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Reverse logistics is part
of a broader supply chain management
process called returns management. Returns
management includes all activities related
to returns flow and
even returns avoidance. Reverse logistics
encompasses the traditional logistics
activities of transportation and inventory
management, but its focus shifts to
getting product back from customers rather
than moving product to customers.
Reverse Logistics -Making a strong business
case is not easy. Although this obviously has
some cost implications, it can be
difficult to illustrate the impact on
revenue. Indeed, in our experience,
companies more often focus on the cost
side of returns management rather than on
its revenue side. To be successful,
however, the revenue side needs to be
managed aggressively too.
To understand how reverse
logistics can create value, it is
necessary to understand both the marketing
and logistics components of this process.
From a marketing perspective, an effective
returns operation can enhance customers'
perceptions of product quality, help
minimize the purchase risks, and boost
goodwill by demonstrating good corporate
citizenship. From a logistics perspective,
returned products that are handled
expeditiously and efficiently can be
reinserted into the forward supply chain
in their current form, as refurbished or
remanufactured products, or as repair
parts. This can create additional revenue,
reduce operating costs, and minimize the
opportunity costs of writing off defective
or out-of-date products.
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