When we think about logistics as a whole, we may only consider it to be the flow of goods from the point of origin to consumers. For some organizations, their duties entail quite the opposite; this is called reverse logistics. The Reverse Logistics Executive Council defines reverse logistics as, “The process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods, and related information from the point of consumption to the point of origin to recapture value or proper disposal.
” The goal is to optimize aftermarket activity. This oftentimes reforms the efficiency in aftermarket activity. This goes beyond regular logistics because goods are being moved beyond their normal destination. Vital components of reverse logistics include reuse of product packaging and or materials, product recalls, and proper disposal. The refurbishing and remanufacturing of goods are also considered a major role. Well-known companies that manage these activities are Apple, UPS, H&M, and Dasani. Below is a diagram that shows the
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differences in functions between logistics and reverse logistics. The importance of reverse logistics is overlooked by consumers. We fail to conceptualize that after consumption, our product waste and materials must go somewhere. Reverse Logistics is what facilitates sustainability after the point of consumer disposal. The reuse of packaging and materials are not the only important role reverse logistics deals with. According to a group of professors and engineers from Hong Kong studying how the supply chain works, “each of the supply chain parties including supplier, manufacturer, distributor, transportation partners, and the consumer would have their abilities and responsibilities to perform various reverse logistics activities such as product recalls, inventory returns and warranty recalls” (G.
T.S. Ho, Choy, K. L., C.H.Y. Lam, & David W.C. Wong., 2012). With this being said, reverse logistics not only deals with the management of sustainability but the disposal of goods necessary.
Despite popular belief, reverse logistics is a concept that has been around a lot longer than most people think. The rise of the internet has made reverse logistics a more prevalent and essential concept for businesses to master, though the concept can be traced back to the Civil War. The Civil War marked the first occurrence of a systematically recorded reverse logistical process. At the end of the Civil War, General William T. Sherman successfully moved a formation of 60,000 men through nine major rivers, streams, and swamps in one of the worst winters in Carolina’s history at that time. General Sherman is heralded for starting the logistics of supplying soldiers and keeping them in top condition under dire circumstances. General Meig’s reported about General Sherman to the Secretary of War summing up the success of Sherman’s logistics approach, “This army of nearly 100,000 men needed to entirely reclad and reshod; the troops were to be fed while resting, for as soon as the army ceased its march it ceased to supply itself by foraging, and depended upon the supplies from the coast. Nevertheless, on the 7th of April, I was able to inform General Sherman that the necessary supplies were in his camps. Every soldier had received a complete outfit of clothing and had been newly shod. The wagons were loaded with rations, and forage.3” (1OR, ser. 3, vol. 5, pt. 1, 227.). Sherman’s success was a direct result of his ability to anticipate future requirements and coordinate the necessary support at both an operational and strategic level. This is where the history of reverse logistics begins.
In 1894, former retail giant Montgomery Ward instituted what is generally regarded as the first major reverse logistics operation. Ward began a catalog promotion offering a 100% money-back satisfaction guarantee on all products. Consumer confidence in the company soared, sales skyrocketed, and Ward developed an entire department dedicated to handling its consumer returns. The next major date in the history of reverse logistics occurred in 1984 during the Tylenol scare. Johnson & Johnson along with McNeil Laboratories quickly responded to get the tainted products off the shelves and quickly replaced them with new lots with tamper-proof bottles (Robinson).
Through reverse logistics, companies found that the ease of returns and reverse supply chain processes had a major impact on a customer’s decision to buy or purchase goods and services. They also found it may provide unseen profits. Companies also found that through reverse logistics, they could become more environmentally friendly. However, practices of green reverse logistics practices were not seen until the early 1990s.
In 1991, Germany passed recycling ordinances in the environmental reverse flow and brought into effect mandatory recycling programs. There were provisions included in these ordinances for fines and prosecution for violators. In addition, there were stricter guidelines for the transporting and handling of hazardous materials and responsibilities for recovering hazardous wastes. These ordinances led to a 1996 United Kingdom legislation requiring manufacturers and shippers to be responsible for the return and recycling of packing materials. The European Union then established a goal of 50-65% recycling or recovering packaging waste.
