Why Reverse Logistics?

Traditionally, in the supply chain of an organization there is a unidirectional flow of goods, that is, from the manufacturer to the end-user. Almost the entire attention of a logistician has been focused on the “forward” logistics activities. Once the product is sold and delivered to the user, the manufacturer feels that there is an end to his responsibility. Manufacturers think that their respon­sibility is limited to the extent of replacement of defective products covered under the warranty or those damaged during transit. What is happening to the used materials, packaging waste, dispos­able product waste generated by the finished products supplied by them? The leftover material and wrappers cause environmental pollution and create problems of disposal for the civic author­ity. However, in the wake of growing concern about environmental pollution, developed countries across the world have passed legislations that require manufacturers to take care of products dis­carded by their customers after usage. Leading corporations across the world are taking this as an opportunity to develop a system for reverse material flow. They are focusing on reverse logistics in order to use it as a tool for competitive advantage. It is estimated that reverse logistics costs account for approximately 0.5 per cent of the total United States gross domestic product (GDP).³ Therefore, reverse logistics is becoming an integral component of the profitability and competitive position of retailers and manufacturers.

Reverse logistics may be defined as a process of moving goods from their place of use to their place of manufacture for reprocessing, refilling, repairs or waste disposal. It is a planned process of goods movement in the reverse direction, done in an effective and cost-efficient manner through an organized network. It can be a stand-alone or an integrated system in the company’s supply chain.

Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.