When we think about the supply chain and logistics, we typically think of them moving in one direction.
Products and materials generally move from sources to manufacturers, who create goods to send to distributors and retailers. Those distributors and retailers then sell finished products to end users, completing the chain.
While this is a stripped-down explanation of a complex system, it’s shared across nearly every industry. But did you know there’s an equally vibrant and complex supply chain system moving backward?
Known as reverse logistics, this Bizarro World supply chain starts with end users and works back toward the manufacturer. But how does this process work, what can we do to improve it, and how does it contribute to a more environmentally friendly future?
At its core, the growing reverse logistics industry is all about getting materials and products from customers back to the manufacturer.
Although our brains instantly think about damaged or incorrect orders, many returns include materials for reuse or recycling. When done correctly, reverse logistics closes product lifecycle loops and promotes greener practices.
For example, think about massive utility-scale solar projects. Those jobs often require hundreds of wire reels and pallets, but what occurs once workers install the wire? Wire reels are often still usable, so developers arrange to have them sent back to the manufacturer for reuse. Once returned, manufacturers repair and clean the reels, reload them with more wire, and send them to other sites.
Reducing system waste is critical for maintaining the material lifecycle and reaps benefits throughout the supply chain. Understanding and optimizing the material return process leads to better value through restoration, recycling, and reselling.
The entire goal of reverse logistics is to develop and maintain a circular economy, but what does that mean? Circular economies function as systems where people constantly reuse products and materials, keeping them in circulation.
“Kris-Tech utilizes reverse logistics programs with some customers for materials like reusable pallets and reels,” Kris-Tech’s Supply Chain Director Marcus Tagliaferri said. “We also have programs with many of our supply chain partners for processing and recycling metals, plastics, and wooden materials. The recycled reverse logistics programs are not only great from an environmental standpoint, by reducing overall usage, but also financially from a business standpoint.”
While it might take some upkeep and repair work to keep products out of landfills, the benefits are spectacular. Well-designed circular economies reduce overall waste, extend product lifecycles, and save companies money compared to buying new materials.
The average consumer doesn’t see more than step one of the reverse logistics process. But behind the scenes, a complex series of steps occurs.
When customers are ready to return reels, pallets, or other materials, they must submit a return request.
To do this, the customer contacts their distributor, reseller, or manufacturer, who gives them return information and authorization. Once the end-user has this information, their items are ready to return to the seller for acceptance.
The returned item reaches the facility a few days later, kicking off step two.
Facility workers inspect the pallets, reels, boxes, or other items to verify customer claims and determine their condition. Depending on the results, companies have several options, including reselling, recycling, and reusing.
For example, Kris-Tech may resell wire if it isn’t a custom order and there aren’t any defects. Meanwhile, the company can recirculate wooden and steel reels and pallets and recycle wire and cable insulation.
If workers find defects, the company has other options to reduce waste and still find cost-effective savings.
By now, workers have completed material inspections and are ready to decide what to do with them.
Typically, companies have a few options, including reselling, repairing/refurbishing, recycling, scrapping, or disposing.
Resell/Reuse – Companies can reuse certain materials like pallets, reels, and other shipping materials if they’re in good shape. This may also be true for products like wire and cable. If the wire doesn’t show damage, workers can restock and resell it later.
Repair/Refurbish – Accidents happen, but that doesn’t instantly turn the material into trash. If shipping materials come back damaged, workers can try repairing them. Doing this reduces manufacturing and product waste while improving the company’s long-term environmental impact.
The same actions are possible for damaged products. Workers can inspect wire and cable for damage, remove damaged pieces, and respool the remaining material for resale.
Recycling – Sometimes, a material is too damaged to do anything with. When products reach their usable lifespans, recycling closes the product loop and opens the door for new material applications. For materials like copper wire, recycling puts the metal back into use since it’s 100% recyclable without degradation.
According to the USGS, the United States recycled about 150,000 tons of old scrap copper in 2024, alongside another 720,000 tons of copper recycled from manufacturing operations. Combined, recycled copper materials made up more than one-third (35%) of the total U.S. copper supply.
Scrapping/Disposal – In cases where the product can’t be recycled, scrapping it can still reduce environmental impact. During scrapping, workers break down the item or material into parts and pieces, selling off what they can. Disposal, meanwhile, removes materials in the most environmentally friendly way possible.
