The Pandemic Has Created Complex Challenges for Reverse Logistics
By Dr. William Oliver Hedgepeth
Faculty Member, Transportation and Logistics Management, American Public University
and Tony Sciarrotta
Executive Director, Reverse Logistics Association
The evolution of reverse logistics is an opportunity for innovation and innovators in what has become a resilient enterprise in the United States and globally. Tony Sciarrotta says, “Reverse logistics today is impacting people a lot more, in ways that they don’t even completely understand.” The coronavirus pandemic has shown retail businesses, the supply chain industry, related manufacturing companies and all of us consumers that we really do not understand this world of reverse logistics.
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Reverse logistics can be discussed in various terms, such as asset recovery, hazardous materials disposition or depository, sanitization, or waste management. Most of us know reverse logistics as recycling. Many of us have a colorful trash container which we put on the street every week with plastic bottles, paper bags full of old newspapers, empty wine bottles and soft drink cans.
For a list of what may be recycled, check your state waste management authority, such as the Virginia Waste Management Authority, for a complete list of what can and what cannot be recycled.
The Term Reverse Logistics Can Be Misleading
The Cambridge Dictionary defines RL as “the process of dealing with goods that have been returned to the company by customers.” The Association for Supply Chain Management (ASCM) notes that RL is “A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.”
The Reverse Logistics Association (RLA) broadly defines RL as “all activity associated with a product/service after the point of sale, the ultimate goal [is] to optimize or make more efficient aftermarket activity, thus saving money and environmental resources and protecting your brand.”
These various definitions show the richness of the concept, which depends on one’s business or educational viewpoint. These different viewpoints seem either to be from people who work in retail, selling some product to us customers, or who work in manufacturing, creating those products from raw materials.
As a retail customer, you might be interested in returning an item — a pair of shoes, a hat or even a lawn mower to the store where you purchased it. Sciarrotta observes, “The U.S. economy, the retail aspect of the economy, is a six-trillion-dollar industry. And of that six trillion, through last year maybe about 8% to 9% of those products sold went back as a return. And something had to be done with those products. Now, what was known last year, and certainly more so today, is people who buy products at stores return them less than people who buy things online.”
Moreover, online sales are expected to continue to grow into the foreseeable future. Sciarrotta says, “Reverse logistics is impacting your life a lot more because you’re buying more online, you’re getting more and there are things going on in ecommerce that drive that higher rate of returns.”
Behind all these purchases is a complex supply chain network of parts that make up the final product. For example, an auto manufacturer has thousands of such supply chain items to order, contract for, and have delivered daily to manufacture just one car or truck. These many parts usually come to the manufacturing plant by ship, plane, and truck.
Sciarrotta notes, “Stores have reopened, but if you’ve bought things online and you had a good experience, you’re going to keep buying things online. Now, once upon a time — again, last year, not that long ago — ecommerce only represented about 12 to 14% of that total six-trillion-dollar number of the retail economy. Now it’s going more towards 20%. It will not all change to ecommerce. Amazon’s not going to run the whole world, nor did Walmart run the whole world with 4,000 stores in our country.”
The Circular Economy Approaches Reverse Logistics from the Viewpoint of Waste
The worldwide circular economy approaches RL from the viewpoint of waste. Sciarrotta said, “The last part of the RLA universe, and an important aspect of what we believe in, is the circular economy so that these products always have an ongoing home. So, we no longer talk about a cradle to grave lifecycle of products; we talk about cradle to cradle.”
However, the Circular Economy Club defines RL in different terms than your waste from home; it is a “source of growth for something new. This model conceives waste as a raw material, based on the reintroduction of materials in the system, combining recycling, reuse and renewable energy and biomimicry.”
This global meaning of RL uses new terminology that is more akin to how a living organism can be revitalized and continue to live, in effect, to be reborn. RL terminology replaces what is usually associated with waste management or trash pickup service with the word “restorative.” The most important aspect of this RL concept is cradle to cradle, rather than cradle to grave, because this is restoring the elements of a product to create a new one.
The Challenges of Reverse Logistics
The scope of reverse logistics, especially during this pandemic, is global and complex, with many challenges from all different aspects or viewpoints. Some of the challenges for academic and business researchers include:
- How to make RL simple
- How to make RL smooth
- How to make RL fast
- How to make RL easy
- How to make RL cheaper
- How to prepare for the wave of returns yet to come back to retail stores
The pandemic and economic crisis have thrust retail and manufacturing companies into a crisis of their own — how to address these challenges. As can be seen from the range of definitions or meanings of reverse logistics, RL is more than just about the flow of goods or products from one place to another.
While understanding the terminology can be a challenge, it also encompasses an entire business science and educational opportunities for academic courses in RL. The challenges are a platform for innovation and innovators. They may also lead to new university courses, research papers and even Ph.D. dissertations.
About the Authors
Dr. Oliver Hedgepeth is a full-time professor at American Public University (APU). He was program director of three academic programs: Reverse Logistics Management, Transportation and Logistics Management and Government Contracting. He was Chair of the Logistics Department at the University of Alaska Anchorage. Dr. Hedgepeth was the founding Director of the Army’s Artificial Intelligence Center for Logistics from 1985 to 1990, Fort Lee, Virginia.
Tony Sciarrotta became the Executive Director and Publisher at the Reverse Logistics Association in 2016 after 12 years of active involvement on the Advisory Board and on Committees. In his 35-plus years in the consumer products industry, Tony has held various positions, including 15 years in returns management at Philips.
During his Philips years, Tony developed new reverse logistics strategies and implemented many new returns initiatives. He worked with retail partners and industry groups on best practices still being used. Tony then became an evangelist for improving the customer experience to reduce returns and their associated costs. Today, Tony is considered a subject matter expert in reverse logistics and speaks for the industry at conferences all over the world.
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