Reverse supply chain states the evolution of products from customer to merchant. This is the reverse of the traditional supply chain evolution of products from merchant to customer.
Reverse logistics is the process of planning, executing, monitoring and controlling the efficient and effective inbound flow and storage of secondary goods and information related to the purpose of recovering value or proper disposal. Some examples of the reverse supply chain are as follows:
• Product returns and handling product displacement.
• Remanufacturing and refurbishing exercises.
• Management and sale of surplus, along with returned equipment and machines from the hardware leasing business.
Different types of reverse supply chain arise at different stages of the product cycle. Mostly reverse supply chain is designed to carry out the below given five key processes:
• Product acquisition: Accumulating the used product from the user by the reseller or manufacturer because of some manufacturing defect or some other reason. It is basically considered as a company’s growth strategy.
• Reverse logistics: Shipping of products from their final destination for auditing, sorting, and disposition.
• Inspection and disposition: Examining the condition of the product returned along with making the most profitable decision for reusing it in some other way.
• Remanufacturing or refurnishing: Returning the product to its original source from where it was ordered in the very first place along with specifications. This is done basically when there is a manufacturing or furnishing defect in the goods.
• Marketing: Establishing secondary markets for the goods that have been recovered by the merchant from the client who initially ordered it in the beginning but chose to return it.
In short, we can say that the enterprises that closely coordinate with their forward supply chains are the one that has been most successful with their reverse supply chains. These two chains create a closed-loop system. For example, the company designs a product layout according to the manufacturing decisions followed by recycling and reconditioning. Bosch is a beautiful example of the reverse supply chain. It constructs sensors into the motors of its power tools, which signs if the motor is worth reconditioning.
Technology plays a great role here by reducing the inspection and disposition costs, sanctioning the company to make a profit on the remanufactured tools. In fact, along with reverse supply chains, forward thinking results in big dividends.