Advances in Reverse Logistics through Transformative Partnerships
The challenges of reverse logistics was a recurring theme throughout the U.S. Chamber of Commerce Foundation’s 2017 Circular Economy Summit. Reverse logistics are important because the current reality of designing for a linear economy where you ‘take-make-dispose,’ has resulted in practices and mindsets that were not intended to take into account the return of goods by consumers, what to do with excess goods, or the merits of reuse instead of recycling. Patrick Browne, Director of Global Sustainability at UPS and Jon So, Senior Director of Product Marketing and Partnership at Optoro, shared insights on how advances in reverse logistics can impact business and the environment.
Reverse logistics, what is it?
For Optoro, and in the context of retail, reverse logistics is the process of collecting, sorting, storing, transporting, and redistributing products in a way that creates or preserves value. The Ellen Macarthur foundation applies that definition more broadly to all materials existing in our ecosystem that can be brought “back into circulation for re-use.”
Why do reverse logistics matter?
As attendees shared reverse logistics challenges from their respective industries, it became clear that the need to aggregate products from decentralized locations to a central collection point, whether it’s for an end of life product, repairs and testing, or goods that are defective was common across industries. Dermot Murray, CSR Manager at FedEx summarized the challenge as, “It’s basically spoke and hub, not hub and spoke.”
E-commerce is a visible execution of reverse logistics, where consumer expectations for free and convenient shipping has become the norm. UPS expects 50%+ of U.S. package volume to be E-commerce and B2C by 2019, this means fewer packages at each stop, more miles, fuel, and emissions. How do you then reconcile consumer behavior with the environmental impacts of on-demand two-day shipping?
Data is the key, partnerships the door
Optoro software runs in their centralized facility or a client’s facility where they can decide the value of the product (condition, what price point it retails for in a certain channel, bar code data, etc) and the appropriate channel (return to vendor, liquidate, bulk sales, auction, etc.). UPS and Optoro’s partnership addresses an opportunity, modifying existing processes to leverage excess outputs, resulting in one of the most practical ways to achieve circularity. UPS provides the logistics expertise while Optoro’s software delivers a platform that indicates recovery value and reduces environmental waste.
UPS is also utilizing data to drive solutions such as synchronized delivery, which can lead to what UPS calls synthetic density. This attempts to match the needs of the consumer, especially in dense urban areas, where delivery items can arrive together by working with retailers in the back end. UPS utilizes intermodal shipping to reduce energy usage by allowing for products to be delivered by plane, train, or truck along the most efficient route of delivery. In addition, UPS is expanding its delivery access points for returning shipments and providing convenient delivery options through its ‘My Choice’ application for consumers.
Browne and So then emphasized the following points for partnerships that seek to deliver operationally, financially and environmentally:
- Ensure your values and visions are aligned, that your communication is strong and that the chemistry allows for having the right people at the right table up front.
- Look for a reverse logistics provider that supports multiple disposition channels that can deliver visibility of data on products that allow you to figure out why products are being returned.
Also present at the summit was Cynthia Power, Facilitating Manager, Fisher Found, EILEEN FISHER who summed up the benefits of capitalizing on the circular economy saying, “Do you want to sell it once? Or do you want to sell it three times?”
[Editor's Note: For more information on topics covered during the 2017 Circular Economy Summit, visit our website].