Something very frequent, which usually happens when buying a product through a catalog or online, is the distrust that invades us, especially if the amount to pay is high or if the product is very specific, and it is normal to feel that kind of emotions, given We do not know the ethics of the company in question, or its policies and procedures, however, in the middle of the digital age, things have radically changed. 8 or 10 years ago in Mexico, there was no culture of consumer protection who made purchases on the internet, however, today companies have changed their way of thinking, as well as the laws.
Returning to the initial premise, if a product purchased on the internet does not satisfy us, or is defective, we can enforce our rights to exchange or refund it, although the process with this type of companies varies a bit, since you cannot go physically to the place in question to change or return the product, companies make use of new methods such as "Reverse Logistics" which in this case consists of picking up the product to your home and taking it to the plant, later they will change it or possibly you return the money through a bank transfer. This kind of example is just one of the many applications that "Reverse Logistics" has.
This article aims to explain this term clearly, through its origin, definitions of experts on the subject and experiences that some companies have had when making use of Reverse Logistics.
ORIGIN
In the article published by (Guzmán, Rosas, Pérez, & Navarro, 2012) he mentions something that: The origin of Reverse Logistics comes from the need of companies to attend to the return of goods, the recycling of containers, packaging remains, hazardous waste, treatment of obsolete products or seasonal inventories at any point in the supply chain, trying to make recovery effective and economical.
The concern of consumers and governments for the environment, conditions companies to adopt waste disposal programs compatible with a global economy, which is a factor to consider if you want to compete in other markets. There is also a tendency for companies to adopt this type of program to be perceived by consumers as companies with a social conscience and, therefore, as a better service provider, generating an advantage over their competitors.
In their article (Vellojín, González, & Mier, 2006), they give us a brief review of how Reverse Logistics starts in organizations, the authors argue that traditionally, the main concern of companies consisted in delivering the product or material from the manufacturer to the customer. Its importance lay in offering a quick response to its markets, maintaining optimal supply lines that would allow the achievement of this objective, and the outlook only envisaged the possibility of expansion at a global level to improve this activity.
Later, aspects such as after-sales service and the establishment of links with the customer began to be taken into account. Taking responsibility for a sale already made has become a form of added value that makes any product more attractive to the consumer's perception.
One form of after-sales service are the well-known returns: items that were not considered by customers as worthy of the investment they made and which are almost never considered as a factor that affects the customer-company relationship. Growing concern for the environment has brought the recycling process to fame. Environmental awareness and concern for the well-being and conservation of natural resources sometimes seem to cause greater discontent in consumers than their own disagreements. In any case, what is appreciated are a few of the many manifestations of a type of material flow that has been called Reverse Logistics.
In his article (Vázquez, 2008) he is more specific in terms of dates, indicating that the beginnings of Reverse Logistics are set at the beginning of the seventies, when the structure of distribution channels for the recycling, members who participate in these channels, new features, etc. But it is from the nineties when the management of end of life products and associated logistics systems began to be studied in greater depth.
The reasons why the study of reverse logistics has increased in recent years are: the growing increase in returned products, sales opportunities in secondary markets, the enormous proliferation of end-of-life returns, the pressure of consumers on businesses to hold them accountable for disposing of hazardous waste products and that landfill capacity has become limited and expensive.
Through these articles we can understand the origins of Reverse Logistics, which, although initially this type of Logistics, arises as a need for organizations to have a better image before their respective consumers, as well as a competitive advantage before others. manufacturers, actually started from the beginning of recycling studies and their respective distribution channels.
DEFINITIONS
Now we will review the definitions of the term Reverse Logistics, from experts on the subject to our own conceptualization of it.
The Dictionary of the Royal Spanish Academy defines the term "logistics" as the art of military organization that attends to the movement and maintenance of troops in the field, as well as the set of means and methods necessary to carry out the organization of a company or a service, especially distribution. He also defines the word "inverse" as the opposite, the altered, the upset of something.
Therefore, we can say that "Reverse Logistics" would be a set of means and methods that are carried out for the collection of a product, from the outside to the inside of the organization, which without good could say that it has its origins in the military organization, Reverse Logistics arises as a need of the organization, located in the organization chart between production and marketing.
From the point of view of a company that provides Reverse Logistics services to other companies, we have to: Reverse logistics provides complete management of product returns from when it is collected at the customer's home until it reaches its destination. (SIT, 2017)
Mireia More tells us that Reverse Logistics is the system designed to create channels for the selective collection of industrial waste such as packaging, containers, vehicles and end-of-life tires, electronic equipment or construction waste (More, 2015).
