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Key Factors to Overcome Challenges in Reverse Logistics

Reverse logistics is the entire process from logistics planning, implementing, controlling the efficient, cost effective flow of raw materials, pre-fabricates, parts, components, integrated objects till the final products and related information from consumption back to origin. It is the activity that carried out after sold out the product in order to recover its functionality or value and refresh its shelf life. It is the opposite of the standard supply chain which allows goods from customers back to the sellers or manufacturers for maintenance, refurbishment, services and recycle. This article discusses the key factors to overcome challenges in implementing reverse logistics.

Reverse logistics can be more profitable and sustainable with proper logistics planning, implemeting, controlling, management and execution. However, it is not easy to manage a good reverse logistics management system in  
an organization as there are many challenges need to improve and overcome in
order to gain the greatest profit and reach the customer’s success.

Organisation of Returns Process

Return process starts with the end customer who wishes to return the product where move backwards through across the key members in supply chain management to the distributor or from distributor to manufacturer. If customer was unhappy after received product or there is defect with the product, they might request a return or refund from supplier, distributor or manufacturer. The Supply Chain will arrange transportation to pick up the product from customer if their request has been approved by company. The warehouse or sorting facility will start to do the necessary inspection or quality check and restock the product and put pack the product in inventory once the product is ready for reuse or re-sell. Eventually the product will deliver to customer if it is ready for re-sell or can be sold to a future customer.

Organizations implementing the return process can reduce their waste and cost, accessible to customer, create a more sustainable supply chain, improve overall corporate citizenship and help company achieve business sustainability.

Reducing Cost of Reverse Logistics

There are number of ways to cut costs with reverse logistics, like reduce transportation cost, handling cost, inventory cost and labour cost. Here are some ways to help in reducing costs of reverse logistics. Generally, a third-party provider whose sole business is to manage reverse logistics. They can manage this process much cheaper than the organisation who try to do it internally. One of the common uses for returned products is internal use. Usually it can cost a company less to repair a product for internal use compare with recycling.

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Judy Yang Lan, DLSM
Judy Yang Lanhas substantive years of experience in the field of procurement and supply management, and specifically in the semiconductor industry. She has a Bachelor degree in Business English and is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Judy completed Diploma in Logistics and Supply Management (DLSM) on September 2021 at SIPMM Institute.

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