What Is Reverse Logistics?

Reverse Logistics refers to the process in which a merchant customer entrusts a third-party logistics company to deliver items from the user-specified location to the merchant customer's location. The reverse logistics process is driven by merchant customers, and the logistics costs are unified and centralized settlement by merchant customers and third-party logistics companies. The entire process requires strong ERP docking system support from both the merchant customer and the logistics company. ^[1]

Reverse logistics

(Control process)

The final closed loop of reverse logistics

In the process of reverse logistics, users do not need to fill in the sending address and the receiving address when the items are sent, all are automatically generated by the system. After the items are delivered to the address where the merchant is located, the reverse logistics process ends. Returning the delivered items to the user needs to use forward logistics to generate a new express order number, and finally realize the closed loop of reverse logistics. ^[2]

According to the channel of the recycled items

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The report mainly includes the reasons and significance of the development of China's reverse logistics industry, the development environment of reverse logistics industry, the development of foreign reverse logistics industry and the cases of enterprises' reverse logistics development, the current status of China's reverse logistics industry, the development mode and choice of China's reverse logistics industry, and the industry's reverse logistics. The development situation and prospects, the operation of third-party logistics companies and renewable resource companies, and the development strategy of the reverse logistics industry are analyzed.

Reverse logistics, as a special part of the value chain of the enterprise, has common features and different characteristics compared to forward logistics. The common feature of the two is that they have logistics functions such as packaging, loading and unloading, transportation, storage, and processing. However, compared with forward logistics, reverse logistics has its distinctive characteristics.

New business opportunities hidden in reverse logistics:

Increase customer loyalty

In the development of e-commerce, because consumers cannot see the real thing, no matter how attractive the design of the shopping website is, if they cannot handle the problem of return, consumers can only be curious visitors and never loyal customers. However, there must be principles for return, and a reasonable return price must be established. The return payment includes two methods: a full refund at the original wholesale price and a certain discount at the wholesale price; the responsibility for return should be clarified to avoid disputes, etc. . The second is to design a website that facilitates the proper handling of returns and reverse logistics in an e-commerce environment. For example, setting a button for confirming purchases on the webpage can satisfy consumers to cancel orders within a certain time limit, and set online and offline return processing processes. And strictly in accordance with the commitments on the website to actively handle return issues. In other words, the online seller should make the purchaser clarify the return procedure or ship the return instruction together with the product while shopping online. In short, an effective reverse logistics strategy for returning goods will not only lose customers in e-commerce, but will increase customer loyalty to some extent.

Increase revenue in resale channels

For some slow-selling products or recycled products with better performance, they can be sold again after proper processing, packaging and processing. Sometimes the resale price will be higher than the original sale price. For example, after the Uniden cordless phone sold for $ 34.98 is returned to the manufacturer, the manufacturer sells the phones to a recycling company, and the company passes the phones through After refurbishment, it was resold on the Mexican market for a retail price of up to $ 48.

Improve the brand image of the company and its products

Reasonable use of waste products in reverse logistics can establish a good image for the enterprise. Nike Company uses the proceeds from recycling used running shoes to build public basketball courts and track and field courts. As its actions to support public welfare causes, although it has paid some costs in operation, their actions have increased the value of their own brands and won consumers. Recognition.

There can be different models for the establishment of reverse logistics alliances, including vertical integration alliances, horizontal integration alliances, and hybrid model alliances. Because reverse logistics is a component of the supply chain, this article is mainly based on the idea of a vertically integrated alliance, and builds different reverse logistics alliance models based on the different participants involved in recycling. In addition to the manufacturer's own recovery and establishment of a self-operated reverse logistics system, three different types of reverse logistics alliance models were established based on the participation of three different entities, namely retailers, producer complexes and third parties, in the recovery of reverse logistics.

RM Reverse Logistics RM Alliance

That is, the reverse logistics alliance between the retailer and the manufacturer. After the retailer is responsible for processing such as recycling and classification, it is transferred to the manufacturer for disposal. Due to the diversification of sales channels and the expansion of the sales market, it is difficult for producers, as the source of product production, to control the specific flow of products, and the retailer closest to consumers has exactly this advantage.

PM Reverse Logistics PM Alliance

That is, the manufacturer's consortium and the manufacturer's reverse logistics alliance. The producer's consortium is responsible for recycling similar products and then transferring them to the manufacturer for reproduction activities. As a recycling organization of similar products, the producers' consortium has similarities in the similar products it collects. It only needs to set up a small number of recycling processing centers, which reduces the intermediate links of product recycling and saves recycling costs.

TPM Reverse Logistics TPM Alliance

That is, a reverse logistics alliance between a third party and a manufacturer. The third party is responsible for recycling the product for corresponding treatment and transferring it to the manufacturer for reproduction. Due to the special nature of reverse logistics activities, traditional third-party logistics companies cannot complete the professional work of reverse logistics. Therefore, the third party here is not a narrow third-party logistics company, but includes both traditional third-party logistics companies and professional Organizations such as recycling centers and dismantling centers.