APU Business Original

Understanding How Forward and Reverse Logistics Differ

By Dr. Larry D. Parker, Jr.
Department Chair, Supply Chain Management, Contracting and Acquisition (SCA)

Have you ever heard of forward and reverse logistics? You probably haven’t, unless you’re part of a company’s supply chain and deal with the various steps involving the forward and backward movement of products.

It’s not a terribly intriguing topic for most people, but logistics matter. They influence a company’s bottom line and have an impact on the environment as well.

Related link: Handling the Supply Chain Challenges of the Holiday Season

What Are Forward Logistics and Reverse Logistics?

So do the terms forward logistics and reverse logistics even mean? How do they apply to consumers?

A quick, simple explanation of forward and reverse logistics can be found on YouTube. Jerry Edinger, CEO of the Customer Service Delivery Platform (CSDP) says, “Forward and reverse logistics have two basic meanings. Forward is moving parts forward towards your customers; reverse is bringing the inventory back from a customer to perform a reverse manufacturing process.”

Donna Michael, a CSDP employee, also shares why logistics matter to a company: “Companies that hold inventory and need to know where the inventory is stored, moved, or returned need logistics as part of an overall ERP (enterprise resource planning) solution.” 

Basically, logistics are necessary to keep track of products. Logistics also involves forecasting what products will be sold in the future and what products need revamping or removal from store shelves.

Forward logistics follows a product from its baby stage as a raw material until the very end when it becomes a product that is sold to the consumer. Keeping track of this path allows any mistakes in logistics to be discovered along the supply chain.

Also, tracking a product as it moves through the supply chain allows changes to be made in the product if necessary and to determine if the amount of that product needs to be increased or decreased, depending on consumer demand. Edinger notes, “Customer demand dictates the rate of forward logistics, and inventory is kept at each stage to manage variances in that demand.”

Reverse logistics involves the flow of a product in the other direction. The product goes back to a manufacturer to be fixed, replaced, or altered, or it can progress all the way back to a raw material to be recycled.

Related link: Podcast: AI and Robotics are Changing Organizational Logistics

The Five Areas of Reverse Logistics

According to Gary Allen of Ryder Systems, there are five areas that pertain to reverse logistics:

  • Returns
  • Recalls
  • Repair
  • Repackaging
  • Recycling

Returns happen for a variety of reasons. For instance, a product doesn’t work, doesn’t fit, is damaged or is unwanted by the end user.

Recalls are more serious and happen on the manufacturing end, rather than the consumer end. Recalls occur because the product is defective or poses a danger to those consumers who bought it.

Repairs occur because an item is damaged. If the consumer doesn’t want the product back after it’s repaired, it can go back onto store shelves to entice other customers.

Ryder also states that repackaging is necessary since oftentimes “most products are returned because customers are dissatisfied with them (in the neighborhood of 95 percent), not because there’s something wrong with them.” The product may simply need repackaging before it goes back to the store to be resold.

Recycling involves the recycling of the materials used to create a product. Once a product has outlived its working life (after all, smartphones last maybe two years, and newer versions come out even faster than that), the next step is for the materials in that product to be recycled.

Recycling seems to be a newer endeavor in logistics, and though a huge benefit is to the environment, companies can also benefit monetarily. Allen notes, “By salvaging, reclaiming and re-using components, companies can reduce costs and minimize waste.”

Both Forward Logistics and Reverse Logistics Remain Important

Forward logistics seems to be the simpler of the two types of logistics, but it is also the process that determines whether a product is good enough to be sold and attractive enough to be in demand. Reverse logistics need to also be in place because the five Rs are inevitable. Each facet of reverse logistics will occur to one product or another, and companies must have steps in place to deal with these adverse situations.

The information concerning forward and reverse logistics may not be exciting, enticing, or relatable unless you’re actively immersed in the process, but their importance for consumers and businesses is undeniable. If a company hopes to deliver a product to the consumer with minimal setbacks and no shortages, logistics must be set in place for a smooth production.

About the Author

Dr. Parker currently serves as the Department Chair, Supply Chain Management, Contracting and Acquisition (SCA) within the Dr. Wallace E. Boston School of Business. He serves as an adjunct faculty for various universities around the world. Dr. Parker is a native of Temple, Texas, a certified Inspector General by the Association of Inspector Generals, and a proud member of professional organizations advancing knowledge and professionalism, such as the Association of Supply Chain Management and the National Naval Officers Association.

Dr. Parker is a published author, inspirational speaker, consummate entrepreneur, and consultant who speaks worldwide on diversity, inclusion, and leadership. He holds a Ph.D. in organization and management from Capella University, a MBA from Liberty University, and a B.A. in history from Wittenberg University. Dr. Parker has a long history of passion and interest in local communities and is a proud member of Kappa Alpha Psi Fraternity, Inc. Learn more about Dr. Parker by visiting Dr. Larry D. Parker Jr. Inspires.

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