Reverse logistics is defined 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.
The key reverse logistics elements are:
Gate keeping – It is the process of screening unwarranted and defective commodities at the entry point.
Compacting Disposition Cycle Time – When products come back to the distribution centers, the disposition methods should be kept as simple as possible so as to save time.
Reverse Logistics Information Systems – The returned items must be tracked and stored at a central repository, by the use of an information system in place.
Centralized Return Centers – In a centralized system, all the products of reverse logistics are sorted, processed and sent to the next destination level in the central facility.
Zero Returns – The manufacturer or distributer will not permit products to be returned. They set a return allowance and set rules for accepting disposition of products from the retailers.
Remanufacture and Refurbishment – This element can split into five categories. They are repair, refurbish, remanufacture, cannibalize and recycle.
– The first three categories involve product up gradation methods.
– Cannibalization is the process of using the product parts of a product for the same product again.
– Recycling is the process of using any part for any product.
Asset Recovery – Helps in minimizing the disposition costs and environmental problems.
Negotiation – This is the deal making or bargaining phase and is a key part of reverse logistics process.
Financial Management – This is the primary determinant in the overall structure of the reverse logistics system.
Outsourcing – The reverse logistics activities are outsourced. The efficient handling methods in a reverse logistics, produces good results.
