Thailand: Expert explains value of "reverse logistics".

(From Thai Press Reports)

Section: Business News - Reverse logistics has often been viewed as the unwanted stepchild of supply chain management. It has been tolerated as a necessary cost of business, described as a regulatory compliance issue, or seen as a "green" initiative.

But more companies are now seeing reverse logistics as a strategic activity - one that can enhance supply chain competitiveness over the long term. Over the next few weeks, we will present excerpts from an extensive article by Diane A. Mollenkopf and David J. Closs in which they present four ways that reverse logistics can have a positive financial effect.

Reverse logistics is part of a broader supply chain management process called returns management. This includes all activities related to returns flow, reverse logistics, effective gate-keeping, and even returns avoidance. Reverse logistics encompasses the traditional logistics activities of transportation and inventory management, but its focus shifts to getting product back from customers rather than moving product to customers.

Making a strong business case for reverse logistics is not easy. Although reverse logistics obviously has some cost implications, it may be difficult to illustrate the impact it has on revenue. Indeed, companies more often focus on the cost side of returns management instead of the revenue side. To be successful, however, the revenue side also needs to be managed aggressively.

To understand how reverse logistics can create value, it is necessary to understand both the marketing and logistics components of this process.

An effective returns operation can enhance customers' perceptions of product quality, help minimise the purchase risks, and boost goodwill by demonstrating good corporate citizenship.