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Reverse Logistics – What is it and How Does it Work?

How does reverse logistics work?

Reverse logistics is the process of sending goods from customers to manufacturers. It is because of this journey back it is called reverse logistics. In this process, the end consumer requests a “return”, processed through delivery agents.

Traditional versus reverse logistics

Traditional logistics starts with the product at the manufacturing factory. Once products are made, they move to retailers through delivery agents. These retailers help in selling the goods to a broader audience.

In contrast, reverse logistics starts from the end consumers. It moves through delivery agents back to the processing hubs. These hubs decide whether they must recycle, or resell, these goods. If a product can be sold again, it is reinitiated into the market.  This is done through retailers to reach the end consumers once again.

Steps to carry out optimal reverse logistics

Steps involved in the reverse logistics supply chain:

  • End consumers
  • Return shipping
  • Return processed
  • Moving and evaluating the product
  • Recycling or resale
  • Initiating sale to the end consumers again

Online orders inevitably face “return of product”. Trillions are spent on commodities being returned. This hampers the growth of e-commerce and traditional businesses.

Types of Reverse Logistics

Some of the types for reverse logistics are enumerated below:

  • Returns: These are normal forms of products that are being returned to the original manufacturer so that the initiation of the community can take place.
  • Returns Avoidance: In this form of returns, the product is attempted to be not returned to the manufacturer and is again resent to the retailer so that the initiation of the product can take place. Alternatively, clippers for the return products can take place at this stage as well.
  • Remanufacturing: In case products are rebuilt, repaired or reworked, manufacturers have a role. Manufacturers can re-purpose those products to be sold again. Companies can recover revenue by following these strategies in reverse logistics. Experienced agents are required in this specific stage as they must be able to identify the issue the product is facing.
  • Refurbishing and Packaging: the product can be repaired once more and packets effectively as this will help in optimising the commodity to be sold again. This is essential as many products are returned as the consumers merely do not like them.
  • Delivery failure: not being able to deliver products effectively to the final consumer is an aspect that can cause a product return to be initiated as well. This must be prevented through adequate information being collected by the customers effectively.
  • Failure of Delivery: In case a product is not delivered to the consumer, refunds are issued. This can take place due to the unavailability of staff. It can also take place through inaccessibility to location. In the Indian context, failure of delivery can also occur due to many reasons. These include strikes, and public holidays, among other reasons.
  • Unsold goods: Reverse logistics also includes goods that haven’t been sold. This implies that these goods are returned by returns due to poor sales. This can also take place if inventory expires. Investigating different reasons for limited sales is important. It helps in making sure that rebranding takes place at an improved capacity.
  • End-of-life (EOL): Products in this category are returned when they are no longer useful. They are replaced through better and newer versions. The life of products can also shorten in many situations if they are constructed with inadequate materials.

Some common reasons for reverse logistics are:

1. Failure to deliver a product

2. Refurbishment required

3. Recycling of Commodity

4. End of product life

5. Disposal of Commodity

6. Remanufacturing need

7. Repairs and maintenance

Challenges in Logistics Services

A challenge in reverse logistics is setting up the correct infrastructure for efficiency. In the absence of the correct automated software, reverse logistics can falter. Being able to monitor products making their way from the end consumer is essential.

Another challenge is the coordination between different agents. Since the urgency of return is lesser for products in return, they get lost in transit. This can increase overall losses.

Reverse logistics in India

In India, a large number of consumers order commodities online. These marketplaces include Flipkart, Amazon and more. The range of products from these places includes clothing items and food items. These major companies have delivery agents who help in reverse logistics. Reverse logistics ensures consumers that if they do not wish to keep the product, they can return it. Therefore, they can shop more, and they can do so without feeling stuck with the delivered product.

However, for smaller organizations, it is difficult to engage in reverse logistics. Smaller entrepreneurs do not have elaborate delivery systems. Applications such as Vahak have emerged with 0% commission transport booking. Through Vahak, one can look at various trucks for major locations across the globe. For smaller organisations, onboarding consumers is easier with Vahak.

