FACULTY OF COMMERCE

DEPARTMENT OF RETAIL & LOGISTICS

MANAGEMENT
NAME SURNAME REGISTRATION
NUMBER

NGONIDZASHE MAWERE R171326E

TINA. T CHADAMBURA R171476R
MELISAH. T MTINGWENDE R171685A
NYASHA KAFURA R172681X

LEVEL: 4 SEMESTER 1

MODULE: LOGISTICS MANAGEMENT

MODULE CODE: RLM 404

MODE OF ENTRY: CON (CDP)

LECTURER: MRS TAGWIREI

TOPIC 10
INTRODUCTION
CAUSES OF REVERSE LOGISTICS
ROLE OF REVERSE LOGISTICS
FUNCTIONS OF REVERSE LOGISTICS
BENEFITS OF REVERSE LOGISTICS
REVERSE LOGISTICS ACTIVITIES
Logistics is defined by The Council of Logistics Management 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 origin to the point of
consumption for the purpose of conforming to customer requirements. Reverse logistics includes
all of the activities that are mentioned in the definition above. The difference is that reverse
logistics encompasses all of these activities as they operate in reverse. Therefore, reverse
logistics is 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 value or proper
disposal.

More precisely, reverse logistics is the process of moving goods from their typical final
destination for the purpose of capturing value, or proper disposal, Keebler et al (2001).
Remanufacturing and refurbishing activities also may be included in the definition of reverse
logistics. Reverse logistics is more than reusing containers and recycling packaging materials.

CAUSES OF REVERSE LOGISTICS

1) Returns

Some goods are invariably returned to the seller. This is true in physical retail as well as in e
commerce.

2) Misdelivered or undelivered goods

If you are an e-commerce player selling virtual goods that can be delivered electronically, you
might be blissfully ignorant of the nightmare of mis-delivered or undelivered goods. But physical
goods not reaching the desired destination is a common problem that ecommerce merchants have
to grapple with.

3) Damaged goods / Malfunctional

Ordering a brand new iPad and receiving one that has a cracked body or a scratched screen is
unacceptable. But it is bound to happen sometimes and such damaged goods get returned by the
customer.

Reverse logistics also includes processing returned merchandise due to damage, seasonal
inventory, restock, salvage, recalls and hazardous material programs, obsolete equipment
disposition and asset recovery. The reverse logistics process can be broken into two general
areas, depending on whether the reverse flow consists primarily of products, or primarily of
packaging. For product returns, a high percentage is represented by customer returns.

Role of Reverse Logistics

Reverse logistics is becoming an important aspect of supply chain management. Many

companies that, previously, did not devote much time or energy to the management and
understanding of reverse logistics have begun to pay attention.

 Reclaimed Value

With reverse logistics, companies are able to retrieve faulty products and refurbish them.
Therefore, raw materials are not wasted and thrown away, and the cost of manufacturing can
decrease. Even if the collected product is unusable, it can be recycled by the company itself. This
will give the scrap value back to the company, but also ensure these parts are properly recycled.
This adds to the environmental impact of a business. More value can be extracted from
used/returned goods instead of wasting manpower, time and costs of raw materials involved in
the original supply chain. The packaging and defective materials are collected and recycled
thereby generating scrap value back for the company.

 Satisfaction

Customer satisfaction is very important for businesses. When a customer knows he can return a
product to the company in exchange for a new one, he will be more confident in that company.
Therefore, by maintaining proper reverse logistics, a company can increase customer satisfaction
while keeping costs down. If a company is transparent about processing, it can increase
satisfaction even more, as a customer will know exactly what is required to return a product.

 Cost Competitive advancement

With reverse logistics, a company can save money, but the customer will save money in the end,
as well. Refurbished or repaired products are often sold at lower costs than new products, even
though they are in perfect working order. This is especially true in the computer industry, where
refurbished products and spare parts are increasing in popularity. For example any computer
companies have accommodated this need by providing more refurbished products. Refurbished
computers are sold at cheaper prices by all leading brands and the demand for such laptops
seems to be growing. The spare parts used by the computer manufacturers to service the laptops
and computers on warranty or on sale, include refurbished parts. Many electronic and consumer
durable manufacturing companies offer buy back or exchange offer for the old equipments

 Control

Reverse logistics can complete the loop in the cycle of a product, ensuring that a company has
complete control over their product. Without reverse logistics, a company is unsure of what
might happen to their product after it is sold. With proper reverse logistics, a business retains
control over what happens to their product. This can include even having a customer return a
product when it no longer functions.

