Forward and Reverse Logistics – Complete Product Lifecycle
The overwhelming increase in eCommerce within the last five years has had a direct impact on logistics and supply chains, and in addition to maintaining competitive sales strategies, companies are being forced to update their processes and infrastructure in order to remain relevant and profitable.
Returns — naturally — are a byproduct of eCommerce shopping that increase right alongside online shopping. According to Statista, there has been a 60% increase in eCommerce packages returned from 2016 to 2019, with 1.6 million packages returned on December 19, 2018 alone. The good news is that companies need not fall on their swords to offer consumers the return options they want. In fact, returns present a profit-generating opportunity for companies who establish an efficient reverse logistics strategy within their supply chains.
Curious? Let’s start with the basics: forward vs. reverse logistics.
The Difference Between Forward & Reverse Logistics
Forward logistics are used to manage the forward movement of goods as they transition from raw materials to end-consumers. In many cases, forward logistics includes product development, material sourcing, manufacturing, transportation to distribution centers, and final-mile delivery to a consumer.
Reverse logistics refer to moving products and materials back into the supply chain post-delivery. Often, reverse logistics are associated with returns and recalls, but they can also include recycling programs, product disposal, and asset recovery. From a business perspective, reverse logistics require managing stock levels as products are returned and managing the disposition of returned products. From an ecological standpoint, reverse logistics offers a path to reducing the environmental footprint of business. Examples include:
- Refurbishing damaged items so they can be resold
- Recycling parts or materials to create new products
- Dispositioning of unsold product from brick-and-mortar stores
- Returning packaging materials and pallets to the manufacturer for reuse on inbound logistics
While many fundamental concepts are shared by both forward and reverse logistics, they are distinctively different with regards to drivers and speed. Customer demand determines the pace of forward logistics (where inventory stored at each stage in the supply chain, etc. ), whereas the speed of reverse logistics is entirely based on product supply.
Benefits to Reverse Logistics
As reverse logistics grow in necessity, it’s easy to tell whether or not a company has an efficient process in place for restocking or disposing or returned products. Returns management has the potential to be slow and expensive, consuming both time and resources/space, but as technology improves, reverse logistics management is becoming increasingly efficient, yielding many benefits:
- Increased velocity due to product disposition and stock availability
- Expanded potential for profit margin growth via reusing, reselling, or recycling materials that would otherwise be disposed of
- Improved supply chain visibility (which sharpens planning accuracy)
- Reduced waste and improved public perception/brand reputation
- Increased customer satisfaction and loyalty due to the availability of simple returns processes (full refund, no requirements around receipts or original packaging)
In addition to the above list of benefits enabled by a strong reverse logistics program, it’s important to point out that reverse logistics can also enable data protection, effectively eliminating businesses from assuming this type of risk. Many industries require IT Asset Disposition (ITAD) and Ingram Micro’s ITAD solutions protect companies by ensuring compliance with environmental and data security regulations, while also recovering any remaining value from retired assets.
Contact us about connecting your forward and reverse logistics to build a supply chain that takes care of your complete product lifecycle.
