Introduction
In the current business environment, competition is a critical factor and is almost in all sectors of the economy. Various industries experience a significant level of rivalry, which has increased the need for reverse logistics. Many business organizations and enterprises are considering the impact of implementing reverse logistics into their supply chain as the demand from customers, service providers, and retailers are enormous. Despite reverse logistics being the same in functionalities with forward logistics, the two are significantly different. Reverse logistics focuses on moving goods or products from the consumers to the manufacturer or point of origin. The inventory in this area is unpredictable because it is impossible to forecast the number and type of product that will be returned. The items returned have a significant variation in quality, making the producer have little information on the condition of the goods. The essay focuses on reverse logistics key processes, benefits, promotion factors, and barriers.
Key Processes of Reverse Logistics
Reverse logistics has five key processes: product acquisition, collection, sorting or inspection, disposition, and re-distribution. First, product acquisition is an essential process in reverse logistics as it involves the attainment of the used products, materials, and other components from the client. This step is critical since the time of the return of the product is uncertain together with quality or quantity (Banihashemi et al., 2019). Second, collection involves gathering the products that the client has discarded to the point of retrieval. The step consists of a series of actions such as sorting, testing, and disintegrating the product to identify its characteristics and quality. At this stage, the company identifies a suitable strategy for every product.
Third, the disposition is when the companies identify the cost of the material to ensure that its costs are less than the cost of the new product. The available options are categorized into three, direct recovery, management of product recovered, and final disposal, and they are organized in relation to the quality of the disintegrated product. Direct recovery is used when the quality of the product is almost equal to that of a new and its condition is satisfactory (Banihashemi et al., 2019). Products that have reached their lifespan or cannot function as required are taken to the reconditioning process to enhance their value and make them profitable again. The process of product recovery involves recycling, parts retrieval, remanufacturing, refurbishment, and repairing. The products that cannot be recovered are disposed of, either incinerated or through landfills if biodegradable.
Fourth, the re-distribution process is the final stage in reverse logistics, where the products that have been reconditioned and recovered are taken back to the market to attract new clients. Additionally, the process changes the direction of the logistics from reverse to forward (Banihashemi et al., 2019). The possibilities of the products that have been redistributed include selling products with a discount, donating, selling via a vendor, or through secondary markets.
Benefits of Reverse Logistics
There are numerous benefits that are generated from the reverse logistic process in an organization. This includes ecological objectives, marketing image, marketing share and exhibition, asset protection, customer satisfaction, and forester effect reduction. First, ecological objectives focus on maintaining the environment. Certain products contain poisonous chemicals such as hexavalent chromium, lead, mercury, and polybrominated ether. Most of these chemicals are in products such are electronics and car batteries (Waqas et al., 2018). The effect of these chemicals is detrimental to the environment. This brought up the need for reverse logistics in such companies to prevent ecological effects that lead to climate problems. By implementing the reverse logistic process, the amount of chemicals deposited in the environment is significantly reduced through reusing the chemicals. Also, the process saves on the energy lost hence protecting energy. For instance, aluminum recycling requires only five percent more energy than that used in processing aluminum ores of the same number. The cost of sending the product to a landfill is significantly high, making the need to identify different ways to manage the disposal. This has been aided by the reverse logistic policy of protecting the environment.
Second, the company’s market image objectives are attained by showing the clients they are protecting the environment through reverse logistic processes. In the 21st century, there has been an increasing demand for protecting the environment, which has made many customers opt for products that significantly preserve the environment (Pereira et al., 2017). Companies are perceived as having a critical part in environmental management as they drive the supply chain, which involves suppliers and clients. This has made many electronic companies adopt sustainability goals, including promoting reverse logistics in their business environment. The reverse logistics has mainly been taken positively by electronic companies such as Dell, which began in 2004. During this period, the company enhanced its image in the electronic industry, considering that it was the period where environmental concern was high.
