Warehouse management can be divided into several phases. One of these phases is known as reverse logistics: what is it and why should it be managed properly? We explain it to you at FR Logistics.
Reverse logistics
This is the name for reverse logistics. It could be considered, simplistically, as logistics that moves in the opposite direction to the traditional supply chain flow. Every day, a company has to deal with raw materials, semi-finished and finished products that “come back” for all sorts of reasons (from delivery errors to defects in the finished product).
In practice, reverse logistics is the management of the movement of returns: raw materials, semi-finished products and finished products move back along the distribution chain, i.e. from the end customer to the manufacturer/distributor or, depending on the company’s approach, to another party specifically assigned to perform this task.
Tasks of reverse logistics
The activities that characterize reverse logistics are:
- Recovery of returns.
- Collection of returns in spaces or places set aside for this purpose.
- Transport of returns and reception in the warehouse.
- Control of the goods according to specific procedures.
- Classification of returns according to the type of raw material, semi-finished or finished product.
Types of reverse logistics
The types of reverse logistics can be divided into:
Returns logistics: this is the most frequent and the one that has grown the most thanks to e-commerce. Its task is to return returned orders to the distribution centers.
Waste logistics: it deals with the recycling, treatment or recovery of waste in order to make use of it or dispose of it in order to avoid damage to the environment.
Why you need to manage returns logistics
The flow of returns can be more or less intensive, depending on the circumstances. By establishing an efficient logistical flow, it is possible to reduce not only the time it takes to complete the task, but also the costs.
A returned product is still a revenue opportunity for the company. In fact, it can be processed, reused or sold on secondary markets.
In some cases, the returned product is destined for disposal centers and this procedure requires compliance with specific regulations.
How to improve reverse logistics
To reduce the costs associated with returns, companies must first conduct an analysis of their reverse logistics in order to identify areas or business processes that can be improved. The most common strategy is for companies with a higher return rate to devote more effort to improving reverse logistics.
According to a report by S. Rogers and S. Tibben-Lembke, members of the Reverse Logistics Executive Council, to reduce the costs of return logistics, companies should focus on the following aspects:
- Product life cycle management. Products go through different stages (introduction, growth, maturity and decline) and each stage requires different management.
- IT systems and technologies. They allow products to be monitored in real time. The automation of data collection on the return flow of goods and their subsequent processing are key elements in developing effective chain management.
Outsourcing reverse logistics
For a company or business, managing the logistics of returns can be difficult, especially if you don’t have the necessary experience and expertise. In order not to burden your efficiency and budget, outsourcing logistics with the help of industry experts such as FR Logistics can be the best solution for your business.
