This is the last component of the supply chain. As mentioned before, this component is a problematic part for many companies because they must create a responsive and flexible system on optimizing this backward supply chain, such as management of product returns due to quality problem, return of unsold stocks, etc.
In short, we can say that “reverse” is the resource goes at least one step back in the supply chain. Examples of reverse supply chain include:
- Product move from customer to distributor. For example, the fan is returned to X store by a buyer because it not working properly.
- Product move from distributor to manufacturer.
- Raw material move from manufacturer to supplier.
Based on the above, in principal, there are five key components to be carried out:
- Product Acquisition. Obtaining the used product from the customer/buyer by the distributor/manufacturer/supplier.
- Reverse Logistics. Transporting products to a facility of distributor/manufacturer/supplier for inspection, sorting and disposition.
- Inspection and Disposition. Companies must conduct this component at the earliest possible stage, assessing the condition of the return products and take the most profitable decision reuse or disposal. This is to avoid the additional costs such as the cost of storage and so on.
- Reconditioning / remanufacturing / recycling. If decision of above (no. 3) is reuse.
- Redistribution. Would be better to conduct survey prior of redistribution in order to determine whether there is demand for it or whether a new market must be created.
The picture below can give an idea to make the best solution for reverse supply chain:
What –> what resources are returned
Why –> reasons why resources are returned
When –> time of returned
Where –> at which point occurred
Who –> who returned
How –> way of returned
By providing the best solutions to the above questions then the company can make a good system of reverse supply chain that of course will add to the benefits and sustainability of a business.