Reverse Logistics

Reverse Logistics

Introduction

Reverse logistics, an important principle in green, or sustainable, business, refers to any systematic reversal of the traditional flows in a value chain.

A value chain is the chain of activities and institutions, such as wholesalers, agents, brokers, shippers, and retailers that add value to a product on its way from the manufacture to its end consumer.

Value chains, or marketing channels, are typically depicted as linear throughput systems with goods and services flowing downstream from manufacturers to consumers, and with money flowing upstream from consumers, back through the channels toward manufacturers, with each member of the chain benefiting along the way.

From the standpoint of sustainable business, such linear systems are problematic because, although they work well for managing throughput flows of materials, they fail to account for the ultimate origination or destination of those materials.

The reverse logistics process in an organization consists of primarily two aspects: returning a product and returning packaging to the point of origin or manufacture 

For example, the raw materials that make up a television or a mobile phone originate from the Earth, and the process of extracting them inevitably reduces the Earth's ability to provide ecosystem services. Similarly, the television or cell phone that ends up in a landfill or an incinerator doesn't disappear there. It degrades and cycles back into the Earth's ecosystems, along with all of its toxic components.

Forms of Reverse Logistics

There are a number of forms of reverse logistics that function to close the loop from value chain to value circle. They include the following:

Refurbishing and remanufacturing

Product take-back

Collection and consolidation of recyclables

Secondary markets

Deconstruction and design for disassembly

Leasing, renting, or substituting products with services

Refurbishing or remanufacturing converts end-of-life products back into usable and, therefore, marketable products. The process requires product take-back, a form of reverse logistics, to move a used product or components from users back into manufacturing cycles.

For example, Caterpillar achieves this through parts and engine exchanges, wherein customers can exchange worn out machinery for like-new remanufactured machinery at a fraction of new prices. Retailers Staples and OfficeMax collect ink and toner cartridges for remanufacturing by offering customers store credit for returned ones.

Organizations can also achieve product take-back by offering customers free or convenient handling of recyclables, such as electronics, compact fluorescent light bulbs or appliances, and toxic substances, such as paint, motor oil, or batteries.

For example, Metro Paint of Portland, Oregon, collects unused house paint from consumers or contractors and recycles it into new, high-quality, low-cost paint in several colors. Dell's Asset Recovery System provides its small-business customers with free pickup of old computers, scrubs the drives of all data, and dismantles the machines to recover usable parts and materials.

Discussion

Reverse logistics is the name given to the overall operations related to the reuse of products and materials and the development of a closed-loop supply chain.

Reverse logistics involves planning and controlling an efficient and cost-effective flow of raw materials and finished goods from consumers back to the point of origin at the factory, for the purpose of recapturing value or proper ...