A lot of people buy products from a company which is located at a different location. So it needs to deliver to the customer. The delivery is done by a third party logistics company who is hired by the company for the delivery. The third party logistics company will take full responsibility to deliver the product to the customer. This is a traditional type of logistics system. But there are many cases when the customer wants to return or exchange the product for a various number of reasons. Some reasons are that the product was damaged, or they didn’t get what they were buying. So the product needs to be delivered back to the company. This is known as reverse logistics. Reverse logistics means that moving the product beyond the final destination for reuse, or disposal of the product.
Benefits of using reverse logistics :-
- If the product was found to be damaged, or the product was not as per the description, then the product is sent back to the manufacturer. Before returning the product is subjected to a number of processes like testing, dismantling, recycling or disposal. All these processes require the product to travel in reverse from the supply chain network.
- After the return of the product to the manufacturer, they can find out what was the defect that occurred in the product. Then they can make the necessary changes to the product and come up with a better product. This way both the parties can get the benefit.
- At the end of the life cycle, reverse logistics can extend the life cycle of the product by recycling, reshaping and repairing. This way, the manufacturer can extract the value of the product as much as possible. Then they can use it to create a new product at less investment.
- After the arrival of e-commerce in the market, reverse logistics has become more important than ever. Since the people stated purchasing products online, the number of sales has increased significantly. A large number of products are returned back. So it is upto the supply chain to manage and handle the safe return of the product.
- The cost of production is reduced because the asset is recovered from reverse logistics and thus, the disposal cost of obsolete products is decreased. This can help the manufacturer save a lot of money. If some parts of the product are not damaged completely, then it can be returned back to the manufacturer to extract the valuable parts.
- By accepting the fault that the product was damaged, the manufacturer can earn the trust of the customer. They can get loyal to customers by becoming completely transparent. They of hiding the errors, the manufacturer must find what damaged the product.
Earlier, when the life cycle of the product was about to end, people would simply dispose of it. But now with the recycling and repairing, the life cycle of the product can be increased. This can increase the number of sales in the industry.