Reverse Logistics: Ready for Prime Time

Forward and reverse logistics have much in common. However, recalls, returns and the disposition and disposal of expired products demand a unique set of logistics capabilities. Fortunately, a handful of industry sectors and select logistics providers are amassing considerable experience and expertise in reverse logistics.

“The food and beverage sector, actually most categories associated with the grocery and drug channels, are the more mature sectors when it comes to reverse logistics,” notes Steve Dollase, executive vice president of supply chain for Inmar. “They were among the earliest adopters of reverse logistics management programs and establishment of policies between trading partners bringing structure to financial reimbursement and disposition management.”

The best-in-class reverse logistics models are designed to maximize revenue, reduce waste and meet changing regulatory requirements, says Dollase, which is achieved through extensive collaboration and partnering with third parties.

For example, “Shared information between trading partners offers rich intelligent data that can benefit all stakeholders,” Dollase says. “Our consultants leverage our data and benchmarks from across the supply chain to help manufacturers and retailers understand and address the root causes of supply chain defects, which often result in returns. We see companies in other industries accelerating the adoption of reverse logistics best practices, and are supporting many as they do so.”

Not only are other industries taking a closer look at their reverse logistics capabilities, or lack thereof, but all sizes of companies are getting in on the action. “We have actually seen a trend of mid-sized and smaller companies following the example set by the early adopters of such programs,” says Dollase.

Raising awareness

According to Dollase, “As reverse logistics management has evolved, it has done so primarily to reduce waste, capture value, and comply with regulatory changes. These practices are in consonance with sustainability and also help reduce risk and improve profit; a motivator for all companies regardless of size.”

Mitigating exposure to risk is also prompting companies to improve their reverse logistics programs, Dollase says. “Recall planning and execution requires much more focus for manufacturers to minimize their business risk. Recalls have taken on a different scope with globalization, virtual manufacturing and increased supply chain complexity. Risk mitigation in a recall is the primary objective.”

It’s also about protecting a brand name. “Recalls demand significant pre-planning and ongoing support to ensure that companies facing potential recall situations can efficiently and effectively mitigate the risk to public safety as well as to their brand,” adds Dollase. “A mishandled recall can be devastating to a brand.” Furthermore, “Increased consumer awareness of and sensitivity to recalls, and increased regulatory scrutiny, are also driving shifts in recall focus and management.”

Regulatory and compliance issues are also raising awareness about reverse logistics. Dollase points out that: “With the Food Safety Modernization Act (FSMA), the FDA has expanded its reach and regulatory powers, with more responsibility being placed on manufacturers and retailers. There are also new controls on imports, enhanced enforcement powers and new fees that can be levied. An appropriate recall plan for manufacturers will address traceability of product distribution, offer a solution to quickly contact customers, remove product from the market expediently, and maintain records to meet FDA requirements. Companies rarely have the internal resources or the systems to manage a recall event effectively as manufacturers’ recalls aren’t a normal course of business.”