Reverse Logistics, a key component in the Supply Chain

by Nigel Lewis on 2010-07-04 00:00:00

Most organizations think the supply chain ends when a customer receives their goods, well maybe a couple of years ago that was the case. So what was it that started to shift the thinking of companies where they started to look at reverse logistics more closely.

In August 2008 I wrote an article called Climate Change meets Web 2.0 , it was an article about a website called www.celsias.com who uses the web to encourage companies to make their sustainability objectives public.  Celsias use the power of the crowds to engage in meaningful conversation with like minded individuals who took the sustainability industry more seriously than the average consumer.

I believe 2 yrs ago Celsias.com was well ahead of its time as companies didn’t want to make their sustainability objectives known, those that did placed their organization in the firing line for radical environmental fundamentalist’s to have a go at them, the intention of Celsias was good but the timing was out.

The pressure to become environmentally compliant meant that companies had to look at their entire supply chain right through from procurement to disposal. Companies now feel obligated to provide additional services to dispose of products that are past their expiry date or products that have just become obsolete. The pressure for companies to do this has now become such that reverse logistics is becoming a profitable industry.

The term “investment recovery” means that companies are looking to utilize and reuse recycling programs to reduce operating costs. The evidence is supported especially by companies involved in the packaging and electronics industry where materials can be recycled then reused or even sold. The flow on effect of this manifests itself in employee moral, customer loyalty and brand recognition.

More and more companies are taking a proactive approach in reverse logistics, from introducing more biodegradable or environmentally friendly products to minimizing production and distribution operations and thus reducing waste material, an important aspect to this is that companies are becoming smarter in reducing their costs as they get a better understanding of the impact Reverse Logistics has on their bottom line.

I would suggest that the pressure of Environmental Groups has forced the hand of businesses to take Reverse Logistics more seriously, not having a sustainability policy can have a negative impact on a company’s ability to win national and international contracts and often sustainability policies takes into consideration the ability for companies to handle the Reverse Logistics process.

Nigel Lewis
CEO - Global Logistics Media Group