Returned goods are part of reverse logistics pdf

Analyzing the flow of goods before and after the use of a returns management system allows retailers to measure. Returns management is the supply chain management process by which activities associated with returns, reverse logistics, gatekeeping, and avoidance are managed within the firm and across key members of the supply chain. Reverse logistics stands for all operations related to the reuse of products and materials. Product returns have often been viewed by customers as a necessary evil, a painful process and, usually, unavoidable. A good reverse logistics program generates maximum value from each item returned. This is exacerbated by the multiple entities customer, manufacturer, reseller and disposer that need to partner to develop a smooth reverse logistics. This is because of the risk of obsolescence, or usability, of the returned goods.

It is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Reverse logistics is any process that involves moving things from the customer back to the producer. Returns were only a small part of our inventory management issues, simply because we were, well small. It is a process of flow of goods or material which are unwanted or defective through the logistics chains to the manufacturer so that it can be recycled, reused, or disposed of properly. Reverse logistics servicesreturned goods authorization. Raimer 1997 indicated that returns are, and always have been, a fundamental part of retailing. Many excellent articles have been written about reverse logistics best practices over the past two decades. Inventory management in reverse logistics in faw co. Have you given a thought to asset tracking after sales. Reverse logistics is relate to the return flows of manufactured goods, materials or equipment back from the purchasers to the logistics network. Reverse logistics is a small part of the total logistics of a company. Thus reverse logistics came to be seen as a problem of. Reverse logistics must be convergent, collecting used product from many points and transporting them back to one or more manufacturing locations.

Effective returns management in an integrated supply chain. In general packaging is manual operations, while moving and storage. In our experience with numerous retailers, reverse logistics remains an overlooked area. Jan 12, 2018 at a company that does not operate reverse logistics any item that has been returned from a customer may be received into the warehouse and stored until it is examined by the quality department or scrapped. This includes business processes that involve transport from distribution endpoints such as retail locations back in the supply chain to locations such as warehouses and factories. The reverse logistics process includes the management and the sale of surplus as well as returned equipment and machines from the hardware leasing business. Is the management and control of reverse logistics giving you trouble. Reverse logistics is more than just accepting a customer return. Retailers are devoting more attention and resources to reverse logistics as they seek to extract as much value as possible from returned goods. Feb 12, 2019 reverse logistics are those used to manage the reverse movement of goods, from the end user to the manufacturer, or even back into raw materials through recycling. Return goods handling is the method by which returned goods i. The paper will examine the advantages of a properly maintained returns process and discuss important options to consider in developing a reverse logistics strategy.

Despite the importance of reverse logistics in handling growing amount of food product returns reverse operations during the product life cycle have received little attention. In the case of reverse logistics, the resource goes at least one step back in the supply chain. This is one of the many factors that motivate ecommerce providers to outsource their reverse logistics setup. Raul castilla, director of reverse logistics at walmart, said each year the retailer processes 45 million cases of returned merchandise through its regional return centers. At a company that does not operate reverse logistics any item that has been returned from a customer may be received into the warehouse and stored until it is examined by the quality department or scrapped. Research executive summaries series tools to manage reverse logistics overview of project reverse logistics has become an area that retailers and manufacturers cannot ignore. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics. The average retailers reverse logistics costs for consumer goods are equal to an average 8. A key part of managing reverse logistics effectively is installing processes as preventive medicine during the forward logistics stream. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Recapture revenue the following paperprovides a contextual overview of u. Paperwork and poor workflow processes tend to plague reverse logistics operations.

Goods are generally returned to the manufacturer if they do not meet the specifications which were desired by the customer or the actual product is something completely different from what the customer had perceived it would be. The returns management process is a core supply chain management process that comprises the activities related to returns avoidance, gatekeeping, reverse logistics and value maximisation in the. An analysis of what reverse logistics entails where it explains how returned goods are managed, as well as their recycling and reuse. How to succeed in reverse logistics material handling. This thesis tries to understand the basic concepts of reverse logistics. Using barcodes to manage inventory returns small business. But businesses have paid more attention to reverse logistics as a field of research is quite new. Operational risks resulting from product returns are also compounded by seasonal changes. Understanding the drivers of expired pharmaceutical returns 2 the healthcare distribution management association hdma is the national association representing primary, fullservice healthcare distributors. Reverse logistics is a part of such reverse supply chains. A significant part of reverse logistics involves trashing the goods collected from customers. Reverse food logistics during the product life cycle. What does walmart do with all the merchandise returned. This study examines reverse logistics practices across the different stages of food product life cycle.