Likewise, in his article he mentions that Interempresas suggests that: Reverse Logistics is responsible for the recovery and recycling of waste in companies, as well as the return processes of excess inventory, customer returns, obsolete products and seasonal inventories. (More, 2015)
The author of the book 'Reverse Logistics in the supply chain' (2012), Editorial Marge Books teaches us that Reverse Logistics, or as it is internationally called reverse supplyChain, covers the entire wide range of the flow of products and accessories that starts after of the delivery of the primary supply and that, traditionally known by the name of "returns", protects the optimization of this reverse flow of products, packaging analyzing all the possibilities: reuse in the supplyChain, repair, restoration, partial re-manufacture, recycling of raw materials or definitive elimination and deciding in each case what to apply, and how and when to apply it. (Head, 2014)
According to the Executive Council of Reverse Logistics, Reverse Logistics can be defined as: the process of planning, implementation and efficient control of the effective flow of costs and storage of materials, inventories in progress and finished products, as well as related information, from the point of consumption to the point of origin, in order to recover value. (Transport, 2016)
The Transportation Blog mentions that: Reverse Logistics is the process of projecting, implementing and controlling a flow of raw materials, inventory in process, finished products in related information from the point of consumption to the point of origin in an efficient way and the most economically possible, with the purpose of recovering its value or that of the return itself. It is responsible for the recovery and recycling of containers, packaging and hazardous waste, as well as the processes of return of excess inventory, returns and seasonal inventories.
The end of life of the product is even advanced, in order to give it an outlet in markets with greater turnover (Transporte, 2016).
In their article (Guzmán et al., 2012) cites Rosas et al. (2009) indicating that the purpose of Reverse Logistics is to project, implement and control the flow of raw material, inventory in process, finished products and all related information with these flows from the point of consumption to the point of origin, efficiently and as economically as possible in order to recover their value or that of the return itself. Likewise, manage the return of goods in the supply chain in the most effective and economical way possible, in addition to the return processes of excess inventory, customer returns, obsolete products and seasonal inventories. It even foresees the end of the product's life, in order to give it an outlet in the markets with the highest turnover.Rosas and collaborators summarize the characteristics of Reverse Logistics in the following table:
| Causes that generate
Reverse Logistics |
Scope of Logistics
Reverse |
Activities of the
Reverse Logistics |
| Merchandise in State
Defective |
customers | Merchandise Withdrawal |
| Return of Excess
Inventory |
Hypermarkets | Clasification of
Commodity |
| Customer Returns | Cash and
Carriers |
Reconditioning of
products |
| Obsolete Products | Supermarkets | Return to Origins |
| Seasonal Inventories | Final client | Destruction |
| Recovery, Recycling
of Containers, Packaging and Dangerous residues |
Table 1 Summary of the Characteristics of Reverse Logistics Source: (Guzmán et al., 2012)
STAGES OF REVERSE LOGISTICS
According to the definitions mentioned above, Reverse Logistics encompasses a multitude of activities. (Vázquez, 2008) mentions that some of these activities have purely ecological connotations, such as the recovery and recycling of products, thus avoiding a deterioration of the environment. Others seek, in some way, improvements and greater benefits in the production and supply processes of the markets. Thus, processes of return of excess inventory, customer returns, obsolete products, excess inventories of seasonal demands, etc., and activities of withdrawal, classification, reconditioning and forwarding to the point of sale or other secondary markets, are some of the operations that can be framed within the Reverse Logistics.
(Vázquez, 2008) goes on to say that Reverse Logistics activities are those processes that are used to collect used, damaged, unwanted or outdated products, as well as containers and packaging and the transport of these from the end users to the seller. The main objective is to receive the highest possible value for the goods and products, in accordance with the legal restrictions or clauses imposed by the seller, or otherwise proceed to their elimination at the lowest possible cost.
When a product has been returned to a company, whether it is a return within the warranty period or a product at the end of its useful life, the company has various ways of managing it with a view to recovering part of its value. These options are subject to multiple considerations: technical feasibility, product quality, existence of infrastructures, costs involved, consequences for the environment, etc.
(Guzmán et al., 2012) cites in their article Gómez and collaborators (2012) who affirm that the Reverse Logistics cycle that involves the processes of collection, inspection and selection, direct recovery of the product, transformation or final treatment, transportation and storage in order to avoid environmental damage, give them an alternative use or carry out an adequate disposal.
Reverse Logistics Diagram
Mercedes Hortal in her article, quotes an author who tells us that: Reverse Logistics is responsible for the recovery and recycling of containers, packaging and hazardous waste; as well as the processes of return of excess inventory, customer returns, obsolete products and seasonal inventories. It is even advanced to the end of the product's life, in order to give it an exit in markets with higher turnover. Therefore, the activities included in the concept of reverse logistics are numerous. Therefore, for further explanation it makes use of the following image:
Logistics Block Diagram. Source: Distribution and consumption
BENEFITS OF USING REVERSE LOGISTICS
Hortal reminds us that the costs of Reverse Logistics are complex to calculate because they are usually not disaggregated, and the return trips of the means of transport are equally necessary. Likewise, he cites the study by Rogers and Tibben-Lembkem where the costs of reverse logistics are valued as 4% of the total costs of logistics. (Hortal & Navarro, 2011). The costs of Logistics and Reverse Logistics will be exemplified through a comparative table.
| Reverse Logistics Costs | Comparison with
Direct |
Logistics |
| Transport | Considerably Greater | |
| Inventory Maintenance | Less | |
| Theft (Loss) | Considerably Less | |
| Obsolescence | May be Major | |
| Quality Classification and Diagnosis | Considerably Greater | |
| Handling | Considerably Greater | |
| Repair | Significant for LI, non-existent LD | |
| Change in Book Value | Significant for LI, non-existent LD |
Table 2. Reverse logistics costs vs. Direct logistics. (Source. Adapted from Tibben-Lembke and Rogers, 2002).
