All businesses need processes in place to handle returned products. In fact, this aspect of supply chain management is known as reverse logistics and is important for smooth, efficient, and cost-effective operations. The food industry is no different: find out all you need to know about it.
Reverse logistics 101
To begin with, let’s start with the basics. As mentioned, reverse logistics refers to the process of sending products back through the supply chain from end users to retailers or manufacturers. Although the concept focuses on returning products from the far end of the supply chain to the source, it emphasizes moving goods from the traditional endpoint of the chain at least one stage backward (Association for Supply Chain Management, n.d.; Jenkins, 2021).
As a result, there are many reasons why a product may need to be returned (Association for Supply Chain Management, n.d.; Jenkins, 2021):
- First: it is not needed.
- Second: it has reached the end of its life cycle.
- Third: the item is damaged or flawed.
- Fourth: it needs disposal, recycling, refurbishing, or reselling.
Consequently, businesses benefit from receiving returned products in several ways. First, a streamlined return process builds customer loyalty and improves brand reputation. Second, it allows companies to recapture value from returned items (Jenkins, 2021).
Each industry has a unique process for handling returned products. Some businesses take back items to resell or repurpose them, while others focus on recycling to minimize waste (Association for Supply Chain Management, n.d.). In the case of the food industry, reverse logistics may tackle returned containers, packaging materials, and pallets. Furthermore, businesses in this sector must also handle rejected food shipments, which represent further logistical challenges, as they deal with risks such as tampering and food spoilage (Jenkins, 2021).
Types of reverse logistics
The following are the main types of reverse logistics management businesses may engage in (Association for Supply Chain Management, n.d.; Jenkins, 2021):
- Returns management refers to the process that occurs when a customer returns a product. It should provide a simple and seamless experience to enhance brand image and boost customer loyalty.
- Return Policy and Procedure (RPP): these are the guidelines that customers and employees must follow to complete the return process. Policies should be consistent, transparent, and easily accessible.
- Remanufacturing or refurbishment: this involves repairing, rebuilding, and reworking products to minimize financial losses from returns. It also helps reduce unnecessary waste. Typically, this process entails disassembling products to recover reusable or interchangeable parts and materials.
- Packaging management: this involves reusing various packaging materials to minimize waste and reduce costs associated with new packaging for returned items.
- Unsold products: this term describes the process of returning goods from end users back to manufacturers due to poor sales, delivery refusals, or excess inventory.
- End of service life: when a product reaches the end of its life cycle, businesses may need to recall it for proper recycling or disposal.
- Delivery failure: this can lead to products being sent back to the manufacturer if they cannot be delivered successfully.
- Rental equipment: this can be returned to the owning business at the end of the rental term so it can be reallocated, recycled, or disposed of appropriately.
- Repairs and maintenance: this process involves taking goods back to the source for repair or proper care.
Stages of reverse logistics
This area of supply chain management usually consists of the following steps (Association for Supply Chain Management, n.d.; Patel, 2024).
1. Processing the return
First, companies need a clear and consistent procedure for managing product transit from the end user back to the manufacturer. Adhering to this plan can help reduce costs.
2. Assess the return
The second step is to determine what to do with the returned product. In food manufacturing, the packaging may be recycled to create new packaging for other goods. Moreover, companies may recall damaged or flawed items for disposal to protect consumers. Additionally, businesses can redistribute returned products due to excess inventory, so they can curb waste and overall losses.
3. Effectively set in motion
Third, once a company has classified its returned products, it should promptly send them to their designated endpoint. Keeping these products in storage incurs unnecessary costs in both time and resources. Additionally, this stagnation undermines the efficiency of reverse logistics in food production.
4. Execute final actions
Finally, whether a returned product is meant to be repaired, recycled, or disposed of, businesses need to fulfill these actions to end the item’s process within the supply chain.
Today, figures show that roughly one-third of all produced or imported food in the United States goes to waste. In addition to actions promoting food preservation, companies need to adopt reverse logistics to reuse these products as resources and derive value from them as raw materials (FAO, 2022; WWF, 2022).
Given the high stakes involved, this process must always be effective and efficient. Optimizing reverse logistics in the food industry can result in significant cost savings and a noteworthy reduction in waste. Below, we outline some recommendations for establishing and managing a streamlined pipeline (FAO, 2022; Lezama, et al., 2021; Patel, 2024; WWF, 2023).
Train your team
Employees must understand what reverse logistics entail. Food loss or waste occurs at various stages of the supply chain, involving numerous factors. Hence, the work team must comprehend the process. For example, companies need to train employees in QA, QC processes, waste management, and merchandise removal and sorting in any distribution channel. Employees should be knowledgeable about the recovery, recycling, and management of reusable food and food that requires specialized handling.
Manage transportation
Optimizing the distribution and collection routes for products is crucial for efficiency. For example, businesses can reduce logistics costs for returned items by combining delivery and collection routes. Additionally, it is possible to transport expired items alongside those that are still safe for consumption, if there is no risk of contamination.
Apply new technologies
Technology offers a myriad of solutions to enhance the efficiency of the returns process. They tend to push for traceability, as real-time data is crucial to make timely decisions regarding food as a perishable product. Reliable information can lead to reduced food waste, more sustainable practices, and even safer operations. Systems that emphasize traceability provide valuable insights into patterns and weaknesses in the supply chain. This allows companies to enhance the production, packaging, storage, and transportation of food products to prevent future incidents.
Additional tools that enhance the efficiency of reverse logistics include:
- Routing systems to decrease the delivery time of returned food.
- Monitoring technology to control temperature and humidity throughout the supply chain.
- ERP solutions to more easily determine metrics such as the merchandise with the highest return rate or the return on investment of returned products.
In brief, efficient return practices of food products contribute to reducing the environmental impact attributable to waste. It can make food production more sustainable and, ultimately, aid mitigating climate change, halting the loss of nature, and providing sustenance for more people (FAO, 2022; WWF, 2022).Dream Foods Caribe aims for all-around world-class quality. We not only develop premium supply products for global food manufacturers across different categories; we are also committed to company practices that support smooth operations throughout the entire supply chain.
Referencias Bibliográficas
- Association for Supply Chain Management. (n.d.). What Is Reverse Logistics?
- FAO. (2022). Voluntary Code of Conduct for the Reduction of Food Losses and Food Waste.
- Jenkins, A. (2021). A guide to reverse logistics: how it works, types and strategies. NetSuite.
- Lezama, E., Lezama, M., Solís, A. and Figueroa, H. (2021). Analysis of the Reverse Logistics of Perishable Products in Mexico. Boletín Científico INVESTIGIUM De La Escuela Superior De Tizayuca, 6(12), 1-7.
- Patel, M. (2024). How Reverse Logistics Can Transform the Food Industry. Food Logistics.
- WWF. (2022). How the next Farm Bill can reduce food loss and waste in the United States.
