Reverse logistics is not a new concept globally, but it has been made more popular with the rise of e-commerce and online purchases. Reverse logistics in Africa is also gaining popularity, although African businesses have slightly different realities from the rest of the world. In this article, we review some of those realities.
Getting the product to the consumer is all that matters, so why are businesses increasingly concerned with the reverse?
What is Reverse Logistics?
Logistics and Supply chain management usually focus on delivering goods and services from the manufacturer to the consumer.
However, there is a phenomenon within the logistics and supply chain concept that focuses on taking the goods from the consumer to the manufacturer.
Reverse logistics is the process of getting a product from the consumer back to the business that initially sold that product to the consumer. Reverse logistics is prevalent in the goods supply chain, and the cost is often on the business.
Types of Reverse Logistics in Africa
The types of reverse logistics are the reasons behind reverse logistics. There are many forms around the globe, but in Africa, there are mostly four types.
- Product Return
- Refurbishment and Remarketing
- Unsold Products
- Rentals
These four types of reverse logistics reflect how businesses interact with their consumers.
1. Product Return
This is the most popular type of reverse logistics on the continent, especially with the rise of e-commerce. Logistics has become more complicated for businesses and, as such, has led to many errors or mistakes in delivery.
Product returns are primarily because of errors on the side of the business; because of that, they shoulder the brunt of the cost. There are a few reasons for product returns, such as wrong purchases, product defects, and wrong order deliveries.
2. Refurbishment and Remarketing
This type of reverse logistics is undertaken to repurpose finished or sold goods. In this scenario, a manufacturer buys back sold goods from the consumer and takes out the viable materials within the product to upgrade, repackage, clean, or repair before reintroducing them into the market.
The consumer often bears the cost of this type of reverse logistics.
3. Unsold Products
This type of logistics is not necessarily between manufacturers and their final consumers. It is between Manufacturers and retailers. In Africa, most businesses, especially manufacturers, release their products to retailers on credit. This method facilitates sales and saturates the market with its products.
In cases where these businesses cannot or have difficulty selling the products. Instead of manufacturing other products, the business can repossess the product and resell it to other retailers who can or are selling better.
4. Rentals
In Africa, a lot of business models rely on renting out products to consumers. This model type is usually prevalent in car hires or mobile rental properties. It entails leasing products to the consumer for a period of time, usually days or weeks, and then collecting the product after the agreed time elapses.
Benefits of Reverse Logistics in Africa
There are several benefits for businesses to engage in reverse logistics in Africa. In this section of the article, we review some of them.
1. Customer Satisfaction
With businesses going online, traditional brick-and-mortar stores continue to shut down at an alarming pace, as highlighted in this article. This also means that consumer interactions on a face-to-face level are significantly impacted.
To increase customer satisfaction, businesses must find other means to guarantee consumer loyalty.
Examples: Fashion or clothing stores used to allow consumers to try on clothes before purchasing, but today, with sales moving online, it is a little difficult. Retail businesses in African fashion are increasingly selling to consumers with the chance that it may not fit even when consumers buy their size category.
2. Cost Savings
Supply chains in Africa use reverse logistics as a cost-saving method. This idealogy is prevalent in the refurbishing and unsold goods type of reverse logistics.
Instead of spending more resources on raw materials and the production process. These supply chains can buy back used goods from consumers at a cheaper cost and use parts from those goods to make new or refurbished products at a cheaper cost.
The same applies in the case of unsold goods. Instead of hoping the retailer eventually sells the goods and risk potential damage, the business or supply chain can recover such goods and sell to other retailers while reducing waste and production cost.
3. Environmental Sustainability
Africa has a waste problem which negatively impacts the continent. One of the solutions to that problem is reverse logistics. It is a great method of reducing waste and its environmental impacts.
For example, plastic is a terrible waste for the environment but is highly reusable. Businesses and supply chains can retrieve and reuse them in future products instead of making new ones and adding to the waste problem.
Another great example is the battery. According to this article, batteries have a recycling rate of close to 100%, making reverse logistics a very good investment.
4. Improved Inventory Management
Supply chains can better manage or regulate their inventories through reverse logistics by tracking and analyzing the reasons for returned goods. This enables them to improve their supply process to take corrective measures to reduce future return rates or risk of customer dissatisfaction.
Let us face it. Consumers do not like returning and waiting extra days for their goods to arrive. Especially when they need it urgently. A supply chain with a high return rate risks losing consumers.
