While logistics represents the production route to the customer, reverse logistics, also known as return logistics, completes this semi-circle with the most efficient planning, control and disposal of materials to create an economic cycle. It is divided into returns logistics, re-distribution logistics and waste disposal logistics. The aim is to ensure the efficiency of the value chain in its economic viability in both directions.
Logistic services are always improvements in the supply environment of systems, i.e. the physical transport of product goods and the related information management. Reverse logistics is comprised of disposal as well as the return of products and recyclable materials into the economic cycle.
Online trade (e-commerce) with the nationwide distance selling act is largely responsible for the growing importance of reverse logistics. This came into force on 30 June 2000 and grants the consumer a fortnightly right of withdrawal and return.
The additional transport routes and the increased circulation of goods through online trading require an ecological awareness of product development, the backward planning and control of transport routes (re-distribution logistics) and the disposal of product components with as few waste as possible. This responsibility towards the environment, with the aim of simulating its regenerating cycles, is at the heart of reverse logistics.
Trigger of reverse logistics:
- Exchange after the right of revocation
- Guarantee claims and repairs
- Disposal in accordance with the Recycling Management Act (KrWG)
Triggers for reverse logistics are, on the one hand, the guarantee that the manufacturer will take back the products on the basis of the customer’s right of revocation and the occurrence of a guarantee claim. On the other hand, the Closed Substance Cycle and Waste Management Act is based on a disposal philosophy that is as environmentally sound as possible. This provides a legal framework for manufacturers, logistics providers and dealers to implement the economic aspects of reverse logistics in a targeted manner.
The model for reverse logistics is nature, which can regenerate itself with its mechanisms. In order to approach this, it is important to focus on the economic aspect as early as the production planning stage by means of a production process that conserves resources as far as possible or a sourcing process for raw materials that leaves as little waste as possible. Many manufacturers take responsibility for the environment by taking back used or defective products and include disposal logistics (e.g. through recycling) in their economic cycle.
Other reasons for reverse logistics
In addition, reverse logistics is driven by the need to conserve the world’s scarce resources, to reduce costs by using efficient transport routes (e.g. through retailer integration for dispatch and returns, product dispatch directly to the manufacturer in the event of repairs) as well as growing environmental awareness among the parties involved (manufacturer, retailer, logistics service provider, customer).
An example of reverse logistics:
The manufacturer intends to put a CD recorder on the market. As early as the product development stage, it incorporates the green idea by using materials that can later be separated and recycled with the lowest possible energy input.
If the customer reports a defect after purchasing the CD recorder, the device is not first sent to the dealer but directly to the manufacturer for repair.
If the customer initiates a return for the CD recorder or wants to exchange the device or withdraw from the purchase, the manufacturer falls back on the integration of local retailers. The nearest retailer who carries the CD recorder receives the product and can offer it for further sale in his shop.
Once the device has reached the end of its lifecycle, the consideration of the economic aspect in product development pays off: After the manufacturer has taken back the device, valuable materials are recycled, the precious metals are separated and melted down for further use.
Further information on the supply cycle can be found in the article The Milkrun Concept.
Teaser image: Green Logistics (License: CC BY-SA 3.0)
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