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What Is Reverse Logistics?

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  • Written By: C.B. Fox
  • Edited By: Susan Barwick
  • Last Modified Date: 10 September 2016
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Reverse logistics refers to the flow of goods and services between a business and a client after goods or services have been rendered. Using good practices in reverse logistics is increasingly important in today’s marketplace because it decreases costs to the business and increases client loyalty. Some of the common considerations in reverse logistics are returns, repairs, and the associated transportation of goods back to the company and then out to the client once again.

In business, logistics refers to the activities and processes that help a business move a good or service to its clients. This is often called forward logistics because it involves moving the product forward along the supply chain, from development, through manufacturing, to distribution. After distribution, products that need to return to the company must move backward along another supply chain, which is what gives reverse logistics its name.

One of the most common occurrences in reverse logistics is returns. For instance, returns may be allowed for distributors who order more inventory than they can effectively move. In most cases, the return of a product is expensive for the business because of the costs associated with transportation, refurbishing, and redistribution. Good practices in returns helps a business save money and offer fast service to clients, increasing loyalty and helping the business make more money in the future.

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Repairs are another large component of reverse logistics, especially in technology industries. Many products come with a warranty and can be returned to the company, repaired, and sent back at no additional cost to the client. Again, this means that the company will pick up the bill on repairs. Products that are outdated or broken can also be returned in order for the company to recycle them, which is another cost that the company often picks up instead of the client.

In the past, reverse logistics was not always thought of as an element of business that required smooth and efficient transactions. It is, however, becoming more important, with many businesses competing for clients through the marketing of their reverse logistics practices. Good reverse logistics practices demand that the supply chain be as efficient at getting products back to the company as forward logistics is at getting these products out to the consumer.

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