Executive Briefings

Defining Differences Between Reverse and Forward Logistics Operations

Among the numerous challenges to a successful reverse logistics initiative is determining and tracking the value of the returned unit.

Take an easy example - a registration system for a flexographic press. Let's say a technician is dispatched to replace a system at a customer site. A brand new system might have a value of $5,000. In forward logistics, cost is a simple number. But what happens when the engineer in the field swaps out the good assembly for the defective one? Now, he is supposed to send the defective one back so that it can be repaired. But the defective system doesn't have full value. It is not worth $5,000, because it doesn't work. But it is not worth $0 either because the company might be able to change one little sub-component and make it a useful unit for the repair pool.

Software that handles reverse logistics has to take into account the useable status of the item and track the unit on a basis that is valued at less than full cost but more than zero cost. That is just one small example of some of the interesting characteristics of a reverse logistics operation that really isn't the same as forward logistics.

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Keywords: supply chain management, elements of reverse logistics, disposal of returned items, supply chain returns, reverse supply chain, logistics services, logistics & supply chain

Take an easy example - a registration system for a flexographic press. Let's say a technician is dispatched to replace a system at a customer site. A brand new system might have a value of $5,000. In forward logistics, cost is a simple number. But what happens when the engineer in the field swaps out the good assembly for the defective one? Now, he is supposed to send the defective one back so that it can be repaired. But the defective system doesn't have full value. It is not worth $5,000, because it doesn't work. But it is not worth $0 either because the company might be able to change one little sub-component and make it a useful unit for the repair pool.

Software that handles reverse logistics has to take into account the useable status of the item and track the unit on a basis that is valued at less than full cost but more than zero cost. That is just one small example of some of the interesting characteristics of a reverse logistics operation that really isn't the same as forward logistics.

Read Full Article


Keywords: supply chain management, elements of reverse logistics, disposal of returned items, supply chain returns, reverse supply chain, logistics services, logistics & supply chain