trends that have increased the importance, and raised the profile, of the reverse logistics process. A wellexecuted improvement program is likely to have. Sep 27, 2012 the most critical factors in a successful reverse logistics program include customer service, understanding and expediting movement, warehousing, decisionmaking and assessment, and final disposition. Although reverse logistics has been gaining more and more attention recent years, many companies havent fully realized its importance and what is reverse logistics. The first step of a best practice implementing a reverse logistics solution would be to supply the customer with a return label when the item is shipped that includes the customers order number in barcode form so that you can inform the customer as. Hopefully you are well as you read this, but lets say you have started to feel a little run down with the beginnings of a cold. Studies in the field of reverse logistics increased in the past years due to the introduction of sustainability in development models leite, 2003. Drivers of product returns bernon and cullen, 2007 forecast accuracy and demand variability.
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