Reverse logistics has several advantages when compared to traditional logistics: it creates a brand image committed to the environment, it allows product replacement campaigns (which are a source of customer loyalty); favors the substitution of virgin raw materials for recycled material allowing cost savings; gives the possibility to change the packaging of products, reduces the quantity of products in inventories; and increases theft security and maintains a more real value of the inventoried material. In addition to those mentioned how to reduce the environmental impact, and serve as a tool for compliance with the legislation.
In return, the costs of transport, handling, classification, and quality control increase (Hortal & Navarro, 2011).
In his article (Guzmán et al., 2012) he mentions that for the company to obtain economic value through end-of-life products:
- Repair: its purpose is to put the used product back in working order, even though the quality of these products is usually lower than that of new products Restoration: it returns to the product specific quality levels (lower than those of the products in order to extend its useful life Re-manufacturing: provides the used product with quality standards similar to those of original products with lower manufacturing costs Cannibalism: recovering reusable components from end-of-life products, which will be used for repair, restoration and re-manufacturing Recycling: the material with which the out-of-use product is made is recovered to be used in the manufacture of new products
The implementation of Reverse Logistics in organizations allows completing the product life cycle, achieving economies through the reuse of raw materials and other inputs in order to positively impact the environment. (Guzmán et al., 2012)
SUCCESS STORIES
Through Reverse Logistics, it seeks to boost the competitiveness of companies to maximize their profits, without neglecting the social responsibility that they have in the impacts that their activities produce on the environment, the economy, society, education and culture..
The benefits of the implementation of reverse logistics are also directed to key aspects such as being in tune with the sustainable development model, minimization of global costs, new raw materials from waste, efficient management of returns and a general improvement of the image of the company that implements it. In fact, an important factor once a reverse logistics system is implemented is the company's ability to design packaging with better properties for reuse, or recycling, achieving synergies with eco-design. (Hortal & Navarro, 2011)
Reverse Logistics has generated not only social and marketing benefits for large companies, but also economic ones, saving them millions of pesos annually, as in the case of Wal-Mart, which again in 2016, won the National Award for Logistics.
On the Encuentro 21 website, they report the case of Wal-Mar as follows: Four years ago, Walmart in Mexico paid for the collection of cardboard and sand, in 2013, on the other hand, the retail chain achieved savings of 207 million pesos thanks to Reverse Logistics and prevented its transport units from traveling empty more than 33 million kilometers.
"One of the most serious damages that we have is the generation of CO2, it is possible to avoid that this CO2 is useless and that the truck moves empty by sending the units to the stores to collect merchandise, beach and cardboard," warned Fernando Savater, divisional manager of Reverse Logistics of Walmart Mexico and Central America in his participation in the Radio Logistics program.
Despite these savings, Savater recognizes that the professionalization of Reverse Logistics is still an incipient issue in the country, since it is still observed as an expense, while in the United States or Europe it is integrated into the value chain as a benefit.
According to data from the “Consumer Returns” study carried out annually by Worldwide Business Research's (WBR) Consumer Returns to the main self-service chains and point of sale, 70% of companies have a corporate return strategy and 13% are in its creation process.
In 25% of cases, returns are handled by the operations department, 17% by quality and 13% are under the supervision of the supply chain area. Only 8% of the surveyed companies have a department specialized in Reverse Logistics. (Dolores, 2014).
On the Encuentro 21 website, Mauricio Fontani stated that: Reverse logistics has become a fundamental process for some sectors, such as high technology, which also requires tailor-made services by its logistics provider and a strict control to gain in collection and delivery times and avoid problems with the serialization of damaged parts that are sent for diagnosis and repair. Likewise, based on studies carried out by the manufacturing industry, reverse logistics can report benefits of around 5% of the total sales of a company.
The specialist pointed out that the tendency to offer a good service is to customize the solution that is offered according to the needs of each client. The main customers in this segment for FedEx are from the high-tech sector that require, in many cases, critical collections, a service offered by the logistics company with small vehicles to adapt to city traffic and that allows a courier of the company is even in less than an hour receiving the part or package from the client. Another challenge in this sector is the monitoring and control of inventories, as well as the management of repair providers.
Our clients tell us that the traceability and time control of their suppliers allows them to have significant savings in part time as fixed capital.
FedEx handles more than 10,000 orders a month in reverse logistics. This segment grew by 10% last year, a trend that they expect to maintain for 2014. In addition to high technology, the area has grown thanks to the pharmacy and e-commerce sectors. (Puri, 2014)
BIBLIOGRAPHY
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