Reverse logistics is regarding all operations related to the reuse of products and materials. According to Wikipedia, “it is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics." When a manufacturer's product such as clothing, shoes, handbags, or accessories normally moves through the supply chain network, the ultimate destination is a clothing store or a consumer. If the product for some reason has to return in the opposite direction of the supply chain, it would be reverse logistics. For example, if the retail store found garments to have damages, they may require the wholesaler to take back the merchandise. The process of returning the clothes to the distributor is part of the reverse logistics process.
Any process or management after the sale of the product involves reverse logistics. If the product is defective, the customer would return the product. The manufacturing firm would then have to organize shipping of the defective product, testing the product, refurbishing, dismantling, repairing, recycling or disposing the product. The product would travel in reverse through the supply chain network in order to retain any use from the defective product. The logistics for such matters is reverse logistics.
In the apparel industry, goods are sometimes distributed to downstream members in the supply chain with the understanding that the goods may be returned for credit if they are not sold. This is determined on a case by case basis between the buyer and seller of the product. This acts as an incentive for clothing stores to carry more stock, because the risk of obsolescence is borne by the upstream supply chain members (the wholesaler or manufacturer). However, there is also a distinct risk attached to this logistics concept. The downstream member in the supply chain might exploit the situation by ordering more stock than is required and returning large volumes. This can help a retailer but hurt a wholesaler or manufacturer. In this case, the supplier (wholesaler or manufacturer) effectively finances the inventory for the downstream member. In addition, when the product is returned, they would have to figure out a new way to sell off the inventory.
In addition to the return of clothing, reverse logistic is used for other purposes. Examples include reusable pallets, tote boxes, shipping containers, clothing hangers, etc.
Learn about Reverse Logistics service providers and Third Party Logistics.
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