What are the benefits of reverse logistics?
Food distribution companies and many other distribution companies in UAE are steadily waking up to a reality where reverse logistics could well be a determining trend going forward. Distribution companies are pondering over the eternal question- What happens to products post the POS (point of sale)? Are they returned smoothly if they are defective and are they recyclable once they reach their end-of-life stage or are they repairable?
The importance of reverse logistics
Before learning about the advantages and disadvantages of reverse logistics, you should first know more about the concept itself. It refers to the procedure involved in shifting materials and products a minimum of a step backwards in the supply chain. It is mostly linked with recalls or returns but also used for recycling initiatives, disposal and recovery of assets. It is about companies getting back value from goods which have been returned or those which are not conventionally useful in their present location or condition.
The future of reverse logistics can be well understood along with its relevance if you look at use cases like recycling materials and parts for creating new products, refurbishing damaged goods for reselling, returning packaging, pallets, etc. to manufacturers for reuse, retrieval of unsold items from stores and so on.
Benefits of reverse logistics
There are several benefits of reverse logistics as distribution players and other companies are already finding out. These include the following:
1. Savings on costs- Reverse logistics helps in reducing costs on transportation along with enabling resale of items which would have otherwise been total losses. Savings can be analyzed through monitoring costs of ownership for every type of product. If reselling and recycling can generate value, then profit margins naturally go up as well.
2. Higher satisfaction for customers- Your method of tackling returns will impact the sentiments of customers regarding your business/brand. Businesses which have stringent return regulations may not always have a rush of customers. You can have policies that come with full refunds or without original packaging requirements for instance.
3. Lower waste- Reverse logistics helps in reselling, reusing and recycling materials that would have ended up in landfills and contributed towards global waste. You can also promote a waste reduction program with customers by offering recyclable materials for packaging along with taking refurbishment initiatives.
4. Eco-friendly business- Lowering unnecessary logistics and transportation will help in boosting environment-friendliness. You can have returns coming to a central location, set up repair centers for fixing items with lesser transport and optimize schedules for shipping in order to get items back to your production facility.
Reverse logistics not only makes your company profitable and more sustainable, but also more environment-friendly.
It helps you drive customer satisfaction and happiness while establishing a footprint of a responsible and caring brand above all else. It also contributes towards lowering waste which is a big incentive. Food distribution and other companies should adopt these emerging technologies not just in the UAE but throughout the world.