Reverse distribution

From CEOpedia | Management online

Reverse distribution is also known as reverse logistics, return logistics and retro logistics. It is the process when a product is brought back to the producer or manufacturer, due to a faulty, damage or simply if the store carrying the product, has not sold it. Where as the regular logistics process can take place in four stages, one after the other, the reverse distribution process has additional stages, which allow the product to skip some of the four primary logistic points.

The four key moments of the logistics process are [1]:

  • Raw Materials - the moment in which the manufacturer possesses only raw materials, which are used to produce the good
  • Manufacturing - in this stage, the raw materials have turned into parts, which will later on be assembled into the end product, wich wll be distributed
  • Distribution - in this part the manufactured item, can be found in the trading point such as a retail store. However it can also be sold directly from the procucer, in which case, he is the distributor.
  • Consumer - the last stage of the distributuion process - the end user of the manufactured product. At this point the consumer can decide whether he is satisfied with the product or not, in which case he is the first stage of the reverse distribution process.

Reverse distribution stages

As stated before, the reverse logistics process begins, with the moment in which the buyer acquires the item. The moment he starts using it is the so-called sort-test. It defines if the end user is satisfied with the product or not, and whether it requires further action. If yes, the possible outcomes in the third stage - processing - are as follows[2]:

  • Repair - the situaton in which the product has a faulty, is returned to the distribution point, fixed and ready to reuse.
  • Refurbishing - similar situation to the repair scenario, however instead of a faulty, that required fixing, the product is renovated and ready to resue.
  • Remanufacturing - in this case the products faulty lies in the manufacturing, therefore it is returned to the manufacturer, upgraded and ready to resue.
  • Cannibalization - this process focuses on the recovery of reusable parts (which are identified as a restricted set), from the purchased item, which has been used. During this process the "end product" are raw materials, therefore in this scenario, a reuse of the bought item is impossile for the customer.
  • Recycling - a similar process to canibalization, however this case involves the resue of materials which where the result of the subassembly, or used to be part of another product.

Reverse distribution and the environment

The reverse distribution process, was introduced, when companies, became more aware abouth their impact on the environment. It lead many firms to evaluate their processes, and operations in search for a soulution, which would help them become more eco-friendly. After investigating the issue it turned out that the main source of environmental problems, particularly noise and air pollution, are logistics. This caused more and more companies to implement reverse distribution, which not only results in the reduction of influence made on the planet, but also in an economic benifites [3].

Examples of Reverse distribution

  • Returns to Manufacturer/Retailer: This is when a product is returned to the manufacturer or retailer, either due to a faulty or damaged product, or if the product was not sold in the store. This is a common example of a reverse distribution process, as the product will go through the same stages as it would with regular logistics, but the product will skip the warehouse and go back to the producer or retailer.
  • Refurbishment: This is when a product is returned to the manufacturer in order to be refurbished. This is often done when a product is returned due to a fault, and the manufacturer needs to repair and re-sell the product. The product will go through all of the same stages as regular logistics, but the product will go to the manufacturer in order to be refurbished.
  • Recycling: This is when a product is returned to the manufacturer in order to be recycled or reused. This is often done when a product is returned due to a fault, and the manufacturer needs to reuse the components, or recycle the product. The product will go through all of the same stages as regular logistics, but the product will go to the manufacturer in order to be recycled or reused.

Advantages of Reverse distribution

A reverse distribution process can be beneficial for businesses in many ways, including:

  • Reduced costs: By returning products directly to the manufacturer, retailers are able to cut back on transportation costs, storage costs, and labor costs associated with traditional distribution. This can result in significant savings for businesses.
  • Improved customer service: Customers will appreciate the convenience of being able to return a product to the manufacturer directly, as opposed to having to go to a store or deal with a third-party return service.
  • Enhanced product quality: By returning products directly to the manufacturer, retailers can ensure that the product is inspected and repaired properly, which can help to ensure high-quality products in the future.
  • Minimised waste: By returning products to the manufacturer, retailers can help to reduce the amount of waste that is produced by traditional distribution methods. This can help to minimise the environmental footprint of businesses.

Limitations of Reverse distribution

Reverse distribution can be a complex and costly process, and there are several limitations to consider before implementing a successful strategy. These include:

  • Cost: Reverse distribution can be expensive due to the cost of shipping and handling, as well as restocking fees. Additionally, some manufacturers may not want to accept returns, as they may not be able to resell the products or may have to sell them at a discounted rate.
  • Time: It can take a significant amount of time for a product to be returned to the manufacturer and for a replacement to be sent out. This can lead to customer frustration and loss of business.
  • Quality: Products that have been returned may not be of the same quality as when they were originally sent out. This can lead to customer dissatisfaction, which can lead to a damaged reputation.
  • Regulations: Depending on the product and industry, there may be regulations regarding the handling and disposal of returned goods. This can add additional costs and time to the process.

Other approaches related to Reverse distribution

  • Reverse distribution is related to other approaches such as reverse supply chain, reverse engineering, remanufacturing, and recycling.
  • Reverse supply chain is the process of returning products from the customer back to the manufacturer or producer. It is an integrated system that includes the collection, sorting, transportation, and storage of returned goods.
  • Reverse engineering is the process of analyzing and understanding a product or system with the goal of redesigning or replicating it. It involves deconstructing a product to determine how it works and how it was made.
  • Remanufacturing is the process of taking a returned or used product and restoring it to as-new condition. In this process, components are repaired, replaced, and tested to ensure that the product meets quality standards.
  • Recycling is the process of converting waste or used objects into usable materials. It involves breaking down the material, sorting it, and then processing it into new products.

Footnotes

  1. ↑ R. Kaynak, İ. Koçoğlu, A. E. Akgün 2014, p.439
  2. ↑ A. Ang , A. Tan 2018, p.522
  3. ↑ M. Şükrü Akdoğana, A. Coşkun 2012, p.1641


Reverse distribution — recommended articles
Optimization of transport — Direct delivery — Inventory in transit — Operating supplies — Distribution logistics subsystem — Stockout costs — 7 wastes of lean — Material stream — Order point

References

Author: Marta Marzec

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