Better manage and reintegrate your returned materials for streamlined practices, reduced waste, and continuing profits from your existing products. Reverse logistics is an integral component of the supply chain and manufacturers have come to realize that an effective reverse logistics program is an important and strategic part of their business profitability and competitive position. Reverse logistics can represent a significant chunk of supply chain cost, and its typically not very well managed, its time to manage reverse as an integral part of supply chain management. Tracking returned goods is now in the palm of your hand.

Reverse logistics is for all operations related to the reuse of products and materials. Encompassing the returned goods makes the supply chain to closed loop supply chain. Reverse logistics provides tools to reduce return rates, and gives new life to unused products. They collect and recycle the returned goods for decreasing the loss generated by the return policy. Reverse logistics are often more timesensitive than getting the goods to the customer in the first place. The council of logistics management has defined reverse logistics as. While many retail organizations run bestinclass transportation and logistics systems and processes, some have neglected reverse logistics as a primary focal area. The reverse logistics process is illustrated in figure 1. Hp and epson produced the cartridges which can be refilled. Reverse logistics effective returns management in an integrated supply chain part 5 in our series on back to basics managing the basic supply chain functions.

Lets take a look at how several organizations deal with the challenges of reverse and where they see future opportunity for improvement. It covers all the activities that determine the fate of these returned goods. Here are two expert perspectives on the opportunities that will make a difference in reverse logistics programs and how to establish goals to optimize those benefits. Product disposition alternatives in a reverse supply chain there are a wide array of products, which in the forward supply chain reach at. Reverse logistics an overview sciencedirect topics. Department of business economics university of verona via. For example, manufactured goods could go from the client to the distributor or to the manufacturer. This white paper examines the reverse logistics maturity model and its application in the lighting industry. This thesis tries to understand the basic concepts of reverse.

It is estimated that reverse logistics costs account for almost one percent of the total united states gdp. The way forward part i of ii although reverse logistics is often overlooked, retailers that master this discipline can gain competitive differentiation and turn the. Reverse logistics deals with the handling of the goods that are being returned to the manufacturer by the customer. Normally, logistics deal with events that bring the product towards the customer. He said 40 percent of that volume will come through in january and. Reverse logistics has been the part of the business since ages in the form of phenomena like recycling of water bottles, recycling of waste papers, and recycling of metal scraps, etc. According to a whitepaper pdf by the reverse logistics association. Winthrop returned goods policy and trade terms sanofi u.

Despite the size of returned products as detailed above. Reverse logistics is the process of planning, implementing and controlling the efficient and effective inbound flow and storage of secondary goods and related information for the purpose of recovering value or proper. Reverse logistics network design consolidating return products for a costeffective collection from large geographical areas leveraging existing and underused forward logistics network capacities to enable recovery of returned goods and waste e. Reverse logistics consists of all activities which are performed after the sale of a product. In attempting to better manage the constant flow of returned goods, manufacturers have identified target. In this guide to reverse logistics, well discuss the steps and terminology to be aware of in this process. For example, 70 to 90 percent of the goods sold in the motor vehicle aftermarket have been remanufactured, reports the remanufacturing industrial council international. The reverse logistics process can be divided into two categories depending on the areas of reverse flow which in turn comprises of primary products, or primary of packaging. This is the reverse of the traditional supply chain movement of goods from vendor to customer. However, the reverse logistics processes involved in returning goods from consumer. Schematic representation of the direct and reverse logistics processes. Sustainable reverse logistics reducing waste and emissions in the retail supply chain feb 2016.

Philips reduced the returned products by over 500,000 units and saved billions dollars through enhancing the management of returned goods since 1998. The correct implementation of this process enables management not only to manage the reverse product flow efficiently, but to identify opportunities to reduce unwanted returns. Returns management should no longer be the ugly stepchild of the supply chain. Medical device, automotive and consumer electronics sectors witness considerably high returns each year but have a low uptake of dedicated reverse logistics channels7. Recovering lost profits by improving reverse logistics 3 about this report by carla huang, ups director of corporate marketing for the hightech industry as a global leader in supply chain logistics, ups has a long history of working with hightech companies, from small component suppliers to global finishedgoods. Each business day, the member companies of hdma are responsible for ensuring that more than eight million prescription. Ernst 2000, reverse logistics involves the return flow, considering either defective parts packages or products returned consumed that should go to a recycling.

Understanding the difference between reverse logistics and. This can originate from a customer returning a product to a retail. Reverse logistics is like cleaning up the morning after a big party a mess that no one really wants to face, resulting from things that are left. How all those free returns create chaos for reverse logistics industry returns of online purchases usually creates a swirl of warehouse work. An average retailers reverse logistics costs for consumer goods are equal to 8. Reverse logistics managed services reverse logistics in the circular economy along with design, collaboration, and business models, reverse logistics plays a critical role in the circular economy. Managing reverse logistics to improve supply chain efficiency.

