Written by: Nithin Narayanan
The concept of reverse logistics has come to prominence in the past few years. Reverse logistics is to facilitate return of unwanted or defective merchandise. This kind of service was considered to be a differentiator in the retail scenario. Those retailers who did not provide their consumers with this kind of facility, found themselves loosing to the competition.
This kind of return facility is a standard norm, but it was not the case earlier. As the cost of reverse logistics kept rising, the significance of returning the returned merchandise again into the market becomes inevitable. In this regard, the time to place the product again into the market is important. This speed of return is also related to the resale value of the merchandise.
In order to save up time and reduce cost, manufacturers began to consolidate parts of the merchandise and materials in the same ware house as the returned warehouse. This co -operative effort by all departments and verticals will reduce cost eventually. But in some cases these products are used as a source of spare parts which is used for warranty repairs.
There are still large companies which spend millions of dollars in creating a inventory pool of spare parts in order to carry out repair functions. This ignorance to reverse logistics could be fatal in a long run to the companies as profit margins are declining every quarter.
With regard to Electronics and computer products, the Reverse logistics handling are made complicated by regulations like ROHS, WEEE, controls on Lead and Mercury materials
Firms are waking up to the concept of Reverse logistics, but in today's competitive and rapidly evolving scene and mass production it is necessary to have a consolidated and pragmatic approach to the Supply chain as well as Reverse logistics.