Why Reverse Logistics is Crucial to Ecological Sustainability and Good For Your Business
With climate disasters worsening every year, it’s no wonder environmental sustainability is a hot topic these days.
According to the Business of Sustainability Index of 2022, two-thirds of American consumers are willing to pay more for an environmentally friendly product. These are products that clearly state eco-conscious intentions – and they are often perceived as having higher value.
There are many economic benefits to taking environmentally conscious action in your business:
- Government incentives available like tax reductions and subsidies to companies that prioritize sustainability.
- Growing demand for eco-conscious brands and products among consumers.
- The peace of mind that comes from knowing you're creating a better world for future generations
So where do most businesses get sustainability wrong? In most cases, the first place they need to look is their returns. Up to 25% of returned items end up in landfills. When customers return goods that are simply thrown away, your business misses out on huge swaths of potential revenue and product value.
Improving your returns process – often called reverse logistics – can increase your profits and help the environment to boot. Some of the most prolific brands in the world are already taking drastic measures to improve their reverse logistics.
We’re going to walk you through everything that goes into reverse logistics, how large brands do it, and how CBIP can help your business follow suit.
What is Reverse Logistics?
The objective of standard logistics is to deliver products from a warehouse or manufacturing site to the customer. The goal of reverse logistics is to recover as much value from used products returned by customers as possible through recycling and refurbishment. This saved profit can then be reinvested into your business to accelerate growth.
Reverse logistics keeps materials out of landfills, where they would otherwise stay until they decompose. Many items release methane gas as they break apart that contributes to global warming. Some waste, such as electronic devices, never decomposes.
How Reverse Logistics Work
To begin creating reverse sustainable reverse logistics, you need to understand the entire life of your product from beginning to end. You’ll likely need to ask yourself some important questions about your product:
- What will happen to your product when it reaches the end of its life?
- Can its materials be recovered and recycled?
- How can the product be disposed of if unrecyclable? Are its materials toxic and harmful?
For example, tech products, especially mobile devices, have a relatively short lifespan. After dying, they become e-waste. Some ways to design products with the environment in mind are to use biodegradable materials if possible.
Generally, there are three scenarios you need to consider upon receiving a shipment of returned products:
1. The product is still functional and requires minimal repairs before becoming resellable.
In this case, you should repair, repackage, and then resell the item on the market as a refurbished product. This is the best possible case because recovered asset value is maximized and minimal waste is produced.
2. The product is no longer functional but contains valuable and harvestable parts.
In these cases, you should enlist a service to break down and retrieve components whenever possible. Recycle these parts back into your product lines to keep them out of permanent disposal. It’s important to remember that some components that may not return value at a small scale may return a higher value at a large scale.
3. The product is no longer functional and does not contain materials that are valuable enough to outweigh break-down and recovery costs.
When your product has definitively reached the end of its life, you should do everything in your power to dispose of it responsibly. In some cases, this means hiring a professional waste removal company.
👉 Fast fact: Burning trash is considered much worse for the environment than leaving it in a landfill.
How Apple Used Reverse Logistics to Promote Sustainability
Apple Inc., which is currently the largest American publicly traded corporation by market capitalization, has been carbon-neutral through corporate operations since 2020. It is currently on a mission to become carbon-neutral throughout its entire supply chain by 2030. They also want to transition their entire manufacturing supply chain to 100% renewable electricity by 2023.
For almost 10 years, Apple has incentivized its customers to recycle out-of-date products through its trade-in program. Based on the quality of the trade-in item, Apple rewards customers with store credit to put towards a newer Apple product.
This program keeps electronic waste out of landfills and maximizes the amount of waste that is handled in an environmentally responsible way. Apple also gets to sell its products on the refurbished goods market.
H&M’s Garment Clothing Program
Trendy fast-fashion retailer, H&M launched its Garment Clothing Program in 2013. This program was predicated on the idea that less than one percent of the materials used to make clothing are recycled properly. They want to keep these thousands of tons of textiles from decomposing in landfills.
In their program, customers can simply take a bag of unwanted clothes (any brand, any condition) to any H&M store. After handing in the bag to a register, they receive a voucher for their next purchase at the store. In 2020 alone, H&M saved 18,800 tons of textiles from landfills, the equivalent of 94 million T-shirts.
The cloth that can be recycled is then turned into new fashion pieces in H&M’s Conscious Choice lines, available for both men and women.
Why Most Companies Don’t Do Reverse Logistics
Planning and executing a profitable reverse logistics strategy is complicated. Supply chains are efficient due to their scale. In reverse logistics, items are returned and processed one at a time, which is normally inefficient and costly – especially for smaller businesses.
Both Apple and H&M have reverse logistics teams who only need to focus on this one job. They also have resources and funding unavailable to the majority of businesses.
So does that mean that as a growing business you can’t have great reverse logistics? Absolutely not. There are a growing number of logistics businesses that help you manage reverse logistics affordably at any size. We’re one of them:
Let CBIP help plan your reverse logistics
At CBIP Logistics, we’re a 4th-party logistics (4PL) company committed to sustainability. When you sign a contract with us, you sign a contract with a network of top tier 3PL warehousing, shipping, and fulfillment providers around the world who share our vision.
As a smaller company (well, smaller than Apple) you’re probably concerned you won’t get the volume rates necessary to do reverse logistics right. That’s where working with a 4PL is an advantage. Our partners work with all of our clients letting you leverage network effects for better volume pricing.
The best part? We’re always expanding our network and can help you adapt your network as your business grows.
Book a free consultation with CBIP Logistics and let’s talk about how we can make your business more eco-friendly.