In today’s economical climate the strategy, Reverse Logistics is arguably more important than it’s ever been. With the emergence of new technologies such as the internet, reverse logistics is only becoming a more in-demand supply chain technique that could help benefit a lot of companies. Reverse logistics is an effective concept that helps organizations cut their cost and can also help improve customer service.
There are many widely successful companies today that implement reverse logistics in their businesses. One great example of a company that uses reverse logistics to cut costs is Apple Inc. Apple manufacturers iPhones and other electronic devices, which are sold in various stores around the globe. Customers of apple typically purchase their iPhone and use their product until it is time for an upgrade. Then when consumers return to apple to purchase the latest iPhone, they are given to offer to exchange their older device for a discount on the latest iPhone. Apple then sends its old device to its factories to use its parts on newer Apple products. Doing this not only helps cut production costs but is also environmentally friendly. Another good example of a company that uses reverse logistics is Dasani. Dasani is a brand of bottled water from the Coca-Cola company, launched in 1999. It’s one of the many brands owned by Coca-Cola. They sell their filtered bottled water around the world. They are an excellent example of reverse logistics because of the several ways they have enabled their consumers to recycle Dasani products. For example, they have placed Dasani bottle bins on school campuses around the United States. Once consumers place their empty bottles in the bins, then Dasani can collect the bottles from the bin and recycle them appropriately.
New developments in technology are being adapted to improve efficiency and performance in the field of logistics. One of the most exciting developments in the creation and utilization of blockchain technology is to provide real-time data to multiple departments in an organization. An example of an application that uses a form of blockchain that most students have used is Google Docs. Changes made to documents are updated and made available almost instantly. Logistics, and thus reverse logistics, can use this technology to update both customers and shippers about the whereabouts of a product as it moves through the supply chain. If set up correctly, the manufacturer, distributor, and consumer can be notified at the same time that a return or recall has been scanned by the shipper (‘Fr8 Network: blockchain’s powerful potential for reverse logistics’). In the instance of a return, this can then allow each member of the chain to take any required action at once, may that be sending a refund or updating a tracking site. This does not only apply in this circumstance, in fact, “All data captured stored transferred and accounted for at each point in the supply path (is available) in real-time”(‘Fr8 Network: blockchain’s powerful potential for reverse logistics’). Ledgers that took days to update are now done in seconds. As the saying goes, time is money, and the time saved by blockchain technology can save companies a lot of money.
Uber Freight is looking to change the way the commercial sector looks at shipping. They plan to apply the same concepts of the sharing economy to freight. Their goal is to achieve what they call “liquid access” to transportation. “Tap a button, book a load” is their slogan. They wish to do away with long-term contracts currently held by old-school trucking companies(‘The Future of Freight: ‘Uberization’ and Self-Driving Trucks’). This could help a smaller business that may not normally require a long-term relationship with a freight company to send back a shipment or to help when demand exceeds expectations like during the holiday season when the customer returns hit an all-time high. Just like how Uber changed the way we look at personal transportation, Uber Freight wants to change the logistics landscape in an age of ever-increasing desire for faster service.
The future is even brighter for logistics with the advent of self-driving vehicles. An advance in technology like this would not only be a huge gust of wind in the sails for reverse logistics but logistics as a whole. Estimates put self-driving cars on the road by 2020 with self-driving trucks being a bit further off from that (Cerasis_IT, 2018). It’s easy to see how removing the human element from this process can be very financially rewarding for companies. Unlike people that need to stop to eat and sleep, these self-driving trucks could be on the road 24/7, minus repairs and stops for fuel. While the hurdles needed to mount are vast in scope before fully autonomous trucks are delivering shipments across the continent, it is a field that is being heavily researched by companies. Some of these companies include Uber and Tesla. Uber recently acquired Otto, a venture that was started solely to create self-driving trucks (‘The Future of Freight: ‘Uberization’ and Self-Driving Trucks’). While this may be in the dreams of many shippers, it pales in the immediate importance to improve service to customers who are growing increasingly more demanding of the speed and ease of deliveries and returns. As these needs increase, companies will continue to look to breakthroughs in technology to keep pace.