Quantity: The total volume of products being returned plays an essential role. Returned products reveal weak links, which are identified in tracking reverse logistics. The higher the number of products being returned is an important indicator.  The more likely the chances of defective communities being present are increased. In addition, it can also indicate the quality of goods which is not ideal for the target audience. This can also hamper the overall supply chain.

Conditions: Specific conditions are needed for goods. They enable to make sure that only qualified commodities are being processed. If a product is inadequate, it is important for manufacturers to know. These will not be processed for reverse logistics further. This is as they are not in perfect condition for reselling.

Financial Value: Multiple products of lower value have lesser significance. Thus,  processing them backwards has low value. The overall cost of returning and transporting commodities back increases losses for businesses. Owing to this, relinquishing ownership to clients is more profitable. Creating a comprehensive document to “qualify for return” is important. Specific products which do not qualify for return can help delivery agents to identify these products.

Reverse logistics vs Reverse supply chain management:

Reverse logistics is a part of the reverse supply chain. It relies upon each delivery agent, manufacturing repairers, and quality checking. They all play a key part in the supply chain.  Several strategies for optimising reverse logistics are present. These add to reverse supply chain management experience. This is because both are complementary methods as opposed to opposites.

Multiple stages are present in supply chain management. These include planning, production, inventory management, capacity management, and distribution. Logistics is a part of supply chain management. It helps in the transportation of goods from one stage mentioned to another. In the case of reverse logistics, the focus is given to the finish stage first.  When sending the products back from distribution to production, it enables improved planning for future communities.

The role of logistics and SCM is it facilitates in management of goods. It is important to engage in this as it helps in products returned to be minimised. Many factors are affecting which encompass the quality of work, process of moving goods back, and more.

Creating relevant policies: Strategies to minimise the cost involved in reverse logistics. To do this, specific cycles of returns can be mentioned. Therefore, consumers will only have a set number of return opportunities for specific goods. Moreover, elucidating a specific number of return days also helps in creating pressure on delivery agents to return goods.

Collaboration with suppliers: Initiating communication is important. The relationships with different suppliers in various regions of India enables better navigation to take place. This allows a smooth experience for customers to be initiated when returning products. To initiate relations with good suppliers, market service is initiated with existing players.

Data optimisation: Various reasons for return can be there. Businesses have the chance to strategically adjust product design, sales processes and more. Any flaws in the customer service experience can be mitigated through surveying. Leveraging online surveys, feedback from emails, and more are some methods. They are used to make sure that this information is being accumulated much more easily.

Reverse Supply Chain Management

Reverse Logistics heavily impacts supply chain management as the flow of goods moves in the opposite direction. The surge of returns heavily impacts supply chain costs and creates heavy losses. Backward movements of goods impact return can be problematic. In the supply chain and sustainability for business, individuality is difficult to maintain. Improved return experiences through centralised return centres can be created to cut down losses. This increased accessibility to return products can minimise the cost in the supply chain process.

Advantages of Optimised Reverse Logistics

The utilisation of optimised reverse logistics is important in creating supply chain visibility. Some major benefits that are present because of effective reverse logistics include:

Reduced cost: Lesser the number of agents handling a specific product is crucial. This makes it more likely for the cost of the product coming back to be diminished. Optimised reverse logistics also helps in stock maintenance as well. This makes sure that overproduction does not take place.

Increased customer retention: Higher defective items being replaced effectively is vital. It helps more customers to be retained. More action by businesses increases customer satisfaction and improves future purchase prospects.

Loss reduction: If products are poorly manufactured, they can be recycled through reverse logistics. An organisation possesses a wide range of products it offers in a similar manufacturing process. Following different product lines, the realignment of different raw materials can be initiated. This can facilitate in reducing the overall cost losses being phased by a business.

Final Thoughts

Reverse logistics is crucial. It helps to build a long-term relationship with the client base. In contrast to traditional logistics, reverse logistics operates in the opposite direction. Replacing products and recycling materials helps in maintaining good relations and minimising losses. In the context of India, authorised transportation marketplaces are essential. Applications such as the Vahak app play an important role here. Platforms such as this help reverse logistics to become simpler for smaller entrepreneurs—the challenge of creating an automated reverse logistical by entrepreneurs on their own. They have helpful metrics through which financial value, fulfilment of conditions, volume and other aspects are met.

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