What is reverse logistics in shipping?

Reverse logistics in shipping is the process of returning the ordered goods from the customer to the manufacturer or any other designated source. It can occur for various reasons, including customer dissatisfaction, damaged goods, and missing parts in the shipment. Sometimes, when the logistics provider fails to deliver the goods to the customer, the goods are automatically moved for reverse logistics. The movement of goods is initiated when the seller verifies the reason for the customer's return request and is followed by a delivery agent coming to pick it up from the customer. The goods are then assessed for quality and categorised for reuse, recycling, refurbishing and disposal. Let us learn more about how this reverse supply chain cycle works.  

Define reverse logistics 

Reverse logistics is a service offered by a logistics service provider. It refers to moving already shipped goods or products from their final destination, usually the end customer, back to the manufacturer. The goods can also be diverted to another designated location instead of being returned to the manufacturer. The reverse logistics process is a method of sustainable logistics initiated by the customer that can lead to various fates of the returned goods, such as 

• Recycling 

• Remanufacturing, or 

• Disposal of damaged goods.  

It works to reverse the flow of logistics activities in the supply chain. It includes a wide range of activities formulated to efficiently manage the flow of products in the opposite direction of the traditional supply chain. Reverse logistics helps in waste management and is a critical component of the supply chain as it enforces sustainability and environmentally responsible business practices. The discarded products by customers are not sent directly as waste but are instead managed to be returned to make the best use of end-of-life products in ways that minimise waste and maximise value. A few common activities within reverse logistics also include refurbishing, remanufacturing, and warranty recovery of goods. 

How does reverse logistics work? 

Reverse logistics begins from the customer end and moves with logistics companies responsible for the reverse process. 

1. Initiation request- The customer initiates a return request stating why the goods are returned. The seller verifies the request and books reverse logistics for the same. 

2. Pickup- The designated agent arrives at the location to pick up the return request and verifies all labels to ensure the shipment is in the proper condition. 

3. Sorting and inspecting- All the returned items go for sorting and inspection to determine if they are suitable for restocking and resale, to sieve the damaged or defective goods and send them for refurbishing or disposal. 

4. Warranty recovery- A few returned products the manufacturers receive may still be under warranty. These can be repaired or replaced, which reduces its cost. 

5. Disposal- The items that can't be recycled or repaired are sent for proper disposal. It also includes disposing of hazardous materials in an environmentally responsible manner to comply with relevant regulations. 

6. Data analysis- Businesses often use all the data collected from reverse logistics to analyse and identify customer trends, areas for improvement, and cost-saving opportunities. The data can help companies make informed and data-driven decisions regarding product design, customer support, and supply chain management. 

Benefits of reverse logistics 

It can be essential for businesses to streamline the process of reverse logistics to reduce costs, recover valuable resources, and meet regulatory standards. A few advantages of reverse logistics are- 

1. Cost-effective- An increased efficiency in reverse logistics processes can help reduce costs associated with the entire process, including returns, refurbishing, recycling, and disposal. Logistics providers can lower transportation expenses through optimised routes and cargo consolidation of returns. 

2. Resource recovery- For those goods that can still be used to recover and reuse valuable resources, including components, materials, and packaging, reverse logistics is a boon. It saves time and money otherwise invested in manufacturing new products from scratch.  

3. Environmental sustainability- Instead of completely discarding reusable goods, reverse logistics helps recycle and reuse products and materials and contributes to reduced waste and its environmental impact. It can enhance a company's reputation in the business market as a responsible and environmentally conscious business. 

4. Quality enhancement- The returned items can be refurbished to improve their quality and shelf life. In addition, the returned items can help identify product defects and quality issues. This leads to improvements in product design and manufacturing processes. 

5. Improved customer satisfaction- When customers can return unsatisfactory goods instead of wasting money, it reflects positively on the brand. Hassle-free returns and warranty services help in enhancing customer satisfaction and loyalty.  

These are a few benefits of reverse logistics in shipping that help in waste management, promote sustainability, and enhance customer satisfaction. 

LOTUS Containers is a global seller of shipping containers and a provider of shipping container solutions. We offer a variety of shipping containers in various sizes, such as 45ft and 53ft.