Innovation with Reverse Logistics (Part 1 of 2)

Introduction

Meta-description. Understanding the reverse logistics meaning helps shippers to account for changes in consumer behaviors and reduces risk. Learn how today. 

 When speaking to any experienced supply chain professional, the focus on  reverse logistics e-commerce can be expected somewhere within the conversation. A strong supply chain must contain elements such as resilience, agility, responsiveness, cooperation, fluency, and so forth. Managing to maintain all these elements can be highly challenging. However, if a business succeeds, the rewards are highly noticeable and can be far-reaching and highly impactful. This is why understanding the reverse logistics meaning in the modern e-commerce supply chain network is more vital than ever!.

Understanding the Importance of Reverse Logistics Management Today

Loyal customers, fast delivery, capability to adapt to the market, freedom in spending resources, time management, effective return management, improved logistics warehouse features, and more all impact reserve logistics.

Statistics from the past year or two do not lie, as highlighted by 2022 reports from Zippia: “38.8% of U.S. small businesses experienced supply chain delays due to the COVID-19 pandemic. The global supply chain market size value is $15.85 billion. And the global supply chain market is expected to experience a CAGR of 11.2% from 2020 to 2027.”

SMEs (Small/Medium Enterprises) often struggle to effectively manage their supply network due to limited capacity and resources. A popular solution to this can be given in the form of Outsourcing. Many SMEs take advantage of outsourcing important tasks and processes of their reverse logistics to experienced professionals within the industry. 

A strong focus on reverse logistics e-commerce allows businesses to quickly scale their services and invest their time and resources into other parts of the company. And best of all, this can happen without sacrificing the importance of the key driver behind their business, the modern omnichannel supply chain

A significant element often prioritized when outsourcing these processes is reverse logistics, which means understanding  reverse logistics meaning can have deep-reaching implications for supply chain managers. This is because the element greatly impacts the customer satisfaction ratio and overall supply chain performance.

The definition of Reverse Logistics

Reverse Logistics is often referred to as Reverse Supply Chain, and part of ‘Closed Loop Supply Chain’. Its first definition was published only in the beginning of the nineties by the Council of Logistics Management (Bri-2004, S. 4) and thus still represents a young sector of Logistics.

Reverse logistics, when focused on goods and services, deals with the process of planning, implementing, and controlling the flow of shipments from the back through the supply line (Bri-2004, S. 5). It is essentially the logistics of dealing with a returned item or product.

Figure 1(The Reverse Logistics Process) (Chi-2018)

The Figure above clearly illustrates the core elements of the Reverse logistics Process. Products are received from the end-customer and transported back to the warehouse in question. They are then carefully inspected for defects, depending on the reasoning behind the return. They are then adequately sorted and either resold/recycled or scrapped.

The Introduction of Reverse Logistics e-Commerce Within Supply Chain Management 

Businesses often quickly experience the challenges of reverse logistics, such as capacity management, customer expectations, waste management, and more. These challenges were often too grand to build a reliable reverse logistics process due to limitations with  logistics warehouse systems and ineffective tech stacks. 

 Only recently has reverse logistics become increasingly popular to manage effectively. There are a couple of reasons for this. The uprising of eCommerce businesses is one explanation, as many products flow quickly through an eCommerce business, increasing the importance of managing the returns process. This has further fueled the need for a clear understanding and visible insight into reverse logistics meanings in light of continued focus on The Internet of Things (IoT)and other automations. 

 Another reason for the increase in the popularity of reverse logistics management is the rise of substantial technological solutions and innovations, such as the IOT and drones or autonomous guided vehicles (AGVs or drones). These  reverse logistics e-commerce solutions allow SMEs to overcome the challenges that come with effectively managing a reverse Logistics process.

Smart Reverse Supply Chain (SRSC)

The concept of merging the technology mentioned above, together with Reverse Logistics forms the idea called a ‘Smart Reverse Supply Chain.’  Smart management of reverse supply chain logistics can save a lot in terms or wasted time and money. It can also improve customer experience and streamlining the process of returning goods flowing back through the supply chain.

To overcome the challenges that come with managing these processes, businesses decide to make use of technologies such as automated inventory tracking, warehouse monitoring, real-time communications, and digitalization and automation of all sorts.

They can choose to adopt these  logistics warehouse tools and technologies individually, or collectively make them work together to strengthen the synergy within the reverse supply chain.

SRCS can manage flow times and information exchanges more effectively between logistical partners. This minimizes the uncertainties and difficulties when returning products. Xu (Xu-2011b) can be equipped with a unique identity and communicate with other devices.

The two key elements that ought to be managed effectively to improve SRCS are:

  • Identification tools: To implement a well-organized smart reverse logistics, it is necessary to establish appropriate identification methods such as RFID (ID Tags), 3-D and 4-D Barcodes to permit the recognition of incoming and handled objects and the communication between them. It also allows for better comprehension of reverse logistics meanings.
  • Standardization: To allow every member of the Closed Loop Supply Chain to process and identify the products, it is necessary to establish a standardization of the used technologies. Although there are governing bodies that keep reverse logistics e-commerce, uniform technologies need to be standardized and improved to meet growing needs and demands.

Improve Reverse Logistics and Profitability With ModusLink

These two elements are best managed through innovative technologies such as chatbots, real-time tracking, push notifications, reliable scanning, and supply chain tools that leverage the IoT.  Doing so opens the door to even more amazing possibilities, including drones in supply chain networks, automated vehicles, and more!

Would you like to know more about these innovative technologies and how you are able to implement these within your supply chain? Ready to learn how to make   logistics warehouse operations and existing processes more efficient? 

To better understand reverse logistics meanings and the impact logistics and management can have on your supply chain network, contact ModusLink today!

Bibliography:

Kolmar, Chris (2022, October 24). 18 STUNNING SUPPLY CHAIN STATISTICS [2022]: FACTS, FIGURES, AND TRENDS, Accessed October 24, 2022 From https://www.zippia.com/advice/supply-chain-statistics/

D’Amico, E. D. (2021, October 10). ResearchGate. ResearchGate. Retrieved November 6, 2021, from https://www.researchgate.net/publication/354551628_Analysis_of_Challenges_and_Potentials_of_Reverse_Logistics

Jenkins, A. (2021, April 5). A Guide to Reverse Logistics: How It Works, Types and Strategies. Oracle NetSuite. https://www.netsuite.com/portal/resource/articles/inventory-management/reverse-logistics.shtml

Marchese, K. (2021, October 29). Supply Chain leadership. Deloitte United States. https://www2.deloitte.com/us/en/pages/operations/articles/supply-chain-leadership.html

Niroomand, I. (2021, August 31). The importance of reverse logistics in your supply chain network. Kinaxis. https://www.kinaxis.com/en/blog/importance-reverse-logistics-supply-chain-network

Reverse Logistics – Rhenus Netherlands. (n.d.). Rhenus. Retrieved November 6, 2021, from https://www.rhenus.com/en/nl/our-solutions/contract-logistics/logistics-solutions/reverse-logistics/