Quick Transport Solutions Inc.

Differentiate Reverse Logistics and Forward Logistics

Logistics is generally defined as the management of resources as they flow from their origin to their destination with the consumer. The resources that are managed can be almost anything, including dry goods, people, and equipment. The definition of logistics also includes the management of abstract concepts such as time. The goal of logistics is to maximize efficiency and minimize cost.

Types of Logistics

Most people are familiar with forward logistics, which deals with the management of products flowing from the factory to the consumer. Reverse logistics is the opposite of this, where products and materials are returned from the customer to the company. This includes warranty recovery, repair, contract returns, refurbishment, resale, end-of-life recycling, recalls and value recovery. The goal of the reverse logistic process is to improve customer experience, maximize recovery of assets and improve efficiency in the supply chain.

Why is This Process Important Today?

Approximately eight to twelve percent of all products sold are eventually returned. Because the cost of end-of-life management tends to be at least twice as high as forward logistics, it is especially important for companies to understand why their products are being returned and take steps to minimize the need for returns.

Another reason that this process is so important today is that we live in a disposable society where consumers are quick to dispose of their current electronics as soon as the newest model is on the market. This creates an abundance of waste that must be disposed of. New laws are holding manufacturers accountable for collecting, transporting and recycling the products they create and sell. Companies must focus on end-of-life activities such as refurbishment, repackaging, harvesting, repair and recycling to minimize the amount of waste they are required to dispose of.

Functions of Logistics

While forward logistics are part of the beginning of the life of a product, reverse logistics focus on the end of that product’s life. This generally involves waste management, liquidation, service parts logistics, and repair and replacement.

Waste management is the disposal of the products and all that entails.
Liquidation involves marketing and selling products to secondary purchasers.
Service parts logistics involves managing parts and field stocking locations.
Repair and refurbishment deals with diagnosing, repairing, replacing parts and preparing the product to be resold.

How to Optimize the Process?

Visibility is one of they most important ways for a company to optimize their process for the end of their products’ lives. It involves using technology to create and increase visibility across the entire supply chain.

Velocity is another important part of the process. It includes the coordination of all reverse logistics components to minimize transportation time as well as overhead costs.

Value recovery is the analysis of the end-of-life process to maximize the amount of value that the company will be able to recover from each product. Options related to value recovery may include return to vendor, resale, recycling, donation, repair or refurbishing. The condition of the item is a major factor in value recovery.

There are few companies that wouldn’t benefit from streamlining their process for handling the end of their products’ lives. Investing in an expert to streamline this process helps companies save money and time, as well as improve the buying experience of their customers.

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