Reverse logistics programs are typically complicated by a number of factors. This flow is a necessary part of order fulfillment, since returns due to damage, inaccuracies, and. From their reading, the author has detected the lack of a desirable largely accepted consensus on what constitutes reverse logistics. The returned goods policy set forth in part a is applicable to all customers who purchase product directly from winthrop or indirectly through an authorized distributor or wholesaler of winthrop. Oct 29, 2010 reverse logistics effective returns management in an integrated supply chain part 5 in our series on back to basics managing the basic supply chain functions.

Ron lembke, university of nevada, reverse logistics association. True reverse logistics involves managing the flow of goods back up the supply chain. Effective reverse logistics processes will create far more visibility across the entire supply chain, controlling the flow of returned goods so the right orders go to the right customers. It didnt work is the customers most common complaint. Reverse logistics may involve varying levels of planning, implementation, and control of goods as they are shipped back to the fulfillment center and navigate the supply chain to the appropriate application. For retailers, manufacturers and distributors, returns have often been seen as a nuisance, a cost center and an area of potential customer dissatisfaction. The following are common types of reverse logistics. Product returns are part of reverse logistics which includes a combination of other activities. Therefore, reverse logistics is rapidly becoming an integral component of retailers and manufacturers profitability and competitive position. Not only does this scenario use precious warehouse space, but it fails to address the potential. Reverse logistics effective returns management in an. To summarize a few of these wellknown best practices.

Reverse logistics encompasses recapturing the value of products, parts, and materials that have been returned from the end consumer in order to get them back into the marketplace as quickly as possible. Recovering lost profits by improving reverse logistics 5 impacting the bottom line many executives compare the amount of money spent processing returns to other supply chain activities and conclude that investing resources elsewhere would yield greater results. The difference between forward and reverse logistics pival. Product return process developing a webbased return form to improve the. Adb consultings returns goods system enables companies to manage and track the returned goods by the customer.

Without a proper reverse logistics system in place, your company may accept returns on the wrong lot number cited for recall. Reverse logistics is the process of receiving returned merchandise with the purpose of proper disposal or recapturing value. How all those free returns create chaos for reverse. Reverse logistics studies and scientific researches. It is the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, inprocess inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of. Although still undergoing substantial developments, the logistics of the outbound products is now fairly well established.

Understanding the drivers of expired pharmaceutical returns. Reverse logistics are a higher priority in some industries than in others, particularly those where returned product can be recycled or remanufactured. Managing reverse logistics to improve supply chain efficiency and reduce cost reverse logistics can represent a significant chunk of supply chain cost, and its typically not very well managed, its time to manage reverse as an integral part of supply chain management. Figure 4 reverse logistic within one portion of a typical supply chain stock. Reverse logistics management usually involves returns, recalls, repairs and refurbishment, repackaging for restock or resale, recycling, and. A good reverse logistics process can bring great value to your bottom line. Reverse logistics implies the return of waste product and packaging for reuse, recycling and disposal, and today this activity is a crucial part of green logistics figure 1. Jan 02, 2015 kevin oreilly discusses how supply chain solutions, a thirdparty logistics company, has a returned goods authorization program that simplifies the reverse logistics services process of returned. Reverse logistics, which is also sometimes referred to as one of its subcategories known as return management, involve all of the actions necessary to facilitate the flow of materials back from the point of consumption to the point of origin. Fleischmann et al 1997 also indicated that the reverse channel is not necessarily a.

Therefore, they just focus on trying to reduce the cost of returns processing. An examination of the reverse logistics of clothing re. Top 3 benefits of a reverse logistics management program. A company has varied disposal options to choose once a product has been returned. Llc dba winthrop winthrop returned goods policy and trade terms terms are applicable as follows. Understanding the difference between reverse logistics and forward logistics by tom k friday, 17 march 2017 published in blog reverse logistics has been around for a long time but has only recently become a more popular method of supply chain management. Returns will always be a part of business, but be sure youre not limiting them to being a cost of business. Reverse logistics are those used to manage the reverse movement of goods, from the end user to the manufacturer, or even back into raw materials through recycling. Reverse logistics is the process involving the return movement of goods away from their final destination for the purpose of capturing value or proper disposal. But returns in any business can erode your bottom line if you dont manage them well and in some businesses returns are a major cost issue. Figure 1 reverse logistics as a part of green logistics mckinnon, 2010, p.