Reverse Logistics

At the simplest level, reverse logistics refers to the process of getting product returned by customers to some earlier point in the supply chain. It may involve getting them out of the stores and back to the vendors. Big retailers typically seek to please their customers by guaranteeing that they will take back any product the customer wishes to return for whatever reason.  These same megastores also have the leverage with their suppliers to demand that they take back anything returned to the retailer and to award a credit to their account.

In the case of manufacturers, it may mean the process of receiving defective products back for repair and eventual return to the customer. Some manufacturers recover, remanufacture and resell traded-in goods. Others use returned products for parts. Some returned items may contain materials that are worth recycling.

The receipt and disposition of returned items pose logistics challenges. They must be received in an efficient manner, and disposed of or shipped on properly. Some will be sent to repair centers and then shipped back to customers.

As with any logistics process, shippers had better pay close attention to the costs involved. Turning a blind eye to the costs of processing returned products will cause those costs to mushroom out of control. Properly managing reverse logistics also has reputational value: no manufacturer wants their items to end up where they don’t belong.