Defining Logistics

On the glossary page of AboutRetail.net, logistics is defined as "the planning and execution of product distribution". When you purchase milk, bread or just about anything these days from your local store, the journey from producer to store will have been thoroughly planned and executed, unless, of course, your store happened to have a cow and a bread mill in the back yard.

Logistics is a word that has morphed from one definition to another, depending on the era and depending on the application. It can be applied to calculations (its original meaning) as well as to military planning. In fact, it has been used in a wide variety of settings. The word logistics has such a wide sweep, it is danger of having no meaning at all. In recent years it has been adopted by what used to be known as the distribution industry.

Distribution is a simple matter of throwing some goods into a truck, ship or aeroplane at point A and throwing them out point B......oh, plus the little matter of getting from A to B. Logistics is a word that encompasses distribution, but also takes into account the fact that the vehicle needs to be ready for service, the driver (or captain) must also be available and with enough hours on his shift, the goods to be collected are ready, the journey has been planned, including en route stops, the recipient is ready to receive the goods...and there are many more parts of the logistics jigsaw. The word logistics fits the bill very well. All those definitions it has collected over the years are perfectly appropriate to the multitude of tasks that are performed and the multi-task attributes of its performers (some say "logisticians") that all come under the banner of logistics.

The Need to Move Goods Backwards

Industrialized economies have honed their logistics skills to the point where vast quantities of goods can be efficiently moved from many locations to many more locations, via many stop-off points, all tracked and counted. Like a well-oiled machine. A well oiled machine with no reverse gear, that is. The greasy spanner in the works of this machine is the need to move things from B to A. Many logistics set ups are great at forward movements but are lousy at reverse movements, or reverse logistics as it is commonly known. It could be argued that the more sophisticated the forward logistics is, the more clumsy is the reverse logistics.

There are many reasons for this. One chief reason is that paperless systems have been built into forward logistics where products are scanned as they pass a threshold. Trouble is, some systems are not programmed to accept products scanned in reverse. As reverse transactions have historically been rare (the odd returned consignment, perhaps), old fashioned pen and paper has been used to record them. Another reason is that once a vehicle has unloaded, it may not return to its base. Sending a box back is not a simple matter of running the system in reverse. In a simple one-to-one distribution system, this would be entirely possible. The vehicle departs A, arrives at B, unloads and loads the return box for the return journey to A. Increasingly, this simple transaction is not appropriate in modern day logistics. In a one-to-many system the vehicle may end up at the wrong end of the country (or world). In another common scenario the vehicle may go on to collect another load and need to leave the last port of call empty.

Why there is a Growth in Reverse Logistics

Most organisations can handle a gentle trickle of paperwork and can fit a few returned boxes on a passing vehicle, so what is the problem? Well, the problem is that traffic in goods travelling backwards through the supply chain is no longer confined to a few unwanted returns. The following list represents the new pressures to send goods backwards:

- Goods destined for recycling
- Reusable packaging
- Goods being disposed of

I'll take these areas in turn:

Goods Being Recycled:
There is global pressure on us all to improve on our efforts to recycle goods. This pressure is uneven, with a burden placed on business (and local authorities) that is out of proportion to the burden placed on individuals. Whether this is right or wrong it is, in most countries nowadays, this is the reality that must be faced. More and more vehicles are taking goods back in order for those goods to be fully or partially recycled. This increase is likely to accelerate globally over the next few years.

Reusable Packaging:
Environmental needs have also resulted in a requirement to reuse packaging much more than we have done in the past. Old fashioned fibreboard boxes that get dumped after one journey are no longer acceptable in an increasing amount of companies. This is not just an environmental imperative, with the legal and moral pressures to comply, it is also an economical necessity: very often reusing packaging saves money.

Disposal
In some countries there are new laws - or will soon be - that compel companies to take back certain goods when customers wishes to dispose of them. These may be electrical items or products containing hazardous, or potentially hazardous, material.

Using Third Parties as a Stop-Gap All in all, the reverse logistics channels will become busier and old ways of doing things will need to be revised. For now, some large companies with slick but complex forward logistics systems are ducking the issue altogether and employing third parties to deal with returns. This way they can continue as if nothing has changed, not having to worry about filling return journeys with these items. Using third parties is OK as a short term gap filler. It allows a breathing space and isolates the add on costs of reverse logistics. By doing things this way, companies can then set about integrating reverse logistics with their current forward logistics having learned lessons through their third party partners. Third parties are good at dealing with goods that need specialist handling and in particular goods that require a controlled and specially licensed disposal regime, but, in the long term it makes more economical sense to take a holistic approach to the movement of goods, regardless in what direction they are travelling. The reason is that the same vehicles and the same personnel are perfectly capable of moving goods both ways. It's just the systems that need to be updated. If this is not done, then you will end up with logistics where the tail is wagging the dog. Logistics is built around movement of goods. The goods should not be moved according to the dictates of the system. This is not logical; and you can't have illogical logistics, can you?

Just take goods that are to be disposed. Most goods that are destined for disposal, will contain parts that have a value, either to sell or to be reused as components in new products. If a company supplied these goods in the first place, surely it would make economic sense to recover components from disposal items rather than see them sold off cheaply. This is where the use of third parties to handle disposal returns might eventually be seen as an unnecessary overhead. If the goods originated in a factory and that factory needs the recovered parts again, why is there a need for a third party to collect returns from the customer, strip out the parts and then send these parts back to the factory. Surely the production environment in a factory is the perfect place to do the whole job. Those that make the goods will be the best judge of what parts can and cannot be reused.

Reverse logistics is a growing aspect of nearly every supply chain. Those that are embracing this fact and are building reverse flows into their systems will be the winners.

Vernon Stent is the author of "Waste Watchers" (now revised as an e-book) and an authority on Global Transit Packaging and Reverse Logistics.