Benefits of a Sustainable Reverse Logistics Strategy

Reverse Logistics, Supply Chain, Sustainability, Technology
April 11, 2013

Recondition, Reuse or Recycle Goods to Minimize Environmental Impact and Maximize Revenue Streams

When it comes to disposal and recovery efforts for returned or end-of-life products, taking a sustainable approach can deliver handsome returns. This isn’t just in financial terms but also within the context of social responsibility and customer satisfaction.

Sustainable Supply ChainHistorically, the entire returns management process has been a kind of black hole. For many companies, it’s been a cost center that offers little visibility into what products are in the pipeline and whether they should be repaired, repackaged, restocked, recycled, disposed of – or whether they even belong in the reverse channel at all.

Today, fortunately, the tides are turning. Like many companies, you’re probably starting to rethink reverse logistics. You may be realizing that it’s important to your bottom line and to your position as a responsible corporate citizen. This is especially true in the hi-tech and electronics industries, where accelerating clock speeds are compressing product lifecycles.

Given shorter product lifecycles, the complexities of selling products over multiple channels (think bricks and mortar, Web and mobile), and consumers who are increasingly demanding scorecards for climate change impacts, energy consumption and emissions, the pressure is on to responsibly manage returned assets. Implementing a strategy to reuse, refurbish and recycle can deliver payback in many ways:

  • Environmental benefits
  • Cost savings
  • Healthier profit margins
  • Consumer/customer satisfaction
  • Reduced supply chain carbon footprint

What is reverse logistics and why does it matter?

While traditional (forward) logistics deals with the flow of products from factory to consumer, reverse logistics refers to the processes associated with returning products, parts, and materials from the final consumer. Typically, this includes repair, warranty recovery, redistribution, value recovery, product and service contract returns, product recalls, used equipment and replacement parts for refurbishment, resale or sale as raw material or end-of-life recycling.

The goal of reverse logistics is to maximize asset recovery rates and supply chain efficiency to reduce costs wherever possible. Increasingly, companies and the partners they depend on, use reverse logistics to meet sustainability goals. More and more companies are integrating recycled materials into their production processes and responsibly disposing of products that cannot be reused or recycled. That includes end-of-life recycling. For example, when a customer buys a dishwasher and it reaches the end of its service life, companies have policies in place for handling the products.

Take these steps toward a sustainable re-use, reconditioning or recycling strategy:

  1. Understand your product’s impact from the forward supply chain through returns. Identify the waste streams associated with your manufacturing and distribution processes. Consider reverse logistics within the context of the entire lifecycle, designing products with disposition and end-of-life processes in mind.
  2. Determine what you’ll do with returned products based on their condition: if they’re still functional and can be repackaged, repaired or remanufactured and returned to stock for sale, consider how you’ll manage that. Determine what you’ll do with parts that can be re-harvested or conversely, must be liquidated.
  3. Consider offering product discount incentives to encourage customers to trade in fully or partially depreciated products. This fosters responsible reuse or recycling of older equipment, while incenting customers to upgrade and/or buy new products.
  4. Set up processes to take back, recycle and refurbish/recondition products that customers return or no longer need in a way that meets environmental regulations. This may mean working with a partner that can handle it for you or working with an IT asset management company that performs end-of-life electronics recycling, handling and reselling of valuable assets.
  5. Establish processes to dispose of returned products/parts. If products have reached the end of their useful lives and must be scrapped, find safe, cost-effective and environmentally friendly ways to do so. Engage a third-party recycling company to collect and reclaim waste and dispose of assets for you, if necessary.

Could you benefit by integrating sustainable returns/end-of-life processes into your reverse logistics supply chain?

To learn how reverse logistics can help you recover more value from returns and minimize your environmental impact, download our Reverse Logistics White Paper now.

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