Published On: Wed, Nov 22nd, 2017

FAQs about Reverse Logistics

What is reverse logistics?

Reverse logistics is, in essence, the process of organising and moving goods from their intended destination – either as a return, or to dispose of them (for example, returning an item from customer to business). Basically, any movement of a product other than along the manufacturer to customer supply chain (in that direction) is reverse logistics.

Who provides the service?

Reverse logistics providers are responsible for moving goods back up the supply chain. Often it is the same 3PL (third party provider) who is contracted by the company for regular logistical services who undertakes this role.

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photo/ Michael Jarmoluk via pixabay.com

What is the difference between reverse and regular logistics?

In Australia reverse logistics is mostly very similar to regular – but in reverse (as the name implies). However, some stages of the distribution process can be skipped. With regular logistics, items are often shipped from the manufacturer (if they are manufactured in Australia) through a number of intermediaries before they reach the store or company that sells the product. In reverse logistics, the item can be taken straight to the manufacturer from the store.

Goods manufactured overseas are a bit more complicated. Large retail corporations such as Apple often bring their own goods into the country and sell them, but other items might need to be ordered by an Australian company. This company might then sell the product on to retailers. In this situation, while the product is in Australia the reverse logistics would mirror the supply chain.

Can recycling be considered reverse logistics?

Recycling in most instances can be considered reverse logistics, especially when a product is reusable without any treatments (e.g. wooden pallets). Recycling products for remanufacture involves more steps, but this can also be considered reverse logistics.

In recycling, the reverse logistics providers often take the product to a recycling centre or plant, rather than directly back to the manufacturer. The manufacturer would then buy the recycled material from the recycling centre. For example, aluminium cans might be recycled into aluminium sheets, which would then be bought by the can manufacturer (as well as other manufacturers, to be used in other products like cars and aeroplanes).

What about waste disposal?

Waste disposal can also be considered reverse logistics. This would (in Australia at any rate) make local councils reverse logistics providers, in a way, as they are the ones who mostly organise garbage collection. ANYTHING that takes away a product or its packaging is reverse logistics – whether the product is returned, reused, recycled or simply disposed of.

So reverse logistics is just taking it away whether or not it’s been used?

Even sending a product back without paying for it (which many cash on delivery e-commerce companies allow) is reverse logistics. In this case, when the customer refuses the cash on delivery payment, the reverse logistics provider will simply return the product to the stock inventory of the seller. As there is no defect, the manufacturer is not involved.

Returns of a faulty product need to be sent all the way back to the manufacturer to be repaired or replaced (the reseller may replace the product initially out of their own stock, but they will need the replacement to then be replaced by the manufacturer).

Change of mind returns will follow the same process as the refusal of cash on delivery; however the product may need replacement packaging and quality controls.

So anything that happens after the product gets to a customer is reverse logistics?

In some cases the reseller will return unsold products back up the supply chain. This is also a part of reverse logistics, even if the product doesn’t reach a final customer. What the customer does while they have a product in their possession is not reverse logistics, however.

Author: Colin Steinway

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