Understanding the Difference between Reverse Logistics and Forward Logistics
Reverse logistics has been around for a long time but has only recently become a more popular method of supply chain management. When compared to traditional logistics, it provides many benefits to businesses and adds value for customers. For those seeking more information about the benefits of a reverse logistics management program in comparison to forward logistics, here are some valuable points to consider.
Reverse logistics encompasses recapturing the value of products, parts, and materials that have been returned from the end consumer in order to get them back into the marketplace as quickly as possible. Reverse logistics management usually involves returns, recalls, repairs and refurbishment, repackaging for restock or resale, recycling, and disposal. By optimizing logistics processes, companies can experience long-term benefits and reduce the percentage of their revenues spent on returns. If the reverse supply chain process is streamlined, businesses can maximize asset recovery rates and reduce costs. The different types of reverse logistics include:
- Movement of capital equipment and products to the next emergency response
- Removal of packaging and containers from the response area
- Destruction of spoiled food products and expired pharmaceuticals
- Return of rejected goods to suppliers
- Movement of extra or over-supplied products to other organizations.
Traditional or forward logistics deals with the flow of products from the factory to the consumer. The different types of forward supply chain management include direct order fulfillment, hub services, pick-and-pack services, and shipping. With forward logistics shipping, a sales forecast is used to project the requirement. When a certain amount of product is required, that quantity will be shipped to the distribution centre and then to the retail stores from there. At every level of this method of supply chain management, advanced shipping notices will assist the information as the products flow.
Benefits of Reverse vs. Forward Logistics
Reverse logistics, or “green logistics,” is growing in popularity as the better option between the two. Shippers do not initiate reverse logistics activity based on planning and decisions of the firm but in response to customer actions. Here are some ways reverse logistics are reaping benefits for businesses:
- Provides a second return on investment from the equipment
- Increases public perception due to its environmentally-friendly properties
- Encourages competition in manufacturing
- Reduces risks to the business by protecting data
- Increases product lifecycles, supply chain complexity, maintainable practices and consumer preferences
- Leads to productivity and growth
- Allows for added value from used or returned goods instead of wasting manpower, time, and costs of raw materials originally involved
- Improved customer satisfaction and loyalty by focusing on faulty goods and repairs.
Look to Lean Supply Solutions for Your Supply Chain Needs
If you want to learn more about the importance of reverse and forward logistics, Lean Supply Solutions has you covered. As a third-party logistics (3PL) order-fulfillment company in Toronto, we base our operations around the Lean Methodology, a proven philosophy focused on eliminating any operations, equipment, or resources that are not capable of adding value to clients’ supply chains. By striving to ensure that the right products are provided to the right customers at the right time, Lean Supply Solutions is able to offer consistent, accurate, and quality results.
To learn more about the Lean Methodology, outsourcing to Lean Supply Solutions, or to ask any questions, contact us at 905-482-2590.