Positive environmental impact: legislations acts, also called require manufacturers to develop a
policy for the collection and reuse of products at the end of their life cycle.

FUNCTIONS OF REVERSE LOGISTICS AS A TOOL FOR COMPETITIVE

ADVANTAGE

 Customer Loyalty

One way of benefiting from returns by customers is the customer loyalty generated by the
company in managing such returns. Some companies do nicely by their customers so much so
that the customers are unfazed in their loyalty to the product and service, this even increases the
loyalty of customer in the sense that customer opt for that company knowing that should there be
a problem they can be taken care of.
A popular example is how Samsung handled the Samsung Galaxy S7 fiasco late 2016 where the
phones combusted out of nowhere. It was so big a product that Samsung had to recall all of the
devices sold (millions of them). They offered incentives to the affected customers e.g. use of
another quality and market tested Samsung phones. They also gave the buyers of the product a
percentage off when buying the next Samsung flagship phone the Samsung Galaxy S8. The
reputation of Samsung was never affected and it even gained a wider market place because of
that where customers compared those reactions to those of other mobile manufactures.

 Reduced Cost from Re-use

Daughety (2005) inform us that reverse logistics give companies the advantage of cost reduction.
He further explains the point that reuse of material returned and the economy generated by
returnable packaging provide economic gain. Reuse of materials reduces cost rather than having
to manufacture now packing for every new product. This helps in production cost being reduces
and consequently competitive prizes for the product that attract customers and fight of
competition.

Imagine companies like Coca cola having to manufacturer new glass bottles or cans every time
they make a 350 coke. The cost would be unimaginable but creating and investing in a reverse
logistics process then the bottles are returned and then can be used again and again.

 Quality

Most of the returns that happen for reverse logistics to occur are because that customers find a
fault with the product or are dissatisfied with the product. When products are returned from the
retailer to the manufacturer then it is highly important that those problems are analyzed and try
as much as possible to improve upon enhancing the quality of the product.

The example highlighted above of Samsung phones exploding rather than affect the company in
a negative way in the long run actually helped the company make their most advanced phone the
Samsung Galaxy S8. They checked for the problems. Found solutions and enhanced upon those
solutions to make one of the best phones of 2017 which became the highest selling mobile phone
of 2017. The process will enhance our product quality so much so that quality becomes out
competitive advantage in the market.
  Positive Corporate Image

Most cases of reverse logistics arise from the situation where the customer is dissatisfied by the
product and returns the product or it’s faulty. Solving these issues helps in building positive good
will. Andreda (2013) explains that business use reverse logistics to convey to customers the
image of corporate citizenship, respecting the principles of environmental sustainability, which is
a good marketing incentive. This increases brand value of the company’s products and services.

 Improvement in Service provision

As said reverse logistics adds value to the products and services, it also adds value since it is
used as a tool for customer relationship management (e.g. retaining customers) since we will be
liaising with the customers knowing of the problems and challenges. This offers an opportunity
for growth in customer service. Changes in prize, promotion, product and promotion can be
copied by competition unlike improvements and solutions in customer service.

Benefits of reverse logistics

 Increase in Public Perception

Customers have grown to accept and embrace protecting the environment as a key value. By
setting an example for others, a company who recycles their end-of-life products embraces the
wants of the public. In the end, this results in a stronger customer base, higher new customer
acquisition rates, and increased confidence from the public. For example Megapack in Ruwa,
under Delta beverages, this is where all plastic containers are made. Through reverse logistics
Megapak allows the return of the empty containers after consumption for recycling.

