Reverse logistics presents unique challenges and opportunities. To meet these challenges and take advantage of these opportunities, companies need to be both prepared and flexible.

Ikea, a company known for innovation, is facing the enigma of reverse logistics head on. As part of the company’s sustainability strategy, Ikea is challenging the perception that its products are disposable by creating opportunities to recycle and reuse products.

In a recent interview with Fast Company, Chief Sustainability Officer Steve Howard outlined several of the company’s initiatives. They include programs that allow consumers to return plastics, batteries, furniture, compact fluorescent light bulbs, mattress, and textiles to the store. These items are then sold “as-is” or recycled.

These programs have proven successful. For example, in just a few months, over 6 tons of batteries were collected in Moscow, and 25 tons of used textiles were collected in Norwegian stores last year.

Ikea is looking at other ways it can provide end-to-end supply chain solutions. One idea is to take returned products and recycle them into other products. In his interview with Fast Company, Howard shares: “We would basically be taking old bookshelves, old furniture, or an old door that’s finished its first life and sending it into new products. You’ll have a kitchen that used to be a bookshelf, without seeing any visible difference in them. It’s not a revolution, but you have to actually fundamentally change your supply chain to do that.”

Ikea has recognized that old, broken, and unwanted products are an opportunity. Through these innovative reverse logistics initiatives, Ikea is not only acting in a more sustainable manner and reducing the company’s environmental footprint, it is also increasing engagement with consumers and creating positive economic opportunities for the company. 

Editor’s Contribution: IKEA Leading the Way in the Circular Supply Chain

IKEA reverse logistics

5 Things to Aid in Setting up A Circular Supply Chain

If you recall from our blog post yesterday where we explained the evolution of the supply chain from a linear supply chain to a circular supply chain, we touted the benefits of a circular supply chain. We also shared a great infographic from Tradeshift.com and the CEO of Tradeshift.com also explains 5 things to aid in setting up a circular supply chain:

  1. Outputs become inputs because your goods don’t end their life with their customers, but become an input in your supply chain. This means your accounts payable and accounts receivable processes will form a loop instead of a straight line.
  2. Without a digital supply chain, it will be almost impossible to coordinate all the moving parts a circular supply chain requires in real time.
  3. Assess your suppliers and work with the top tier for a common vision and goals towards a circular supply chain and ensure your CSR standards are met as you assess reuse opportunities.
  4. Figure out the cash flow demands of a circular supply chain, compared to a linear one. Your margins might improve, but your suppliers’ need for cash may change.
  5. Make a plan to manage the components like the evidence, materials, production information and components for the entire lifecycle.

Given the changing consumer, business, and government attitudes toward consumption and the environment, the circular economy looks poised to make businesses operate smarter and more collaboratively – while discovering new sources of profit and a competitive advantage by redesigning supply chains.

 

Cerasis, an expert technology solutions and transportation management service provider invites you to a 60 minute Webinar titled “The Big Benefits of Using Technology to Effectively Manage Transportation Reverse Logistics” to air live on September 30th, 2015 at 2 PM CST.

You can register for the webinar by visiting https://attendee.gotowebinar.com/register/6754187048550350082.

Mastering Transportation Reverse Logistics Starts with Education, Then a Strategy of How RevLog Fits with Traditional, and Technology to Execute

Here at Cerasis, we think it’s important that our clients and customers understand that transportation reverse logistics (or reverse logistics in general for that matter) is much more than just a flashy buzzword. It’s an integral part of helping your company thrive in today’s competitive business world. A key part of that is that you fully understand not only what reverse logistics involves and how it can help you, but what its history is.

Reverse logistics really does go back further than most people realize. The key reason that it’s only now getting the attention it deserves is through the development of transportation reverse logistics programs that help improve efficiency throughout the process.

We hope you are able to join us Wednesday, September 30th at 2 PM CST.

Why Should You Attend This Transportation Reverse Logistics Webinar?

This webinar is perfect for those who are looking to secure the benefits realized of a transportation reverse logistics capability, such as:

What Will You Learn in this Educational & Comprehensive Reverse Logistics Webinar?

Turn your transportation reverse logistics practice into a profit webinar, you will learn the following:

We hope you are able to join us for the “The Big Benefits of Using Technology to Effectively Manage Transportation Reverse Logistics” Wednesday, September 30th at 2 PM CST. Again, you can register by visiting https://attendee.gotowebinar.com/register/6754187048550350082.

It’s a story we have all heard: nature is a repetitive circle of events. From the grass to the antelopes to the dirt beneath our feet, life moves in a circle, and business practices move in a similar fashion. Reverse logistics could be the business equivalent to the passage of time and life for nature. While businesses want to believe moving forward through selling product is the only way to achieve success, reality tells of customer returns, environmental considerations for equipment recycling and reuse, cost management, and the effective management of all the aspects between the three. And at the end, check out a nice infographic speaking more to reverse logistics strategies and practices.

