What is reverse logistics?

Understanding the different practices in logistics means, in particular, understanding what reverse logistics or "returns logistics" is. This term, although not necessarily new to logistics professionals and companies, has increasingly become part of professional language as an important component of flow control.

We will go into the deeper meaning of this product return logistics and we will then be able to discover the whole process that it can encompass. Then we will be able to study this through the prism of concrete examples applied within the supply chain. Finally, we will see the advantages and limitations of this reverse logistics in order to maintain a critical appreciation.

What is reverse logistics?-1

Reverse logistics, a sense in reverse logic

In order to understand what reverse logistics is, let us start with logistics in the broadest sense. For a supplier, logistics consists of ensuring all the physical and information flows needed to supply a product of a given quality, within the agreed timeframe and at an established price, to its customer.

By simple inversion, returns logistics consists of controlling all the physical and information flows that ensure the return of a product from the customer to the supplier. The explanation is simple and does not require great linguistic skills to grasp its multiple ramifications.

Reverse logistics, a history that is neither ancient nor modern

Now that the definition has been established, let's look at the history of returns logistics, as well as its recent evolution. In two steps, we will be able to observe that these logistics already existed a few decades ago, but that, recently, they have had to evolve rapidly in order to cope with new sales techniques and changes in customer service, while ensuring waste management.

The beginnings of reverse logistics

Indeed, these product return logistics are not new. It is true that it is rare for goods to be sent from customers to their suppliers. However, this could happen for reasons related to the quality of the products in question:

  • intrinsically defective product;
  • product damaged by the transport company ;
  • non-conforming product due to ordering error ;
  • etc.

Clearly, we are talking about the exceptions that were part of a market with a tendency to flow downwards only (from supplier to customer). They were therefore quite rare and did not always justify considerable management of this "marginal" chain.

However, there were also a few rare channels in which return logistics solutions were present and not just the exceptions. In the not so distant past, we remember the deposit on glass bottles which, once returned to the shop, went for recycling, allowing the consumer to collect the deposit.

Recent developments in reverse logistics

For almost twenty years, e-commerce has reshuffled the deck in the market, by :

  • internationalising trade, even in low-value goods;
  • increasing competition between sellers in the same market;
  • enabling a new consumer experience for customers;
  • forcing the authorities to react on each other's trade obligations.

From now on, reverse logistics has become a necessity in view of the challenges that e-commerce has created in terms of increased accessibility for all economic players in a market that has become common.

What is reverse logistics?-2

Reverse logistics: a consequence of market evolution

Faced with these changes in production and consumption as well as in the legislative framework, reverse logistics has become a response by companies to market demands. It enables companies to meet their legal and moral obligations as well as the societal and responsible requirements of consumers and governments.

The notion of customer satisfaction

This is one of the major causes of the development of reverse logistics. Thanks to new consumption patterns and in particular the arrival of e-commerce, customer satisfaction is more than ever at the forefront of salespeople's concerns. Today, returning a purchase to the seller can sometimes even be done without justification, which was inconceivable until recently, before the rules were changed by the online sales giants.

This strategy has pushed the more traditional distribution channels (shops, convenience stores, etc.) to review their offer and sometimes to align themselves. Even the legislator has had to impose a 14-day withdrawal period to redress the balance. Today, a customer can have a product delivered and return it without even opening it on receipt and sometimes without having to bear even the transport costs.

Product quality control

Items can sometimes suffer from quality defects, even in large quantities or entire series. In such cases, a product recall may be required so that all defective items are returned to the manufacturer. It is important to realise what this entails: identifying the affected items among all the others, then tracking them down, retrieving them, collecting them and finally processing them.

This is a laborious task that requires a competent logistical reverse side that is equal to such an ambition. Moreover, within a strict legal framework (health, food, pharmacy, etc.), this is an obligation of result for companies.

Recycling and reprocessing channels

The importance of the environment in the concerns of all agents in a market, whoever they may be, forces each company to meticulously manage its product returns or the issue of their end of life cycle. The processes of destruction, recycling, revalorisation and treatment as waste must be thought through and are subject to obligations.

For example, the life cycle of WEEE requires manufacturers and retailers to integrate this reverse logistics into their manufacturing and marketing process.

The advantages and limitations of reverse logistics

As we have seen, reverse logistics refers to the management of the physical and information flows that "go up" from the customer to the manufacturer or retailer. Over the past few years, this returns logistics has gone from being marginal to considerable (almost 25% of downstream flows go upstream).

This refines the skills of companies in controlling their flows and forces them to constantly improve their flow management system or, failing that, to call on competent service providers to fulfil this role. In addition, returns logistics applied to end-of-life products is also an element of response to the environmental concerns that are very present in the markets and among consumers.

However, the evolution of such logistics suggests a certain consumer malaise. When you realise that almost 25% of downstream flows go upstream for various reasons, you can imagine all the transport, storage, handling and disputes that arise from such a figure.

Reverse logistics is a powerful tool that drives excellence, but care must be taken to ensure that the flows in a supply chain do not reverse to too great an extent, otherwise the advantages of returns logistics (environmental benefits, customer satisfaction, quality and cost control) may well be diminished or even cancelled out.

What are we to think of the quality of the articles, the control of flows, customer satisfaction or respect for the environment, when half of the products resold will return to the sender or his service providers? Reverse logistics is a skill that only retains its excellence in due proportion.

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