Every company’s objective is to make money, there is no business expecting to lose money from the outset, yet this is the reality for certain firms that are mismanaged. Having a thorough reverse logistics program incorporated into a company’s supply chain is an effective method to prevent certain losses. However, certain products are not worth the finances and workload to be delivered back to the manufacturer, hence a reverse logistics program is not appropriate for every organization. This reality of the reverse logistics is a focal point for companies to establish a closed loop supply chain that drives modern day sustainability and help to mitigate company losses (Kazemi et al., 2019). The items worth returning to the manufacturer might be resold at a reduced price, reshaped for a different product, restored to working order, or discarded. All of these alternatives allow the firm to recoup some of the money spent on products that are returned by customers.
Consumers return commodities for a variety of reasons, but regardless of the cause, the firm is left with the task of trying to recoup part of the money spent on the product’s sale, shipment, and storage. When it comes to a company’s bottom line, it is critical to invest in a strong reverse logistics program to reduce return losses. Retail returns is one method a company might leverage reverse logistics to its advantage. They might refill and resell the things themselves, or they could sell them in bulk to another firm (Gorst, & Ballantyne, 2021). There are a few firms that will buy returned things in bulk and resale them in their own stores or on their websites. These businesses are able to profit from these products because they buy them at a steep discount (Gorst, & Ballantyne, 2021). At the time when the new consumer buys the item from the secondary merchant, the savings are refunded to them.
Reshaping or refurbishing the returned items are the next two ways a company may employ a reverse logistics program. Even if the pieces are unserviceable, Rolls-Royce permits customers to return them as a core exchange. They will pay the customer to send them stuff, thereby turning the customer into a supplier (Aviall, 2017). Rolls-Royce can accept these items and utilize them to fix other things or restore the item that was returned to them (Aviall, 2017). When a company can remanufacture a product at a lower cost while maintaining the same level of quality, the buyer has the choice of acquiring something at a cheaper price. In addition, it allows fewer objects to be taken to landfills for decomposition.
The final method a company may employ in a reverse logistics program is to recycle returned items and use them to make new ones. Many electrical devices include valuable elements that are used to keep them functioning correctly because gadgets are expensive to produce, these businesses rely on consumers to help them reduce the losses (Garrido-Hidalgo et al., 2020). The more things that are recycled, the more money that may be saved and turned into profit for the company (Curvelo et al., 2021). This helps the company to expand while remaining competitive with other businesses. Cell phone makers are an illustration of this. They would buy old cell phones from customers and recycle them for other items.
A reverse logistics program for a company would allow it to reduce some of the losses it incurs when customers return things. These returns generally result in a loss for the firm, but some organizations are ready to absorb these losses and sell them on their own websites. A company might also modify or renovate these results for its own gain. Recycling is not the best solution for every company, but in the case of electronics, it keeps the majority of discarded items out of landfills while also lowering the cost of new products (Curvelo et al., 2021). Whatever perspective a company takes on reverse logistics, it should have a plan in place to assist reduce losses from returns of things that customers no longer desire.
References
Aviall, Rolls-Royce extend distribution agreement to 2026. (2017). Airline Industry Information
Curvelo, S., Guerhardt, F., Franzini, C. E., Lee Ho, L., Rocha Ribeiro Júnior, S. E., Cânovas, G., Kenji Yamamura, C. L., Vanalle, R. M., & Berssaneti, F. T. (2021). Refurbishing and recycling of cell phones as a sustainable process of reverse logistics: A case study in Brazil. Journal of Cleaner Production, 283. Web.
Garrido-Hidalgo, C., Ramirez, F. J., Olivares, T., & Roda-Sanchez, L. (2020). The adoption of internet of things in a circular supply chain framework for the recovery of WEEE: the case of lithium-ion electric vehicle battery packs. Waste Management (Elmsford), 103, 32–44. Web.
Gorst, J., & Ballantyne, E. (2021). Retail returns: Turning costs into profit at a UK 3PL. Journal Of Supply Chain Management, Logistics And Procurement, 3(4), 387–398.
Kazemi, N., Modak, N. M., & Govindan, K. (2019). A review of reverse logistics and closed loop supply chain management studies published in IJPR: a bibliometric and content analysis. International Journal of Production Research, 57(15-16), 4937–4960. Web.