By this point, the company has found and logged defects and must decide what to do with the material.
Depending on the product, manufacturers can repair and resell it, scrap it to recoup some value, or toss it out.
Repairing or refurbishing products involves a series of inspections and tests to ensure they work before reentering circulation. Recycling is just as rigorous because workers must extract as much value as possible.
Every supply chain relies on accurate product tracking and counts. Without them, materials can vanish.
Companies must keep track of materials every step of the way and ensure their accuracy. Incorrect data can be a killer because it aligns closely with inventory tracking and sales data. If workers can accurately track materials in the system, developing product flows and waste management practices will become easier.
Good material tracking also helps with planning and forecasting. If companies know more materials will return during certain times, they can adjust plans to maintain inventory levels. At the same time, correct counts help companies improve allocation metrics. This means there’s enough space for materials without leading to overstocks, stockouts, or other issues.
Not all customer returns are for pallets and boxes. Sometimes, products come back because they’re incorrect or damaged.
No matter the return type, the company gathers clues to improve its products and materials. This is especially true if they’re adhering to ISO 9001 certification standards. ISO 9001, specifically Section 8.3, relates directly to product development and design. According to Section 8.3:
“The organization shall establish, implement and maintain a design and development process that is appropriate to ensure the subsequent provision of products and services.”
While it seems like technical jargon, it simply means companies must make and sell products that work. When they don’t, the company should find ways to improve processes to prevent future problems.
Paying close attention to returns and finding opportunities for continual improvement leads to better customer outcomes.
Reverse logistics didn’t become a nearly trillion-dollar industry by luck – it’s a crucial aspect of supply chain management.
For as much as we’ve discussed products and materials, customer service is the focal point. A strong reverse logistics program improves both customer and company processes.
A strong logistics program reduces waste and improves accuracy, saving money and time. Manufacturers can also improve shipping methods, material handling processes, and inventory control when everything works together. That means easier shipment tracking and fewer lost or unaccounted products that lead to lost revenue.
No company wants to leave money on the table, especially when it affects so many aspects of business. Investing in strong and resilient reverse logistics programs does more than improve material tracking and the bottom line.
Return services are more efficient when companies work with responsive third-party logistics (3PL) partners. A 3PL company uses real-time data to offer snapshots of shipments and coordinates pick-ups, deliveries, and transit. Along with effective communication, companies can limit lost time and materials, build supply chain trust, and save money.
When customers send back materials like reels, pallets, and other products, companies can reuse them for future orders. If the materials aren’t in great shape, the company can recycle or repair them, saving money.
When products come back to the manufacturer, it’s possible to refurbish and resell them or recycle them. In either case, less material goes to the landfill, and the product’s lifecycle becomes cleaner.
It shouldn’t be a shock that fast, reliable material returns are table stakes for any company.
People return finished products and materials every day. Making it easy for them to do what they have to do and move on with their lives helps build brand loyalty and support. Companies that don’t develop and adapt their reverse logistics processes leave opportunities on the table.
Today’s customer demands are more discerning and selective than ever. If the company they’re working with makes returning materials difficult, they’ll move on to someone else.
Reverse logistics offers another opportunity to supercharge company performance, build customer trust, and reduce waste.
“It’s incredible to see how much reverse supply chains have developed recently,” Tagliaferri said. “Ultimately, it equates to less materials going to landfills and a more sustainable environment for future generations.”
Customers don’t want to deal with unintuitive and drawn-out return processes, especially when they have things to do. Investing in reverse logistics is a game-changer, especially when industry competition is fierce. Simplifying returns isn’t just good business; it becomes a critical selling point alongside quality and price.
Deploying and supporting a robust reverse logistics model also makes sense for the planet. Improving returns keeps the circular economy moving, improves product life cycles, and reduces our carbon footprint. Additionally, returns offer critical clues for companies looking to improve their service. Every return has a story – knowing why materials come back helps refine development, manufacturing, production, and other touchpoints.
Let’s face it, returns are a part of every company’s life. If implemented correctly, reverse logistics improves the buying and return experiences while completing product lifecycles.
That sounds like a win-win for everyone.