We live in a world of efficiency and optimization, and no part of the world embodies this idea better than the business landscape where companies big and small alike heavily value the impact of good logistics and the significance of detail-orientedness when handling operations. Plus, considering the global context and the current pandemic fallout that continues to lurk and plague supply chains, now’s a crucial time for companies worldwide to reduce the number of resources wasted and maximize the usefulness.
However, in today’s business landscape, we’re seeing a shift in trends from valuing the typical forward supply chains to the increasing importance of reverse supply chains given the contemporary challenges we are facing. In fact, even small businesses can’t afford to be held back by new normal guidelines such as social distancing rules and ongoing testing measures for Covid-19. So, to break the glass ceiling that separates us from knowledge and indifference about reverse logistics, we’ll be diving deep and learning why even the most prominent names struggle to optimize.
What Makes Them Different?
As the name suggests, reverse logistics is closely similar to your usual logistics; the most significant difference is how the products move from end-user back to the processing facilities. It deals with product returns, repairs, and many other similar services offered by companies that minimize the amount of waste generated, increases the value recaptured and improves the overall sustainability of business operations:
- Cost Optimization and Environment Responsibility: While your typical objective in a forward supply chain is concerned with maximizing profit and cost optimization in the supply chain process, reverse supply chains are more concerned with the environmental responsibility of a company. Yes, there’s still an aspect of cost optimization, reducing the number of resources wasted, but the main objective is to ensure that these resources remain useful even at the end-of-life (EOL) instead of doing unnecessary harm.
- Processing Times of Returned Products: Unlike a forward supply chain where the processing steps and times are well-defined from start to end-user, processing steps and times of returned products vary greatly depending on several conditions. There’s no telling how badly in shape these returns are and if they’re even serviceable. Plus, there’s also the issue with inconsistent inventory management.
- Sufficiency Issues With Product Tracking: Last but not least, it is much easier to determine the life cycle of a product within the forward supply chain, and management does not experience any issues with appropriate product tracking. Sadly, there’s a severe lack of system capabilities with product tracking in a reverse supply chain, which is why a lot of returns are lost in the process.
What Are The Benefits?
Now that’ we’ve settled the clear-cut differences between forward and reverse supply chains, what exactly makes them so special and important in today’s context? Apart from adhering to a company’s environmental responsibility, are there any other benefits you can seek to gain from allocating resources in improving your reverse logistics framework?
#1 Improve Business Image
Number one, an efficient reverse supply chain will significantly boost and improve your business image. Firstly, your target customer base will feel more inclined to stick with your brand because of your environmentally friendly operations and the proactive plans you develop to reduce the environmental impact of your products. Secondly, a stronger reverse supply chain means better customer service because you can guarantee that their products are serviced and handled appropriately when sent in for repairs or returns.
#2 Optimized Supply Chain = Reduced Costs
From a financial standpoint, your company can also seek to gain plentiful from an optimized reverse supply chain because this will result in reduced costs. You’ll be surprised at the amount of money and resources you can save through improved management and optimization of supply chains, and these can help maximize your profit margins.
What Are The Barriers?
Likewise, implementing an effective reverse logistics framework also has multiple barriers that prevent significant progress. And, unless these issues are addressed, you risk outputting substandard results, which is why many companies still value the forward supply chain more in the first place.
- Lack Of Awareness About Reverse Logistics: Generally speaking, not a lot of people are aware of the existence and significance of reverse logistics, except very-skilled businesspeople and professionals well-versed in the technicals. As a result, it has yet to catch onto the mainstream, remaining an enigma to the majority of enterprises.
- Technology Sufficiency: Just like Google’s failed attempt at internet balloons, there’s a big issue with technology sufficiency in the reverse supply chain. Current technical capabilities are unable to meet the demands of a reverse supply chain, making losses and wasted resources a given until the technical capacity improves.
Overcoming Supply Chain Problems
Nevertheless, despite the barriers to effective reverse supply chain management, we think it’s high time that businesses pivot and overcome the supply chain problems exposed by Covid-19. And, unless we start now, we risk these issues growing into bigger problems.