Logistics is the inclusive process of managing how resources are procured, stored, and distributed in the production of goods, and how those finished goods are delivered to the end consumer. Initially, “logistics” was used as a military-based term that referred to how military personnel would acquire, stock, and move equipment from one place to another. As time passed, this term became common jargon in the business world, especially those located in the manufacturing industry. In this context, logistics refers to the movement of goods along the supply chain.
Recently, the exponential growth of eCommerce has had a massive influence on logistics and supply chain management. Various organizations are compelled to upgrade their infrastructure and operations to generate profits in today’s highly competitive marketplace. As a result, more and more businesses have started to apply forward logistics and reverse logistics strategies to gain cost efficiencies, economies of scale, profitability, as well as customer loyalty. Whether you design these strategies on your own or take the help of a 3PL logistics provider, you must be aware of what is forward and reverse logistics and the difference between them.
What is Forward Logistics?
Forward logistics refers to the management of goods as they are transported from the supplier to the end-user. It involves product development, procurement of raw materials, manufacturing, transporting goods to warehouses, and delivering them to the customer. Moreover, the inventory is maintained at each stage to cater to both the general requirements as well as any sudden changes in customer demand.
The monetary value of the product rises at each stage in the forward logistics chain. In other words, the greater the distance between the first and the final stage, the more valuable the product will be. However, this method is not an efficient way to increase the profitability of a product as the cost of each additional step may outweigh the sales value of the product. Therefore, businesses aim to reduce the steps between the first and the final stage to increase profits and stay competitive in the market.
What is Reverse Logistics?
As the name suggests, reverse logistics is the opposite of forward logistics. It is the management of goods as they are transported back into the supply chain after being delivered. Reverse logistics involves asset recovery, product disposal, and recycling programs.
Through reverse logistics, businesses can recreate value from used goods and decrease their carbon footprint. It allows companies to be eco-friendly as well as cost-effective. Refurbishing defective and damaged items enables companies to resell products. Moreover, items beyond repair can be recycled to create new products resulting, in fewer items being wasted.
The Difference Between the Two Types of Logistics
After understanding what forward and reverse logistics mean, you can clearly distinguish between the two types of logistics. However, the differences between them are more than what meets the eye.
Planning: Due to uncertainty, planning for reverse logistics is difficult as compared to forward logistics. The organization controls the movement of goods in forward logistics, allowing them to plan the process accordingly. However, in reverse logistics, the control is shifted to the customer; hence the element of uncertainty is introduced to the mix.
Transportation: One of the most significant differences between reverse and forward logistics is the number of origin and destination points. In forward logistics, there is a single origin and multiple destinations. This feature lets companies design a highly streamlined supply chain to avoid delays or errors. In contrast, reverse logistics has various origins but only one destination. As a result, it can get very confusing for the customers to return their products to the company if no proper system exists.
Packaging and Product Quality: Packaging and product quality vary drastically between forward and reverse logistics. Forward logistics gives the company the ability to control the quality of goods they send to their customers. As a result, the quality is higher as compared to reverse logistics. In reverse logistics, the customer sends the product back to the company. Most of the products returned have poor quality and lousy packaging.
Regardless of the differences between reverse and forward logistics, each type has an essential role in an organization. If you don’t have the necessary expertise to manage your forward and reverse logistics, don’t worry! 3PL logistic providers can be of great help to operate your company’s logistics management and supply chain, allowing you to focus on other aspects of your business.