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an operator driving a forklift truck as a symbol of reverse logistics

Reverse logistics

A key part of the circular economy

Reading time: 9 min

Have you ever had a drink that came a glass bottle in a restaurant? Or bought a product online? These two actions have more in common than you think, and it's because they're possible thanks to reverse logistics.

When we drink a soda in a glass bottle at a restaurant, the bottle returns to its point of origin to be reused for a new drink. And when we want to return a product that we purchased online, we have this same option by following the distributor's instructions. In other words, both cases have in common that a selective collection channel has been enabled.

What is reverse logistics?

Reverse logistics or reverse distribution is a stage in the supply chain in which the product is returned from the point of sale to the manufacturer or distributor for recovery, repair, recycling, or disposal. 

If in conventional logistics the product is moved from point A to point B, in reverse logistics, it's returned from point B to point A. This way, each company establishes a channel for waste recovery (industrial, electronic, construction, etc.), depending on the type of activity it carries out and its needs. Therefore, reverse logistics is part of a company's value chain, as it's an additional link that's added to optimize the production process and customer loyalty.

In addition, reverse logistics is related to the circular economy because its main goal is to recycle or reuse products and materials to extend their life cycle as much as possible. And, consequently, decrease the use of the planet's natural resources.

So, what's the main objective of reverse logistics? 

The main objective of reverse logistics is to manage the flow of products, materials and resources from the final consumer to the origin of the supply chain in order to maximize their value and minimize their environmental impact. 

What are the 3Rs of reverse logistics?

 

  • Reduce: It refers to the reduction of the environmental impact by minimizing the use of materials and resources in the production, packaging, and distribution of products. Reduction can also be achieved by optimizing inventory management and preventing returns.
  • Reuse: It's how products and materials are reused to extend their useful life. It can be achieved by repairing, refurbishing, and remanufacturing returned products.
  • Recycle: This is the process of recovering and transforming materials to reuse them manufacture new products. Recycling helps reduce the amount of waste and minimize the environmental impact of products at the end of their useful life.

These three practices together make up the 3Rs of reverse logistics and are essential for sustainability and efficiency in supply chain management.

Types of reverse logistics

Taking into account the process or treatment given to the product that is returned to the manufacturer or distributor, we can classify reverse logistics into two types:

reusing packaging, an example of green reverse logistics

Green reverse logistics

Products returning from the point of sale to the source go through a process of repair, recycling, or disposal in an environmentally friendly way before being stored or sold again. For example, at Repsol, we reuse the packaging in which some products are sold.  

reverse return logistics

Reverse return logistics

In this case, the product that returns to the point of origin is put back into stock to be sold again without needing to go through any additional processes. For example, this could involve an item of clothing that has been returned to a store.

What can reverse logistics be used for?

It is important to emphasize that depending on the sector in which you operate, the elements of reverse logistics may vary. However, the most common process that's followed is:

two hands with cleaning gloves and the recycling symbol.

  1. Collecting goods: Consists of the collection of the products. Depending on the type of goods and the conditions of the service, the manufacturer may indicate guidelines to be followed for proper management.
  2. Sorting goods: Once collected, the products are sorted by category and prepared for the next steps in the process.
  3. Return to warehouse: After sorting, the route of the products to be returned to the source warehouse is determined.
  4. Destruction of unserviceable goods: Products that have been classified as broken are destroyed and deposited at the appropriate points for this purpose, considering the type of material.
  5. Recovery, recycling, and management of materials: Products classified as reusable or recyclable are managed to extend their useful life cycle. In this phase of the process, it is very important to pay attention to those that require special management such as construction waste or electronic equipment.
  6. Administrative processes and follow-up of operations: To finalize the reverse logistics process, the required documents must be completed. By doing so, the execution of each of the operations is duly documented. 

Benefits of reverse logistics

Because of its multiple benefits, many sectors are committed to this strategy aimed at extending the life cycle of products and processes:

Recycling Pictogram

Caring for the environment

 Reverse logistics allows us to reduce the waste we generate, which minimizes the environmental impact. The material returned to the point of origin is part of a recycling or reuse chain.

Fuels Pictogram

Stock control

Return operations involve considerable effort for companies, so there's greater control over resources and products, especially inventory.

Environment pictogram

Better customer service

Companies' high level of management and response capacity leads to a better assessment by the customer. In addition, reverse logistics provides valuable information for the manufacturer or distributor. It makes it possible to evaluate the reasons for the return, aspects that can be improved, control products that have arrived in poor condition, etc. 

Environment pictogram

Cost reduction

The manufacturer can reuse the packaging or even manufacture new material from it and save costs on purchasing raw materials. By significantly reducing the number of packages, the cost of manufacturing the product is also reduced.

In short, when there is greater control over the product, more efficient action is taken at all process stages. This translates into better service for society, less environmental impact, and greater profitability for companies.

Current examples of reverse logistics

Reverse logistics is a crucial process in supply chain management that involves recovering products and materials after their use or distribution. This practice focuses on several key areas:

  • Returns management is an important area in reverse logistics as it focuses on quickly, controllably, visibly, and directly processing customer returns or preventing them from occurring in the first place. Customers consider the flow of returns and return policies when evaluating the quality of a company.
  • Remanufacturing or refurbishing involves the repair, rebuilding, and reprocessing of products that have been returned or have reached the end of their useful life. Packaging management focuses on reusing packaging materials to reduce waste and minimize disposal.
  • Reverse logistics for unsold goods deals with returns from retailers to manufacturers or distributors. This can be due to poor sales, excess inventory, or delivery refusal. End-of-life is another important aspect of reverse logistics as it refers to the proper handling of products that are no longer useful or do not work.
  • Lastly, reverse logistics also handles undelivered products, which are returned by drivers to sorting centers and then returned to the point of origin.

Repsol and reverse logistics

At Repsol, we manage resources efficiently to strengthen our value chain in which we prioritize the satisfaction of our customers and employees and the positive impact on society and the environment. 

Therefore, some of the actions we have taken are the implementation of a reverse logistics system in which we optimize the useful life of the containers in which the products are marketed and contribute to the development of clean technologies with non-labelable oils. We also work with environmentally committed suppliers and purchase pellets from responsibly managed forests.

In addition, following our commitment to sustainability, we have the Circular Economy Business Strategy Certification granted by AENOR (Spanish Association for Standardization and Certification) in which waste management plays a key role. As stated by Ismael Pereda, Sr. Manager at Repsol, "The goal is to recover 100% of waste, providing circular solutions throughout the value chain."