According to the Journal of Business Logistics and a poll taken by the University of Oklahoma, reverse logistics costs accounted for more than nine percent (9%) of total logistics costs for all the companies studied. Leslie Hansen Harps, author of an article titled “Getting Started in Reverse Logistics,” refers to reverse logistics as a “motherlode waiting to be mined.” So how does reverse logistics work, and how will it benefit your company?
First of all, according to the before mentioned article, most companies do not see reverse logistics as a worthwhile subject, and many admit that a bad reverse logistics plan, or lack thereof, as a barrier to effective management. The tides are turning, however, as more and more companies realize that reverse logistics, or in other words managing returns, can generate revenue, improve customer satisfaction, achieve significant cost savings, and deliver a competitive edge.
Reverse Logistics is simple. It is defined as “the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.” In short, reverse logistics is everything related to the reuse of products and materials.
Harps continues with her article by discussing some benefits to reverse logistics and how it will help your company. Her list includes reduced costs, customer focused returns creating loyal customers, leveraging returns, and automating the process. Each point is discussed in detail.
In closing, if reverse logistics has been at the bottom of your priority list, then it is time to change. Fewer returns, lower costs, and greater return on investments are all waiting for you if you implement an effective reverse logistics plan.