6 Steps to Closing the Reverse Logistics Loop

To get the most out of reverse logistics efforts, electronics OEMs need to create a closed loop system that maximizes product and material management. That can take time and effort, but can result in substantial return on investment.

“Typically, when an OEM, who has the biggest responsibility for reverse logistics and the largest investment in the supply chain, starts thinking about reverse logistics, they have no solution and feel as if they don't have time to mange supply chain and its functions, let alone have time to deal with the reverse supply chain,” said Linda Li, executive director and corporate vice president of the Li Tong Group, at the recent Hi-Tech & Electronics Supply Chain Summit.

(Image: Li Tong Group)

(Image: Li Tong Group)

At the same time, most recognize the importance of having a system in place. “With the proliferation of products, and explosion of devices, manufacturers realize that it is becoming a serious problem,” Li said.”Not taking it seriously is not just bad for the environment, it wastes a lot of money.”

Done right, reverse logistics can become a profit center. “When you advocate green programs, people think you are trying to get money out of them,” explained Li. “It doesn't have to be that way. Reverse logistics can contribute to the top line rather than being a cost.”

She outlines six steps involved in a closed-loop reverse supply chain:

  1. Consider methods of product acquisition needed to obtain the products from various supply chain entities (including contract manufacturers, parts suppliers, service centers, and raw material suppliers) and the end-users
  2. Put in place reverse logistics to move the products from the points of distribution to a point of processing
  3. Test, sort, and evaluate collected materials to determine the product's condition and the most economically attractive reuse option
  4. Enable the most economically attractive option, whether it is direct reuse, repair, remanufacturing, recycling, or disposal
  5. Collaborate with contract manufacturers, parts suppliers, service centers, and raw material suppliers to established closed- loop redeployment, reuse, reapplication of parts, components, and raw materials
  6. Leverage remarketing and asset management for maximum value recovery

Let us know in the comment section below how your organization is handling reverse logistics activities. What has worked for you?

— Hailey Lynne McKeefry, Editor in Chief, EBN Circle me on Google+ Follow me on Twitter Visit my LinkedIn page Friend me on Facebook

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3 comments on “6 Steps to Closing the Reverse Logistics Loop

  1. SP
    December 8, 2014

    Quite agree that reverse logistics is great geen concept and must be practised. And if you look deeply good amount of money can be generated apart of doing good for the environment. We all have to save the environment there is no other option. Imagine the no. of phones being used and people upgrading their phones, what happens to the old ones…if there is a mechanism by which one can just ship back to the Reverse logistics dept of that mfr. and then they take care of recycling..a lot can be achieved. May be the government can also step in.

  2. shirleydevis
    January 7, 2015

    Great information and step, Also like to admire the time and effort you put into your post. 

  3. Hailey Lynne McKeefry
    January 9, 2015

    Thanks, Shirley. The conference offered a great overview of this topic–and I learned a lot. I was glad to be able to share it. I think that it will be critical to make a business case for reverse logistics before it will ever take off.

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