Registration dateOCT 25, 2022
If ‘logistics’ is a concept that connects suppliers to consumers, then ‘reverse logistics’ connects consumers to suppliers. It is a method of retrieving products that have been delivered to consumers if they are deemed no longer necessary and processing products based on their conditions. The types of reverse logistics include returns logistics, retrieval logistics, and disposal logistics.
- High Uncertainty and Difficulty in Securing Visibility
- - Reverse logistics is difficult to predict because the time consumers decide to return a product varies. When there is high uncertainty, the quality of logistics is decreased.
- - Reverse logistics are generally conducted and completed in a limited amount of time/short-term, making it difficult to secure visibility of the process.
- High Cost
In forward logistics, production, distribution, and sales are carried out in large quantities during the planned period. However, reverse logistics requires a relatively high cost due to the difficulty in batch processing because retrieval, transport, etc. are unplanned and processed in small quantities.
- Connectivity to Logistics Personnel
Unlike forward logistics, the logistics connection section is not clearly distinguished in reverse logistics. Therefore, close connections between logistics-related people are important.
Since the quality of products may be deteriorated from the moment they were decided to be retrieved from the consumer, it is important to immediately process reverse logistics.
- Image Enhancement
Recently, as the interest and importance of environmental conservation increased, brands proceed with reverse logistics despite disadvantages such as high cost and lack of visibility because it has a positive impact on the environment. This is because it can imprint a positive brand image on consumers who purchase those products.
- Returns Logistics
- Logistics are returned or exchanged due to defects in the products sold to consumers or changes in consumers’ minds, and it is mainly caused by consumers.
- Retrieval Logistics
- - This occurs when consumers purchase new products and process existing products. It is logistics that is carried out for the purpose of collecting empty bottles and aluminum cans, etc. from consumers and reuse them.
- - If a product defect is discovered and recalled, it is also considered retrieval logistics. As opposed to returns logistics, it is mainly caused by Suppliers.
- Disposal Logistics
- - It is a logistics process that is carried out to to dispose wastes such as products that have not been retrieved, packaging materials for products, or delivery containers.
- - As it is closely related to environmental issues, management is more and more crucial. Like retrieval logistics, it is mainly caused by suppliers.
- - The change in consumption patterns is also accelerated as it changes to online and contact-free due to COVID-19. As a result, the e-commerce market has grown significantly, and the scale of product returns is also expanding, making reverse logistics more and more essential.
- - Recycling some of the products obtained through reverse logistics can even have a positive effect in terms of environmental protection.
- - If the reverse logistics system is efficiently configured and utilized, time and cost can be saved, and management such as maintaining an appropriate inventory is available. Furthermore, it can secure brand satisfaction and loyalty of consumers and is an important factor in enhancing corporate image and profitability.
- Reverse Logistics Using Advanced Technology
- - The use of advanced technologies such as AI in an industry is critical for developing the industry. Reverse logistics can also be an important factor in reorganizing the supply chain and Innovating the overall logistics market if advanced technologies are used.
- - Reverse logistics using advanced technology plays a vital role for the environment such as product recycling and carbon emission reduction.
- - Optoro, a US reverse logistics company, provides a logistics service that handles returned products to promote continuous consumption. It uses a system that automatically selects returned products from an e-commerce site to determine the optimal re-selling site. It is eco-friendly as it can reduce returns logistics.
- - Stitch Fix, a US online styling company, is a service based on reverse logistics. It started with the analysis of consumption patterns of consumers after comparing various products. Based on an AI system with the information of customer’s preference and accumulated data, it selects 5 products and sends them to the customer. The customer then purchases only the products he or she likes and returns the rest.
(Source: Clip Art Korea)
- ESG(Environmental, Social and Governance)
- - ESG stands for Lowercaseand refers to a company’s eco-friendly management, social responsibility, and transparent governance.
- - ESG, which is a key factor for a company’s sustainable business, is difficult to confirm in financial statements. However, it is a non-financial indicator that affects the image and value of a company in the mid-to-long term, and its importance is increasing recently.
- ESG Management and Reverse Logistics
- - Efficient reverse logistics can reduce greenhouse gas emissions by reducing unnecessary transport, warehouse, and loading/unloading processes. So, it is important to efficiently utilize reverse logistics for ESG management.
- - US Supply Chain Quarterly also evaluated ‘Reverse Logistics’ as a key factor along with packaging, sustainable sourcing, climate change, and product quality.
- - As more and more consumers are called Greensumers (Green + Consumers) who value ESG activities of companies, reverse logistics is assessed as an important competitiveness of companies.
- - Global companies are focusing not only on their own ESG activities, but also requesting their partners to participate in ESG activities to increase their brand value. In addition, small and medium-sized enterprises (SMEs) also need to adapt to changes as ESG management is now considered essential.
# References  This work was written by ‘Korea Information Society Development Institute’ in 2009 and used ‘Environment-Friendly Logistics Activities (Author: Hyun-soo Kim)’ which was opened as the 3rd type of Korea Open Government License. This work can be downloaded for free at https://www.kisdi.re.kr/index.do.