Reverse logistics covers all the processes and activities involved in managing, inspecting, and processing goods shipped from the point of consumption (or sale) to the warehouse. In other words, it’s the conventional logistics flow but in reverse. Whether it involves the management of e-commerce returns, or logistics for second-hand products or environmentally hazardous waste, reverse logistics poses major challenges for companies—but also opens up a number of opportunities. A warehouse management system is essential for organizations looking to deploy reverse logistics processes at scale and reduce the associated costs.

 

What is reverse logistics? 

Reverse logistics encompasses all the logistics operations involved in returning, inspecting, and processing products shipped from a consumer, a company, or a retail outlet, to the distributor’s or manufacturer’s logistics warehouses. It therefore represents conventional logistics flows but in reverse, since the items return from the point of consumption (or sale) to the warehouse, where they’re exchanged, refunded, reused, repaired, refurbished, recycled and, if their condition allows, resold.
Reverse logistics has been around for some time. But managing the associated flows has become a much more complex task in recent years under the combined influence of the growth of e-commerce, much faster collection and promotion turnover rates and the shrinking of retail floor space (returns management), the circular economy (collection and resale of second-hand products), and a growing body of regulations aimed at reducing harmful waste.

The different types of reverse logistics flows

Returns logistics

The growth of e-commerce has seen the number of returned products increase at a rapid pace. Allowing customers to return items easily and free of charge is now part of the sales pitch for marketplaces, e-commerce pure players, and distributors. Provided that the returned product is in good condition—and passes checks for counterfeiting—it needs to be returned to stock as quickly as possible so it can be resold. Parcels that are returned to the warehouse because of transport-related issues—such as deliveries sent to the wrong address, or that couldn’t be delivered because the customer wasn’t at home—have to be relabeled and reshipped.
Another aspect of returns management relates to unsold items in physical stores, which involve specific logistics flows, not least because of the sheer volumes involved.