Third, marketing share and exhibition objectives have made companies engage in reverse logistics. Apart from lowering the cost of production, various companies take their competitors’ products and use them to enhance the performance of their products and market share (Bajwa & Younas, 2019). Other companies use discounts to collect their materials, which makes clients focus on returning their products, hence promoting its value (Waqas et al., 2018). Dell electronic has used this strategy for clients that are buying their products. Fourth, the asset protection objectives are based on protecting their technology. This strategy is mainly used by high-tech industries because they fear their technology could leak to their competitors. They encourage the clients to return their products to them rather than other secondary companies that practice reverse logistics.
Fifth, customer satisfaction is significant issue in the reverse logistics. Clients require after-sales support and product return support when the items are defective. Fulfilling the client’s needs is important for customer loyalty as they are the one that drives the organization’s success (Sajjanit & Banomyong, 2018). Lastly, the Forrester effect reduction objective is based on the traditional supply chain forester effect. This effect is identified as the supply chain gain from the low to the high level. Through reverse logistics, these effects are reduced as products are returned to the manufacturer. They absorb the demand variations at the beginning of the supply chain, making it cheaper than the variable costs.
Factors that Promote Effective Reverse Logistics
Promoting reverse logistics is based on design and production, process management, quality and organization, and finance and marketing. In the design and production process, the following are the factors of consideration. During the product’s early design, it is necessary to consider the recovery option in the life cycle. The redesign of the production process should be made available if necessary, and the process of product recovery should be aligned with the current existing production process (Julianelli et al., 2020). The restricting and improvement of a specific set of materials should be sustainable in that it does not involve high costs or transportation challanges. The process management should incorporate a transportation network that operates in accordance with the current mode (Puzio, 2018). It is also vital to reduce the delivery time mistakes and the volume of products taken back to the company to minimize losses. Information regarding the process should be collected and analyzed to promote the monitoring and control process of reverse logistics (Julianelli et al., 2020). The flexibility of management policies and procedures also promotes this process. Additionally, the metrics collected should be relevant as they hugely determine the subsequent performance of the process.
The quality and organization process should ensure that the product’s quality is consistent with the clients’ expectations irrespective of the product’s nature. The clients expect that the quality of the product, whether new or refurbished, should be the same. The organization managers and leaders should be familiar with the process of reverse logistics together with its importance in the business. Awareness should be created in the organization among the employees to be familiar with the significance of the process (Julianelli et al., 2020). Furthermore, the development of ethical standards is also necessary as it is the route for reverse logistics success. The focus on finance and marketing is on critical areas such as capital investment. The process requires a significant capital injection to make it successful, as it involves the creation of other centers for quality checkups and collection. The companies should have a marketing plan that suits the process in order to create a good image that would benefit the process. Furthermore, the company should make an effort to develop educational programs that suit their reverse strategy.
Barriers to Reverse Logistics
There are multiple barriers to the implementation of reverse logistics. First, the high cost of setting up reverse logistics is a significant barrier in many organizations. This is because the process requires additional resources into the organization’s supply chain, which are expensive to manage. For example, setting up the monitoring system is costly as it requires the employment of expertise on the area and frequent analysis of the process to ensure its success (Pacheco et al., 2018). Additionally, certain products are expensive to restore or recycle because of the regulation, which makes it challenging. Second, lack of interest among the top management is also a significant issue affecting the success of the process. The program requires assistance from the organization’s top management, and when there is no support, the process becomes ineffective. Third, legal issues are also a significant problem as the process requires government support to become successful. Lastly, there is low awareness among the public members regarding the process, which makes them ignore the issue.
Conclusion
In conclusion, reverse logistics is a significant factor for business organizations. Its key processes include collection, sorting, inspection, disposition, and re-distribution. The benefits of reverse logistics include ecological objectives, marketing image, marketing share and exhibition, asset protection, customer satisfaction, and forester effect reduction. Various factors promote its effectiveness, including design and production process, process management, quality and organization, and finance and marketing. However, there are multiple barriers to its implementation, such as high cost of setting up, lack of interest among the top management, legal issues, and low awareness among the public members. Therefore, it is imperative for organizations to consider the above factors when integrating reverse logistics into their current supply chain.
References
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