Reverse Supply Chain: Can it create a means for sustainable initiatives?
By Sam Jenks
When I hear the phrase supply chain, the image that comes to mind is a product. But it’s more than just a product.
It’s a product in motion.
(See Amazon in motion below)
That product is assembled in a warehouse, shipped to another warehouse, purchased by procurement professionals, shipped to a store, unloaded into another warehouse, counted into inventory, wheeled out onto the store floor, placed on a shelf, taken off the shelf, brought to the register, purchased by a consumer, put into a car, driven home, opened up and makes the freshest pot of coffee you could ever imagine.
Whether it’s an electronic coffee maker, computer, or backscratcher, the typical cycle of a supply chain is relatively similar.
There exists a supplier of goods who produces and supplies a purchaser with those goods. In between the buyer-supplier transaction there’s logistics, such as packaging, shipping and delivery. The amount of times that process is repeated varies, but that is typically the model of a supply chain.
So, the supply chain ends when the coffee maker is purchased and starts making coffee, right?
That’s just the thing. Supply chains are typically spoken about in a linear model, yet the idea of the reverse supply chain offers information to imply that supply chains are rather cyclical.
What in the hell is this reverse supply chain?
Harvard Business Review had a definition that I rather fancied;
“It’s the series of activities required to retrieve a used product from a customer and either dispose of it or reuse it.”
As stated, the supply chain isn’t over when a consumer consumes a product. In definition, between the supply chain and the reverse supply chain, the supply chain can become a never-ending process for some goods.
Why is it important?
Brands worldwide have begun to take the reverse supply chain very seriously in the last decade.
With the influx of e-commerce emergence and surge of technological advancements, there are regretful, tampered, refurbished and unwanted purchase taking place every minute of the day. There are statistics that suggest of purchases made in the US, “20% of everything that is sold is returned” (Cognizant)
Being that United States is one of the consumer powerhouses of the world, the statistic frames the importance of the reverse supply chain.
What qualifies as part of the reverse supply chain?
There are several qualifications of goods that are part of the reverse supply chain, and there are constantly new grounds for supply chain reversal being discovered. The further innovation comes along, (especially within technology) the longer the list of reasoning of returning grows.
Those that are most typically seen today are:
- Recall for products
- Dissatisfaction with products functionality
- Inspection: includes testing and sorting
- Recycling
Where do the products go from there?
Speaking from the point of a closed-loop supply chain (figure below suggest a “green” closed loop supply chain) it’s hard to say what happens to products that make a return into the supply chain from the “end customer”
Some of products that make their way back into the reverse supply chain do meet their eminent end. They’re given to a collection center of some sort after disapproval or recall from an end customer. Those products are then given on to a disassembler of sorts. During this process, the products are determined to be fit for reuse, or ready for disposal.
Products that make their way back into the hands of an (re) assembly and/or (re) manufacturing teams have a chance for immortality. Typically bits and pieces of products are fit to be repurposed and others are not. And, this brings about one of the most important functionalities of the reverse supply chain (Habibi 2016).
Reverse supply chains can improve sustainability in business
Recycling goods may seem a bit unfair to the end consumer. When I buy a brand new iPhone I want that iPhone to be brand new; right? The reality is, many products that sell as new, have refurbished or recycled tidbits.
But this isn’t a bad thing!
In an age of digital advancement, at the velocity that is practiced, the upgrades to goods are yearly, at least. Resale and repurposing of goods is a necessary practice.
Without the the reverse supply chain technological advancements would create enormous and unruly amounts of waste. The practices within the reverse supply chain can create better sustainability initiatives by improving quality, transparency, but also by eliminating the stigma associated with repurposing of goods.
In the coming week’s we plan on delving into the technological recovery that happens within the reverse supply chain. Reverse supply chain’s have struck our interest here at Kodiak Community. The possibilities for sustainable business practices within the reverse supply chain are endless, literally.
Until next week.
This publication is brought to you by author Sam Jenks, but also on part by Kodiak Rating — A Supplier Relationship Management SaaS functioning out of Stockholm, Sweden. Kodiak Community intends to challenge traditional business practices with innovative thinking and creation.