 Prevents unnecessary costs

Taking the example of Megapack, recycling reduces the cost of raw materials. Also, Reverse
logistics prevents manufacture from getting sued by customers. Manufactures may risk incurring
unnecessary costs, which are paying the customers, back their money if the product is defected.
Mobile phone manufactures allow their customer to return damaged phones to them; hence they
will recycle the parts and use them again. Thus they will not incur much cost on buying raw
materials.
  Improved customer satisfaction and loyalty

By paying more attention to faulty goods and repairs of merchandise Manufactures gain
customer loyalty or their brands are recognized by customers. Reverse logistics can include
gaining feedback to make improvements and to improve the understanding of real reasons for
product returns. It is important not to overlook reverse logistics as organizations can noticeably
improve their customer service and response times along with environmental sustainability and
company social responsibility.

 Increasing product lifecycles

Reverse logistics allows the increase of the PLC. Through reverse logistics the manufacture can
get back those goods which are in the decline stage of the PLC and modify them so that they can
be sold again. Hence the manufacture’s product life is extended, thus more profits. This is seen
mostly in electrical gadgets such as mobile phones and computers. Some manufactures take back
their computers so that they can increase their specs like the memory so that they can be more
competitive on the market. For example if the processor was 1.20GHz it can be increased to
2.50GHz

BENEFITS OF REVERSE LOGISTICS TO CUSTOMERS

While conventional logistics optimizes the flow of goods from producer to consumer, reverse
logistics manages the processes for inverting that flow to deal with returned parts, materials and
products from the consumer back to the producer. Most often, this includes warranty recovery,
value recovery, repair, redistribution, product recalls, used parts and replacement materials for
refurbishment, service or product contract returns, and end-of-life recycling.

 Reverse logistics is generally considered a way of creating a safe and friendly

environment to consumers since it promotes recycling of products and not disposal and
control of critical contaminated products, which can cause environmental hazard and
have prohibited unscientific disposal of items
  Helps in maintaining affordable prices to customers due to minimised production
expenses. In today’s world natural resources are diminishing at a faster rate which is in
turn making raw materials very expensive thus newly manufactured products expensive
to purchase. Each non-recycled electron contains items that could have been repurposed
and reused in new merchandise and electronics. With less recycled materials, the existing
pool of natural resources will continue to decrease, which will result in higher prices as
the demand for electronics grows. Ultimately, a business engaged in recycling of end-of-
life computers and equipment as part of reverse logistics strategy has taken steps to help
keep their expenses less which will also lower prices of their goods and services

 Increased product efficiencies and improved customer experiences. For instance, a

growing number of cell phone manufacturers have established procedures in place for
consumers who wish to return an older model and ensure that the device is refurbished or
recycled rather than dumped into the local landfill. This has seen the introduction of the
revamped NOKIA 3310, which now has better modified functions such as WhatsApp.
Thus customer preferences are catered for in this instance

REVERSE LOGISTICS ACTIVITIES

Reconditioning, Refurbishing and Remanufacturing-

Where a product is of low value and quality, reverse logistics activities plays a role of
recapturing value that is improving the product’s performance in accordance with customer
specifications. Thus if a product cannot be sold as is or if the firm can significantly increase the
selling price by reconditioning, refurbishing or remanufacturing the product, the firm may
perform these activities before selling the product.

Repackaging

Generally, packaging materials returned to a firm will be reused. Therefore it is a responsibility

of a reverse logistics activity to make sure that products are packaged safely so that the end user
receives them in the right condition for use.

Disposal of products
One of the main activities of revere logistics is to make sure there is safe disposal of outdated
products in a way that does not pollute or emit the environment. If the product cannot be
reconditioned in any way, because of its poor condition, legal implications or environmental
restrictions, firms try to dispose of the product for the least cost. Any valuable materials that can
be reclaimed will be reclaimed and any other recyclable materials will be removed before the
remainder is finally sent to a landfill. Thus many companies setup Reverse logistics because of
philanthropic reasons so as to earn both social and economic benefits.

In summation reverse logistics benefits not only firms but also consumers since it gives room for
customers to bring out their concerns on products and services which firms can use as feedback
to make improvements and real reasons for product returns thus enhancing satisfaction on the
side of consumers.