Many organizations and individuals have tried to define Reverse Logistics. According to Reverse Logistics Association, the term “reverse logistics” as all activity associated with a product/service after the point of sales, the ultimate goal to optimize or make more efficient activity, thus saving the organization money and environmental resources.
Another definition from various researchers are summarize below,
Reverse logistics is defined as;
. . . the process of planning, implementing and controlling the efficient, cost-effective
flow of raw materials, in process inventory, finished goods and related information
from the point of consumption to the point of origin for the purpose of recapturing
or creating value or for proper disposal. (Rogers and Tibben-Lembke, 1999, p. 2.)
Practically all businesses must deal with returns of some nature because of issues such as
marketing returns (i.e., customers change their minds or find the product unacceptable), damage or quality problems, overstocks, or merchandise that is brought back for repairs, refurbishing, or remanufacturing. Norek (2002) provides an indication of the sheer volume of returns generated in many companies. He notes that returns range from 3% to as high as 50% of total shipments across all industries; various industry studies put the true costs of returns at 3–5% of sales; and, for traditional brick-and-mortar retail operations, returns are three to four times more expensive than outbound shipments.
Rogers and Tibben-Lembke (1999) provide greater insight into the variations by industry type. For example, the magazine publishing industry is subject to the highest reported returns (50%). Magazines have a short shelf life; if they do not sell close to the publication/cover date, they are returned or dumped. Other industries with high average returns include book publishers (20–30%), catalog retailers (18–35%), and greeting cards companies (20–30%). At the other end of the spectrum are companies such as mail order computer manufacturers (2–5%), consumer electronics (4–5%), and household chemical manufacturers (2–3%).
Rogers and Tibben-Lembke (1999) provide greater insight into the variations by industry type. For example, the magazine publishing industry is subject to the highest reported returns (50%). Magazines have a short shelf life; if they do not sell close to the publication/cover date, they are returned or dumped. Other industries with high average returns include book publishers (20–30%), catalog retailers (18–35%), and greeting cards companies (20–30%). At the other end of the spectrum are companies such as mail order computer manufacturers (2–5%), consumer electronics (4–5%), and household chemical manufacturers (2–3%).
Reverse logistics and handling returns present a formidable challenge for companies. Many
times internal issues impede the development of a good reverse logistics program. Rogers and Tibben-Lembke (1999) surveyed firms about the kinds of issues that cause difficulties and limit their success in the area. The most common reasons cited include: (1) Importance of reverse logistics relative to other issues (39.2% of respondents); (2) Company policies (35.0%); (3) Lack of systems (34.3%); (4) Competitive issues (33.7%); (5) Management inattention (26.8%); (6) Financial resources (19.0%); (7) Personnel resources (19.0%); and (8) Legal issues (14.1%) (Rogers and Tibben-Lembke, 1999, p. 33).
Sources:
Norek, C.D., 2002. Returns management: making order out of chaos. Supply Chain Management Review 6 (3), 34–42.
Rogers, D.S., Tibben-Lembke, R., 1999. Going Backwards: Reverse Logistics Trends and Practices. RLEC Press,
Pittsburgh, PA.
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