Reverse logistics, a key function of the supply chain, is a complex and often difficult to navigate process. This is because as the supply chain evolves and increases in complexity as a whole, so does reverse logistics. This process also contains a subset of different service offerings that vary by supply chain such as remanufacturing and refurbishing. As a general concept reverse logistics is the management of the flow of materials from the point of consumption (consumers) to the point of origin (manufacturer) for the purpose of recapturing value or disposal. Supply chain operators are focusing on the efficiency of reverse logistics more than ever as return volumes rise to nearly $200 billion annually due to the growth of online shopping. Managing this process can equate to an average of 7-10% of the total cost of goods. The significant financial impact has driven more 3PLs, warehouses and distribution centers to add this as a core competency rather than a specialized add-on service. Becoming experts helps to save their customers time and money, increasing overall customer satisfaction. In an effort to assist supply chain operations perfect their reverse logistics processes the Supply Chain Council has developed the SCOR model which identifies 8 common return points that businesses should consider when developing their reverse logistics initiatives. These return points include: three at the supplier and supplier’s supplier level, two at the manufacturing level and three at the customer and customer’s customer level. Once these critical points have been identified and optimized supply chain businesses can benefit from well executed reverse logistics operations. The most often reported benefits of efficient reverse logistics processes are reduced remanufacturing costs, improved customer experience, maximized return on assets, streamlined operations, improved inventory management and efficient product recall execution. Many businesses turn to technology investment to assist in process optimization. Retail and manufacturing operations alike are investing in automated material handling equipment, bar code technologies, computerized return tracking and entry, EDI and RF. Relieve the financial burden of returns processing by closely evaluating your individual operations and needs and invest in appropriate technologies. To learn more about managing reverse logistics with supply chain technology contact Datex experts today at www.datexcorp.com or marketing@datexcorp.com or call 800.933.2839 ext 243.

1. SUPPLY CHAIN
MANAGEMENT
BASICS:
REVERSE
LOGISTICS
BY: ANGELA CARVER

2. What is Reverse Logistics?
• Reverse Logistics Magazine defines the process of reverselogistics
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 for the purpose of recapturing
value or proper disposal…Remanufacturing and refurbishing activities
also may be included in the definition of reverselogistics.”

3. What is Reverse Logistics?
Forward Logistics
Reverse Logistics
Raw
Material
Part
Fabrication
Modules
Subassembly
Parts
Assembly
Distribution Consumer
ReuseRepairRemanufactureRecycle
*http://cerasis.com/2014/02/19/what-is-reverse-logistics/

4. Importance of Reverse Logistics
• According to the Reverse Logistics Association , returns volumeis
$150 to $200 billion annually.
• An article in SupplyChain 247.com noted that reverse logistics
average between 7% to 10% of the cost of goods.
• Due to the significant financial impact that this process has on both
supply chain operations and their customers, it has started to
become a core competency rather than a specialized add-on service.

5. Reverse Logistics & E-Commerce
• E-commerce has been a driver in the adoption of reverse logistics in
the supply chain. As consumers shift towards purchasing more items
online rather than in-store returns have increased due to buyers
remorse, unmet expectations and improper product sizing.
• Advanced reverse logistics capabilities has become a differentiating
factor for many e-commerce retail businesses who can now offer
free and fast returns from anywhere.
• Optimizing internal reverse logistics operations allows supply chain
businesses to reduce the cost of handling and processing high
volumes of customer returns.

6. SCOR Model
• The Supply Chain Council has released its most recent SCOR model
to show recent trends in reverse logistics adoption in the supply
chain industry. The SCOR model identified 8 specific return points
including:
1. Three return points at the supplier and the supplier’s supplier level
2. Two return points at the manufacturing company level
3. Three return points at the customer and the customer’s customer level
• These eight return points detail all areas supply chain operations
must consider when developing their reverse logistics initiative.

7. Benefits of Reverse Logistics
• In a recent Inbound Logistics article supply chain experts detailed
some of the top benefits reverse logistics offers to those who execute
it effectively including:
– Reduced costs with remanufacturing
– Increase customer experience with a customer-focused returns processing
– Maximizes return on assets
– Streamlines operations
– Improved inventory management
– Efficient product recall execution

8. Reverse Logistics Technology
Technology Utilized Retail Manufacturing
Automated material handling equipment 31.1% 16.1%
Bar codes 63.3% 48.7%
Computerized return tracking 60.0% 40.2%
Computerized returns entry at most downstream
point in supply chain
32.2% 19.1%
Electronic data interchange (EDI) 31.1% 29.2%
Radio frequency 36.7% 24.6%
*http://www.rlmagazine.com/edition01p12.php
• Surveys of top retailing and manufacturing operations show that
these operations have made significant investment in technologies to
improve reverse logistics processes. The top tech investments are
show below.

9. Conclusion
• Increasing rates of customer returns and the financial burden of
processing them has driven many supply chain operators to evaluate
the potential of reverse logistics in their supply chain network. The
possibilities and the benefits are endless if executed properly.
• Consider both how your system currently operates and how it can be
improved with the implementation of standardized returns
processing.
• Effectively implementing a reverse logistics program can help your
operations to attract and retain clients, save money, reduce inventory
waste and much more.

10. Evaluate your operations’ reverse logistics potential
with a no-obligation business assessment
Register For Your Business Assessment