Business owners face endless decisions throughout all aspects of the supply chain. Businesses must decide which routes to use, where to manufacture products, and whether to employ the use of a third party logistics provider. However, one of the most important aspects of supply chain strategies is often overlooked: the reverse supply chain (also referred to as reverse logistics). Basically, reverse logistics in the supply chain revolves around dealing with end-of-life, malfunctioning, or hardware upgrades. A reverse logistics strategy provides a path for removing the existing equipment to make way for the next era of equipment in the case of end of life products or new upgrdes. In a sense, reverse logistics could be considered the “greenest” part of any business logistics strategy. In fact, the EPA asserts that up to 40% of “tossed” computers were recycled in 2013, which has risen significantly from a startling 18% in 2007. To help you understand how a reverse logistics strategy affects supply chain strategy, consider these key points.
Return on Investment…Again
When a business, or other organization, purchases equipment, parts, or remanufactured equipment it is an investment. Over time, this equipment improves profitability and has a positive return on investment. When the time comes to get rid of this equipment, business owners can employ reverse logistics practices to reap a second return on investment from the equipment. Many computers and other electronics contain high levels of metals, such as copper, iron, or steel, which may be sold for reuse in new devices. or a defective automotive piece of equipment can be remanufactured giving life to the equipment, allowing it to be reused or resold. Essentially, this is part of the recycling process, but for our purposes, we identify this as reuse due to the income generated through it.
Increase in Public Perception
Society has grown to accept and embrace protecting the environment as a key value and need of modernity. Although it started as a few simple activists decades ago, environmentally-friendly businesses routinely see an increase in customer satisfaction and public perception. For example, a single business who engages in reuse and recycling can take advantage of the mass-following of the Green Movement. People have seen the harmful nature of filling landfills with millions of toxic, dangerous items, and the public wants to know that each company is doing its best to promote a safe environment for future generations. 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, more loyal customer base, higher new customer acquisition rates, and increased confidence from the public.
Reuse Encourages Competition in Manufacturing
Throughout the supply chain, businesses compete with one another for a greater share of the market. This is routinely a positive occurrence and helps keep the prices of products affordable. However, diminishing natural resources, as well as the resources necessary for the production of synthetic materials, are affecting the supply chain. 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. Additionally, reduced business expenses translate into savings for the company and lower prices of their goods and services. Therefore, lower prices encourage more consumers to purchase a business’s products, which helps grow the respective company.
Reduced Risks to the Business
A successful reverse logistics strategy must contain the processes to ensure protection of data. Data breaches may not sound as though they have a particular relation to sustainability, but a company’s sustainability is measured by its ability to maintain happy customers while reducing impact on the Earth. When a data breach occurs, it has the potential to decimate a company’s customer base. Unfortunately, a failing company is more likely to forget about recycling as part of IT Asset Disposal, and the business’s level of sustainability falters. Furthermore, recycling as part of reverse logistics strategy helps ensure the company’s existing data on their equipment is removed in its entirety, which further reduces the risk to the business. Ultimately, proper return management, recycling, and reuse encourage the protection of consumer data and foster business success and sustainability.
Throughout the course of business, business owners will need to create a sustainable plan for dealing with end-of-life equipment, recalls, remanufacturing, or equipment failures. The processes of recycling items from this equipment help to strengthen businesses by providing an additional source of income from the sale of the items during recycling, improving the public perception of the company, and reducing the risks of data breaches. Sustainable reverse logistics strategies offer so many additional, smaller benefits that they cannot possibly be listed, such as eliminating fines from government organization from improper disposal, but the overwhelming monetary benefits of employing a reverse logistics strategy far outweigh the costs of simply tossing old equipment into a landfill.