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Reverse Logistics a key element in Corporate Social Responsibility! How can that be?

Many companies are looking at reverse logistics as the new revenue stream.  How can returning and then disposition of product lead to a revenue stream?

The answer lies in part in the understanding of reverse logistics as a part of sustainability. Reverse logistics or returns management, once an afterthought, now covers the green movement of reduce, reuse, recycle and recover.  Companies are being held accountable for the entire lifecycle of their products after being returned.

The accountability is due to the growth of aftermarket interactions. While these new markets have created new markets for many companies, they must also ensure their brand is protected. Firms are finding themselves under increasing observation to ensure these operations have a positive effect on the environment as opposed to filling up a landfill.

There are several best practices companies should be using or developing to augment reverse logistics.  They are the following:

  1.      Simplifying the returns and repair process can increase the speed of inventory movement through the supply chain. Reworking  product into saleable condition and recycling usable parts and selling any excess to jobbers or surpluses.
  2.      Capture, analyze and use the return data to understand and improve the design of future products.
  3.      Outsource such components as warranty claims processing.
  4.      Increase the quality of complaint behavior.
  5.      Implement programs alerted on eliminating defects, thus preventing returns.
  6.      Align sales, design and production teams with incentives to ensure products meet customer needs.


Traditional disposition of product has bred much inefficiency that have impacted the supply chain – returned products moving from customers back to suppliers, then to a return center, then to a recovery provider.

For those reasons above reverse logistics remains a large source of untapped revenue to companies. Knowledgeable improvements to reverse logistics can lead to present reductions in cash pay outs.  In addition, organizations with effective reverse supply chain competencies have a better outlook on customer service and offer more services.

Retailers Battling Cargo Theft

Consumers think little of the security and technology needed to bring goods to market.  Almost daily, cargo thieves are aiming at freight which is worth upwards to millions of dollars.  The targets run the full gamut from food, drinks, electronics, home products, building materials, clothing, auto parts, and pharmaceuticals.


As cargo theft gangs (think of the movie “Captain Phillips) become ever more organized, many logistics firms are signing on with loss prevention and risk professionals in order to keep the supply chain safe.  Add to the mix that traditional means of securing property may not meet the regulations of the U.S. Customs and Border Protection or World Customs Organization; this compounds the problem of these external risks.


There are several joint business ventures – Customs-Trade Partnership Against Terrorism (C-TPAT), Partners-in-Protection (PIP) and EU Authorized Economic Operator (AEO) – organized to strengthen the impact of supply chain and border security efforts. For example, with C-TPAT, companies can speed up the business process and capitalize on the efficiencies of the supply chain process. 


Price point is another factor influencing the logistics market.  The choice of vendor may be a strictly price-driven idea but development teams are creating non-price point factors to acquire new business. We are beginning to see this with blanket insurance policies at no additional cost.  With such policies in place this translates to the customer:  if there is any loss during the supply chain process, the vendor takes on 100% of the liability and replacement costs.  As well, with these policies, risk professionals are re-assessing risk models and employing new security measures.


In the past, the greatest concern for many supply chain managers was ensuring security in their warehouses against deceptive pickups, driver theft, facility theft, etc,. Today, these concerns are the simplest and most easily ‘cured’ challenges the supply chain is facing. Today, the biggest challenge is when the product leaves the property.


Product is most vulnerable when it is in transit.  Even in the past when a large percentage of theft was internal, that percentage is falling due to more sophisticated and prevalent external cargo theft gangs.


As a result of this increased risk to cargo, loss prevention professionals are instigating solutions to keep a step ahead of criminals and securing the assets after they leave the premises.  One of the solutions is covert tracking of high dollar shipments, accomplished by inserting a GPS device in the shipment.  If the shipment steers off course or the driver stops for a long time, an alert is immediately fed to the monitoring system for action.


The screening of covert tracking can be active or passive. If active, security can visually track the movements of the shipment along the designated route.  If it is passive screening, there are check points that the shipment must reach at allotted times.  However, there is a downfall with both of these.  The window of opportunity to steal a shipment is very small and by the time loss prevention personnel become wise to the problem, the shipment may very well be lost.


Overt scrutiny is just that – obvious and out in the open.   Usual method is to install a GPS and inform the drivers of such a device. This tells them the shipment and they are being tracked.  Another overt method is to hire a third party escort.  Vehicle escorts can lead or follow shipments from start of trip to the final destination.  This process is labor-intensive and expensive, but it has proven to be most successful in ensuring product reaches its destination. 


The use of overt tracking is becoming increasingly prevalent, especially in the electronics and high dollar freight.   Loss professionals by administrating a risk assessment and a cost analysis are capable of determining which method of tracking will bring best results – risk management and return on investment.


Law enforcement and private security are concentrating their efforts on cargo theft in order to reduce the outside influences of crime in the supply chain process.   The National Cargo Theft Task Force is taking the forefront on this attack.  This group and others are working hand-in-hand with other law enforcement agencies; sharing information, technology and best practices. 


The challenges linked to securing the supply chain and its processes cannot be answered by one group. Solutions are only possible with collaboration between local, state, federal law enforcement agencies and supply chain management teams of all companies cooperating with each other.