Cost Management

Throughout the course of business, there will be a series of recurring updates for equipment, software, and materials. Reverse Logistics allows businesses to recoup a portion of the original purchase price of this equipment. Many business IT departments routinely send out previously used computers for a second life in the hands of other businesses and ordinary people. Furthermore, when an item is returned by a customer to the respective business, the item becomes a wasted cost if the item is simply trashed. Reverse Logistics provides a guide for ensuring these returns do not become lost costs and have a second life. For example, a returned product may only require rewrapping of exterior for sale to a secondary consumer. Alternatively, the same item may be sold to discount stores at a portion of the original cost-of-manufacture.

In 2013, 35 percent of businesses reported using Reverse Logistics as a means of cost management for supporting additional sales, described the Hi-Tech Reverse Logistics & Aftermarket Services Report from eyefortransport. However, 70 percent of respondents within the survey saw Reverse Logistics as a burdensome cost for the business. Unfortunately, this means that the associated revenue from using Reverse Logistics for these companies has been lost. In many cases, the rationale behind this response remains in-house RLS (Reverse Logistics Strategy). If a RLS provider is employed, the cost of such employment may be much less than the actual revenue garnered from the RLS. Ultimately, the company would make more money through Reverse Logistics.

Public Perception

Around the world, more people have become concerned about mankind’s carbon footprint. “Going green” through recycling and protecting natural resources stand at the top of much of the public’s values. Unfortunately, businesses have gotten into the slump of ignoring this trend for much of the past few decades. However, the rise of social media has given the public a new voice for speaking out against environmentally-harmful business practices, such as those implied when a company does not engage in some form of RLS.

With a few words, an irate customer can post images, video, and other media proclaiming traditional “out-with-the-old-stuff” business practices as atrocious and call for a massive boycott. To the dismay of former business professionals, the public can destroy a business with this principle alone. As a result, today’s businesses must ensure they have a successful, viable RLS to maintain harmony with public perception. Additionally, the growing concern of the public can be of great benefit to the company. For example, customers may favor your company over your competitors when you implement an RLS.

reverse logistics strategy model

Environmental Factors

Materials within electronics or automotive aftermarket parts are not just an eyesore for the public, they can destroy the ecosystem. Silicon parts, acids within deteriorating batteries, and metals become useless parts in landfills when a reverse logistics strategy is not used. In 1997, US Congress passed legislation for the monitoring of landfills, which requires landfill owners to provide landfill liners that will last for the required, 30-year monitoring period. Unfortunately, after 30-years, the respective owner is no longer liable for contamination to drinking water and the environment if the liner fails.

Ultimately, the electronics and automotive aftermarket parts of today will affect the environment in the next 50 years if not recycled and reused. Additionally, more metals, plastics, and other materials have an inherent problem; they are limited in number. This means failure to recycle may result in extra costs to meet the growing demand for electronic materials in the future if the resource supply drops. An RLS eradicates all, except for non-reclaimable materials, electronic hazards from becoming an environmental disaster.

Government Regulations

Although opponents to the 1997 Final Rule for Landfills see Congress’s actions as a mistake, the Environmental Protection Agency (EPA) and government organizations around the world recognize the importance of ensuring proper disposal of hazardous materials. Businesses tend to forget about how a single issue may impact an ecosystem. For example, leaking acid from batteries may contaminate the water of a lake, which then impacts drinking water for various towns. As a result, the rates of intestinal problems, cancer, and other illnesses begin to grow. Time passes, and the respective town dies, and with the town, dies the business.

This represents the worst-case scenario of the business cycle: start-up, growth, garbage, and failure. However, the cycle can become a positive, fulfilling circle of life if an RLS is implemented and maintained. Not only will it ensure the success of the business, but it will benefit all of society beyond the simple product did to begin with. If you’ve considered employing a Reverse Logistics strategy previously, decide which path you want to take:

If you need help in establishing a reverse logistics strategy with technology tools included, contact Cerasis and we’ll steer you in the right direction.

Infographic: Reverse Logistics: Managing the Business Circle of Life & The Spectrum of Reverse Logistics

Don’t let the consumer product gifts fool you into thinking that reverse logistics isn’t great for the more manufacturing, distribution, and bigger shipping (LTL) world. Core returns, huge pieces of IT equipment, and more. Here are some common categories which are great for the application of reverse logistics:

reverse logistics pipeline

In all of these categories, reverse logistics is much larger and includes a broad range of assets that, taken together, can have a significant impact on a company’s bottom line. It is worth repeating that while the cost of processing returns is less than 4% of total logistics costs, high-tech companies can average a recovery value of 28% on returned assets and enjoy a 12% competitive advantage in overall customer satisfaction with best-in-class reverse logistics.

How are you using reverse logistics strategies to recover the value of assets? Let us know in the comments section below!

 

reverse logistics infographic

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