REVERSE LOGISTICS

Reverse Logistics

Introduction

Reverse logistics is the name given to the overall operations related to the reuse of products and materials and the development of a closed-loop supply chain. Reverse logistics involves planning and controlling an efficient and cost-effective flow of raw materials and finished goods from consumers back to the point of origin at the factory, for the purpose of recapturing value or proper disposal.

Discussion

Reverse logistics, an important principle in green, or sustainable, business, refers to any systematic reversal of the traditional flows in a value chain. A value chain is the chain of activities and institutions, such as wholesalers, agents, brokers, shippers, and retailers that add value to a product on its way from the manufacture to its end consumer.

Value chains, or marketing channels, are typically depicted as linear throughput systems with goods and services flowing downstream from manufacturers to consumers, and with money flowing upstream from consumers, back through the channels toward manufacturers, with each member of the chain benefiting along the way. From the standpoint of sustainable business, such linear systems are problematic because, although they work well for managing throughput flows of materials, they fail to account for the ultimate origination or destination of those materials. For example, the raw materials that make up a television or a mobile phone originate from the Earth, and the process of extracting them inevitably reduces the Earth's ability to provide ecosystem services. Similarly, the television or cell phone that ends up in a landfill or an incinerator doesn't disappear there. It degrades and cycles back into the Earth's ecosystems, along with all of its toxic components.

Business becomes sustainable only to the extent that value chains can be converted into value circles. A value circle, in contrast to a value chain, is a system in which all waste is reclaimed and converted back into resources. Reverse logistics are the processes of reclamation.

Value circles are the result of biomimicry, meaning that they are modeled after natural systems, all of which are inherently cyclic and sustainable. In nature there is no waste, because the waste from every process or organism functions as food or fuel for some other process or organism. The concept that waste equals fuel is central to the philosophy, developed by Michael Braungart and William McDonough, of cradle-to-cradle design and manufacturing, which maintains that all commercial waste can be eliminated by ensuring that all product materials either serve as biodegradable nutrients for natural systems or are reclaimed for reuse in technological systems. Again, reverse logistics is the mechanism by which reusable or recyclable materials reenter a value circle. (Copacino, 1997)

Factors Responsible for Returns

There are two basic causes of returns in reverse logistics. These include

Defective Cause

Non Defective Cause

Defective causes can be of many types. Defective causes include failure of products, shipment damages and many other causes due to which product lose its quality or failed to use. Non Defective causes include stock balancing, store returns, shipping errors, customer returns and non ...