Most people are familiar with the traditional supply chain operation. Freight cargo moves from seller or manufacturer to the end customer, sometimes with the help of a third-party logistics company and sometimes handled internally through a large corporation. But the freight shipping world isn’t so cut and dry. What happens when customers need to send cargo and product back to the original shipper, or the intended end user isn’t the true final destination for cargo? That’s the process of reverse logistics. So, what is reverse logistics, and what does it mean to your supply chain? Let’s dive into it and answer these questions for you.
What Is Reverse Logistics?
Simply put, reverse logistics is just as the name entails, meaning products and materials going the reverse direction than the typical supply chain, usually from end customer to initial shipper.
Reverse logistics can also be applied to raw materials and products and isn’t limited to going back to the point of origin. For example, recycling, whether it be for certain types of paper or plastic, uses reverse logistics because it is moving products from end user to someplace else. In this case, it is moving the products from the end use to be recycled elsewhere.
Additionally, reverse logistics is often used in the world of retail and eCommerce because of returned goods or an item needing to be remanufactured or refurbished. Shipping automotive parts also entails a great deal of reverse logistics since parts might need to be sent back to a manufacturer or repair shop after reaching what would have been their final destination.
The Importance of Reverse Logistics
Small businesses and supply chains need to focus just as much on reverse logistics as they do on the traditional side of shipping to complete the product lifecycle and to provide the best services to their end consumers. If the end consumer is not satisfied with the product, there has to be best practices and protocols in place to easily incorporate reverse logistics.
Some examples of reverse logistics protocols include:
- Redirecting cargo back to the manufacturer or separate facility rather than the selling business.
- Providing shipping labels or arranging the pickup and transit of returning cargo.
- Having the capacity to be able to repair and resell any dysfunctional products.
The ultimate goal of reverse logistics and the reason it’s so vital to your overall shipping strategy is to salvage value from products that would otherwise go to waste or make customers unhappy. Instead of products being deemed unusable, having a reverse logistics strategy in place gives your products a better chance at being fixed and re-sold, or it gives you the opportunity to identify product defects early in the manufacturing process. This helps you increase revenue, manage unnecessary costs, find solutions and make for a better end customer experience.
Get a Strategy Going
It’s important to have a separate reverse logistics strategy in addition to your traditional supply chain protocol. Think of your reverse logistics strategy in three parts:
- Your returns policy – Have all your bases covered when it comes to how your business handles returns. Make it clear what is returnable, a timetable for returns, who’s responsibility it is to ship it back, and where product needs to be sent to.
- Repair process – As mentioned before, cargo like manufacturing or automotive parts can be fixed and resold. Salvaging value off items in the reverse logistics chain is the purpose of reverse logistics for businesses, so have a repairs process in order.
- Disposal – Some products can’t be salvaged. Their cost to repair or reuse is more than the value the product can give you. This is where recycling comes into play, and where you can make your supply chain sustainable and rid it of excess inventory and costs.
Get yourself a shipping partner who can help you with both your main supply chain strategy and your reverse logistics plan. FreightCenter is a third-party logistics company (3PL) who specializes in providing personalized shipping solutions to small businesses everywhere. Our expert shipping agents can guide you step-by-step through the shipping process and get you the most cost-efficient, practical options available with the help of our powerful transportation management system (TMS).