Challenges of Reverse Logistics in Africa
There are unique challenges supply chains and businesses in Africa face when it comes to the issue of reverse logistics. This makes it perhaps more challenging for these businesses and their supply chain to implement effective strategies.
1. Infrastructural Limitations
Poor infrastructure and transportation modes still plague the continent, negatively impacting the reverse logistics efforts of businesses and supply chains.
Poor road networks, warehousing, power, and lack of specialized equipment make it challenging and expensive to seamlessly manage the flow of goods in a reverse logistic operation.
2. Consumer behaviour and Attitudes
As much as businesses and supply chains hate to admit it, consumer behaviour and attitudes can be a big issue in reverse logistics. There are countless stories of consumers buying a perfectly good product and then trying to return them just because……
Because of a lack of awareness and trust on the part of consumers, businesses tend to favour the pay-on-delivery policy, which is a double-edged sword.
Businesses deliver goods, and the consumers are nowhere to be found or flatly refuse to collect the products. Now, because these businesses are yet to collect money, there is very little they can do about it.
All these can make reverse logistics very expensive and frustrating for businesses and supply chains.
3. Resource Constraints
In Africa, Supply chains and businesses still struggle with limited access to resources such as technology, finances, information, and trained personnel. These can make it difficult to navigate effectively and invest in reverse logistics within the continent.
4. Poor Supply Chain Visibility
Supply chain visibility is essential for the seamless management of the supply chain. However, certain elements must be in place for this to happen. Examples of such factors are technology and the flow of information across the supply chain.
When there is poor supply chain visibility, stakeholders within the supply chain find it difficult to effectively track, monitor, and manage reverse logistics in Africa.
Strategies to Optimize Reverse Logistics in Africa
An optimized reverse logistics operation accounts for speed, cost, and efficiency. To actualize this, supply chains and businesses must implement well-thought-out strategies.
In this section of the article, we review five of these strategies.
Centralized Return Centers
A central returning facility or warehouse allows your business or supply chain to manage return goods effectively. This entails sorting, routing, and allocating returned goods to the next phase of the return process.
Streamline Return Process
To enjoy an efficient return process, you can start by helping the consumers by streamlining the process. You can achieve this through easy-to-use options, convenient return options, and clear instructional manuals.
Leverage Technology
The impact of technology on modern supply chains and logistics can not be overemphasized. This makes it much more relevant to your reverse logistics process. By leveraging technology solutions and software, you can automate and streamline the process on the back end.
You can also track, monitor, and analyze the entire reverse logistics process through technology, conveniently enhancing decision-making capabilities.
Collaboration with suppliers
Developing close collaborations and partnerships with suppliers such as logistics and recycling companies helps you build a robust reverse logistics network. This helps you optimize the entire process and seamlessly link to your supply chain.
Optimize Transportation Modes
Transportation is indeed quite poor on the continent, but using a combination of transportation modes, tools, and vehicles can enhance reverse logistics, making the process less expensive and convenient for your supply chain or business.
FAQ on Reverse Logistics in Africa
1. What makes reverse logistics important?
Optimizing the utilization of resources, decreasing waste, and increasing satisfaction among consumers depend on reverse logistics. It reduces environmental impact, increases overall supply chain efficiency, and enables firms to recoup value from returned goods.
2. What common causes of product returns in reverse logistics are there?
In reverse logistics, product returns can happen for various reasons, including client discontent, product flaws, wrong shipments, expired goods, overstock circumstances, and product recalls.
3. How can businesses measure the success of their reverse logistics initiatives?
Reverse logistics can be evaluated for effectiveness using key performance indicators (KPIs) such as return rates, processing times, customer satisfaction scores, cost savings, and environmental impact measurements.
These metrics should be regularly monitored and analysed to assist firms in finding areas for improvement and promote ongoing optimization.
4. Are there specific regulations or compliance requirements related to reverse logistics?
Yes, there may be certain laws and compliance standards pertaining to reverse logistics, depending on the business and the type of returned goods.
These may include recycling requirements, product recall compliance, safe disposal of hazardous items, and data privacy considerations when managing returned goods.
5. How can businesses dispose of or recycle returned products in reverse logistics?
Businesses should handle the correct disposal or recycling of returned goods in accordance with local laws and in cooperation with authorized recycling or disposal facilities.
As a result, proper waste management techniques are encouraged, and environmental regulations are adhered to.
Conclusion
Although reverse logistics in Africa is a relatively new concept for businesses and supply chains, it is an increasingly favoured concept in the continent. However, the realities might be different for these businesses. This article provides a guide to help navigate the process.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
