Reverse Logistics

The ever-growing market pressure is causing strain on the supply chain. Companies that intend to gain optimum value and efficiently adapt to the market demands should not overlook reverse logistics. Reverse logistics definition points toward a set of activities that travels backward through the supply chain. It is performed to fulfill various purposes, whether to capture the product's value, re-use or ensure its proper disposal. It allows stakeholders to gain value, reduce waste, and enable cost savings.

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    Since the process is complex, organizations often choose to outsource support from reverse logistics companies. The third-party service provider offers custom-built reverse logistics solutions to streamline the process. The entire workflow must be strategically defined to avoid any incompetency. It will help extract the optimal value when a product reaches the end of its lifecycle. Here are a few things to develop a strong understanding of reverse logistics.

    What does reverse logistics mean? How does it work?

    What is reverse logistics? Reverse logistics is a part of supply chain management. It helps in moving the products back from customers to the seller/manufacturer. It allows companies to regain their value or ensure their disposal. The process operates involving the following 5 R's
    · Return
    · Resell
    · Repair
    · Repackage, and Recycle.

    When is reverse logistics used?

    Reverse logistics comes to use when goods need to move backward from the destination. They travel 'reverse' in the supply chain to the seller. And they may potentially reach the supplier. It enables product retrieval. Based on its condition, reverse logistics experts determine if they can refurbish it or extract parts and dispose of it.

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    Types of Reverse Logistics?

    Reverse logistics management is of various types. According to your requirements, you can outsource reverse logistics services for better management. These professionals leverage best practices to ensure that it is correctly handled. It ensures optimum ROI. Take a look at the different categories of reverse logistics.

    Returns Management

    It involves defined practices to ensure that the product is returned to the organization from customers. It ensures that the product arrives back at the right entity. Establishing a robust return management pipeline and policies is crucial to ensuring customer satisfaction.

    Refurbishing Or Remanufacturing

    It implements activities to repair and rework the goods. It prepares the products for the shelves again. Based on their condition, it defines the complexity and scope of remanufacturing process for companies.

    Return Policy And Procedure

    Return Policy and Procedure (RPP) lays out guidelines in customer contracts, defining what permits a return. It must be accessible, visible, and unambiguous. The clients should also align with the companies’ established RPP.

    Procedures For Returning Items

    Defined procedures enable companies to smoothly process reverse logistics. It helps properly authorize returns by verifying the goods' condition. It also covers activities to schedule the return supply chain and approve refunds.

    Management Of The Packaging

    The reverse logistics is hinged on the key idea of waste reduction. Thus, the product is recovered along with the packaging material. These materials are re-used to reduce waste or ensure proper disposal.

    Goods That Were Never Sold

    Sometimes the extra stocks at the retailers do not get sold. Or when end customers do not receive or refuse the goods, it results in unsold goods. In such situations, efficient reverse logistics must be in place to bring it back to manufacturers/distributors.

    End-Of-Life (Eol)

    A product that has reached the end of its lifecycle becomes redundant. Customers no longer need it and choose to replace it. Reverse logistics enable manufacturers to repossess such goods. They either choose to scavenge it to retrieve parts, recycle it, or carry out their proper disposal.

    Items That Were Not Delivered

    Due to failed or missed deliveries, end customers do not get the product. Such goods arrive back at the sorting warehouse. It then travels back to the starting point. Accordingly, stakeholders determine what to do with the product.

    Leasing And Rentals

    Customers use certain equipment according to the terms of leasing/rental contracts. When the lease period is over, stakeholders tend to reclaim it via reverse logistics. They then decide what to do with the used product.

    Maintenance And Repairs

    According to Service Level Agreement, the enterprise provides customers with repair and management services for the purchased goods. If the product requires repair, the reverse logistics process helps to bring back the product to the manufacturer.

    Advantages Of Reverse Logistics

    Reverse logistics is of crucial importance in facilitating customer satisfaction. Simplification of return processes enhances business credibility and reduces waste. Moreover, it helps companies regain products’ value by refurbishing or recycling them. Efficient reverse logistics reduce inherent risks in completing the product lifecycle.

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