Reverse logistics
Why invest in reverse logistics?
Today, return flows are no longer the exception.
$415B
Estimated value of the global reverse logistics market in 2025
4.6%
Estimated CAGR of the global reverse logistics market from 2018 to 2025
20%
Part of the return flows within the French economy
Yet, unlike forward logistics, reverse logistics faces major challenges.
Several levers improve the performance of reverse logistics.
Design for reverse logistics
Most products are not designed for reverse logistics. They are often difficult to compact or disassemble to optimize truck loading. Packaging, assuming it is still available at time of collection, is usually not designed to be reuse. Limited information are available to determine if returned products can be reuse or should be recycled.
Hopefully, some businesses are designing their products to fit the reverse logistics process. For example, Ahrendsells an office desk with an easy to disassemble tabletop to facilitate transport. Orange ships its internet modems in a packaging that can be reuse when the customer wants to send its equipment back. To facilitate customer and distributor returns, Xerox provides protective packaging for returns that requires no tape. Komatsu, the manufacturer of construction and mining equipment, has fitted all standard equipment with sensors that collect data on their condition. Once an equipment is returned by a customer, Komatsu is able to quickly identify if its components can be reconditioned or should be recycled.
Invest in infrastructure and equipment
France Boissons has installed equipment at its customers’ sites that crushes up to 20 kg of glass bottles.
Collaborate for scale
Because goods to be collected are usually geographically dispersed and low-value products, aggregating volumes become essential. To reach sufficient scale, some companies consolidate their return flows. Return flows are usually easier to consolidate across companies than forward flows because they are not subject to the same timing and confidentiality constraints. Some service providers are offering to aggregate return flows within industry sectors. In thetextile industry, I:CO, a reverse logistics company, manages the reclamation of 22,000 tons of used apparels daily in 60 countries for large apparel brands such as H&M, Puma or Levi’s.
Return flows can also be consolidated with forward ones. When STEF, a logistics company, delivers fresh fishes to its customers in southern France, it picks up containers filled with fish wastes that will be used to produce fertilizers.
To reduce collection costs, businesses can also incentive end customers to return their used products. For example, in some IKEA stores, customers can return used furniture and be paid back in store vouchers.
Make return seamless
For customers, it should be as easy to return a used product than to buy a new one. Customers should be allowed to choose among various pick-up or drop-off options such as neighbourhood collection containers, automated parcel lockers or courier pick-up. For example, Adidas, in partnership with start-up Stuffstr, dispatch courier in London to collect used garments at owner homes. In the Netherlands, postal service PostNL collects end-of-life electrical appliance from consumers’ homes. Virgin Mobile uses a mailing polybag for returning a used cell phone as part of a trade-up program.
Various services should be available at the time of collection such as used product deinstallation, disassembly, packing or labelling. For example, delivery services UPS and FedEx, as well as start-up Happy Returns, accept unboxed returns in some countries. In Ireland, postal service An Post uses its ReturnPal app to schedule carrier pickups of unlabelled parcels from the customer’s home, then does the labelling at the post office.
Leverage technologies
Businesses use technologies to improve their forward logistics, not so much their reverse logistics. According to a recent study, the top four areas of the supply chain where digital technology is being applied are: delivery (46%), customer engagement (45%), manufacturing and remanufacturing (43%) and planning (43%). Only 27% of respondents are currently using digital technologies to improve reverse logistics.
Though, new technologies can also help firms manage return flows that are less predictable and more variable than forward ones. In France, Heineken identifies each of its returnable bottle used in the out-of-home market with a unique code. This code enables Heineken to track the lifecycle and location of each bottle and reduce returnable bottles losses. CoremanNet, a subsidiary of Bosch Group, has set up a dedicated logistics network and associated information system to manage the return flows in the automotive remanufacturing industry.
Use appropriate means of transport
Traditional modes of transport, optimized for forward logistics, don’t always fulfil reverse logistics cost and service specific requirements. Alternative modes of transport, such as electric cargo bike or autonomous vehicle, may be more relevant for reverse logistics. For example, Movebybike collects used furniture by cargo bikes in Sweden. UK parcel delivery company Hermes partnered with Starship, maker of small six-wheeled autonomous courier robots, to pilot a returns pickup service in London.
Our approach
Training
We deliver training on reverse logistics. We leverage more than 80 examples and cases studies.
Maturity level assessment
We assess the maturity of reverse logistics processes using a Reverse Logistics Maturity Model. Our model defines five maturity levels. It describes the characteristics of effective reverse logistics processes.
Roadmap
We formulate recommendations to improve the performance of reverse logistics and develop a roadmap to support their implementation.
Cases studies
For a local waste management company, we reviewed reverse logistics flows for the collection and recycling of construction waste and recommended the implementation of a centralized platform.
For an industrial equipment manufacturer, we assessed the reverse logistics maturity level using a dedicated maturity model.
We identified several areas for improvement, such as designing equipment to facilitate reverse logistics.
Featured insights
Reverse logistics, the circular economy weakest link
Reverse logistics is sometimes described as the logistics going in the “wrong direction”. Yet it plays an important role to transitioning to a circular economy.
Connect with our circular economy consultants to know more