Innovation with Reverse Logistics (Part 2 of 2)

Introduction

In Part I of this article we gave a short introduction to the Reverse Logistics concept, and the reasoning behind the recent increase in popularity. Many SME’s (Small-Medium Enterprises) now make use of Reverse Logistics to some degree. The benefits gained such as resource management, profit margin increase, and increased customer satisfaction are prominent within any company that maintains a reliable Reverse Logistics Chain. 

In Supply Chain Management, Reverse Logistics can be used as a strategy to close the circularity of a products’ life cycle. Reverse Logistics is the process that deals with the collection and remanufacturing of used or unnecessary items. From a supplier point of view, Reverse Logistics’ drivers are legislations, which oblige them to manage the remanufacturing of sold products, environmental concerns, strictly linked to the demand of customer to have more sustainable products, and economic benefits, since a returned item can easily be sold instead of producing a new one from raw materials (D’Amico, E. D. 2021).

This part of the Reverse Logistics Article will cover the latest innovations that are mainly used to gain a competitive advantage within the marketplace. When executed correctly, these innovative technologies allow companies to scale rapidly. SMEs often outsource to professional Supply Chain companies that make use of these technologies. This way, smaller companies can experience the benefit of rapid scalability whilst keeping their investment costs low. It also provides better resource management as they can allocate their personnel to other tasks. In this article, we will zoom in on the two most popular innovations within Reverse Logistics.

According to D’Amico, E. D. (2021), An implementation of technologies such as IoT (Internet of Things) and Blockchain would allow to improve the functionality of Reverse Logistics. Although these technologies can be expensive to be implemented and require much expertise, they offer possible solutions, especially with the use of RFID (Identification tags usable on products). Traceability, transparency, and prediction are the main benefits of Smart Reverse Supply Chain (SRSC).

Innovative Technologies

Internet of Things (IoT)

According to K. Ashton (2019), IoT describes a network in which every physical product has a virtual identity and is linked to a connection. It represents one of the main pillars of the revolution of Industry 4.0. The IoT is considered as the key that allows objects, such as RFID tags or sensors to communicate with each other and with humans. The holistic connection created a synergized network that allows streamlined Data transfers on a large scale.

IoT is used within many Supply Chain aspects nowadays. Inventory management is a frequently used aspect. As soon as the quantity falls under an established number, a reorder can be automatically processed with the use of RFID in a virtual cloud. According to Wanganoo (2020),  the structure of IoT is based on four layers. These are:

  • Data storing (RFID)
  • Communicaion
  • Service
  • Display layer

IoT is able to bring remarkable opportunities to Reverse Logistics. Through the establishment of a connected network of products, the information infrastructure is strongly improved (Gar-2020).

Blockchain

Blockchain can be defined as a digital technology that facilitates the recording of transactions and allows for the traceability of a resource. The type of resource can vary between physical (e.g., cars) or an abstract resource (e.g., patents or cryptocurrency). Especially with cryptocurrency, Blockchain allows the record of every transaction. Blockchain as a process can be explained as follows: The moved information can be envisioned as a block, which contains all the pertinent data and passes from one client to the next. The exchange should be endorsed by the organization, which looks at the data and approves it. This guarantees straightforwardness and security. The new record is added to a block, that contains a unique code, named hash. It also contains the code from the previous block and is successively added to a chain of blocks.

The main concept stimulates the idea of handling information in a decentralized way. Information is verified by the collective, instead of by a single entity.

When it comes to supply chain and Reverse Logistics, Blockchain can be used to improve the chain in multiple ways. The decentralized structure allows every logistics member to keep real-time track of a product and it increases the reliability of the data (Zhu-2019). The transparency enabled by Blockchain increases the security of a trade. This security is a valuable element needed in any resilient Supply Chain. In addition, Blockchain allows Supply Chains to streamline their transaction process as it can remove intermediate steps form the transactional process. This reduces costs and time, ultimately improving the Supply Chain.

The figure below clearly illustrates the Blockchain process.

Figure 1. (The Blockchain process) D’Amico, E. D. (2021, October 10).

These two innovative technologies allow any company to build a reliable and resilient Reverse Logistics process, ultimately improving the Supply Chain. Would you like to know more about these innovative technologies and how you are able to implement these within your Supply Chain? Contact a ModusLink Expert today by clicking here!

Bibliography:

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/