In a previous post, we looked at the recylcing of currency notes to make hand-made paper. With the environmental consciousness increasing in the world, hand-made paperfrom recycled bio-degradable material will be highly valued. If this paper is transformed into useful products like paper bags or photo frames value is added and it can be sold at a higher price.

If there is a customer demand for these products, then new businesses will form which will in turn create more avenues to process waste. Win-win for all and a new market is created.

However, one huge problem in handling waste is collecting waste from the source and supplying it to the manfacturer for processing and production of eco-friendly products.

This is where the business of returns kicks in.

According to the Wikipedia:

Reverse logistics is the logistics process of removing new or used products from their initial point in a supply chain, such as returns from consumers, over stocked inventory, or outdated merchandise and redistributing them using disposition management rules that will result in maximized value at the end of the items original useful life.

A reverse logistics operation is considerably different from forward logistics. It must establish convenient collection points to receive the used goods from the final customer or remove assets from the supply chain so that more efficient use of inventory / material overall can be achieved. It requires packaging and storage systems that will ensure that most of the value still remaining in the used good is not lost due to careless handling. It often requires the development of a transportation mode that is compatible with existing forward logistic system.

Source: RevLog

Forbes.com writes about the growing business in reverse logistics.

A growing number of companies are finding that there‘s money to be made by sending things back.

And that bottom line impact can be a huge one. In the U.S. alone, the cost is an annual $100 billion. So a growing number of companies have found ways to create a real business out of sending things back

Unyson takes over the management of returned, damaged or obsolete products for clients by entering each item into their customized Web-based communication and transportation networks. This allows for full visibility of return shipments in transit, as they are sent back to a distribution center or return center for disposal or reconstitution.

The business of returns starts when a customer, retailer, dealer or manufacturer finds something wrong with a product (outdated, spoiled, broken or flawed). This single fact should initiate a response that through appropriate automation takes care of blame, return transport, physical processing and eventual redistribution or recycling and finally compensation to the customer.

The whole idea of reverse logistics, or returns, can be painful, time consuming and costly for all involved–manufacturer, retailer and customer.

There has been great advances in the field of logistics or what can now be called forward logistics, similar thinking and technologies need to be incorporated into ‘reverse logistics’.

There are many challenges facing this idea.

Reverse logistics is, of necessity, an information technology-intensive business, says Steve Manning, vice president at Milpitas, Calif.-based electronics manufacturing services (EMS) provider Solectron and general manager of its Solectron Global Services unit. The reason? “It’s all about the data,” Manning says.

“There are a significant number of touch points [in the reverse supply chain] that add up to a lot of cost. By not properly addressing the touch points, companies can negatively impact profitability, customer satisfaction and brand image,” Corwin explains, “so companies are getting more sophisticated in their returns approach.”

…new environmental laws — such as the European Union’s Restriction of Hazardous Substances (RoHS) and Waste Electrical and Electronic Equipment (WEEE) directives — are forcing companies to plan how they will retake possession of goods from end users at the end of a product’s lifecycle.

“If I bring in a pallet of 48 comforters, I deal with all 48 at once, and the cost is spread over all the comforters,” Giovingo says, “but if a consumer brings a comforter back, all the same activity — the receiving, inspection and stock put away — now has to be performed for just one unit. You multiply that times a couple hundred or a couple thousand returns each day, and it really adds up.”

Apart from bringing in new challenges, it provides new opportunies to cut waste, increase brand image, understand trends and manage the supply chain better.

Update:

Reverse Logistics Association

“In other words, anytime money is taken from a company’s Warranty Reserve or Service Logistics budget, that is a Reverse Logistics operation” – Gailen Vick, President RLA