Pillars of Sustainability in Reverse Logistics- Part 2: Economic

Are you looking to understand the impacts of your reverse logistics process on your triple bottom line? Want to tighten up processes and improve efficiencies to satisfy all your stakeholders?

Ingram Micro Lifecycle is a global third-party reverse logistics provider, supporting customers in different industries with their technology requirements. Our services enable a circular economy while also working to recover the maximum value without compromising sustainability efforts.

In the second part of our sustainability pillars series, we summarize the environmental pillar from our previous article and delve deeper into the economic pillar of reverse logistics.

What are the three sustainability pillars?

These pillars are as follows:

Environmental – eco-friendly practices such as recycling and reuse of materials. Reducing the volume of harvested raw materials for manufacturing.
Economic – including the monetization of assets and harnessing new revenue streams.
Social – the fair labor practices within reverse logistics roles.

We covered the environmental pillar in our previous article.

This week, we’re looking closer at how reverse logistics intersects with the economic pillar of reverse logistics.

The economic pillar of reverse logistics

Review reverse logistics processes regularly to tighten efficiencies and cut financial leakage whenever possible. Identifying these opportunities will enhance the cost-effectiveness of the reverse supply chain. It will also maximize the value of returned products.

We’ve outlined below the ways reverse logistics supports the economic pillar of sustainability.

Value recovery and cost savings

View the reverse supply chain as a revenue stream. It has the supplementary capability of boosting customer retention and acquisition. Keeping the reverse logistics process efficient increases asset recovery. Accurate tracking, visibility, and accountability throughout the reverse supply chain reduce errors, losses, and risks. More assets processed means more potential for value recovery.

The process also saves on disposal fees as more materials and products will be recycled, refurbished, and repaired, ahead of reuse. Harnessing used products provides a source of donor parts, where the original product cannot be restored. This minimizes the investment required on brand-new parts and componentry.

Maximize efficiencies through streamlining, automation, and outsourcing of reverse logistics. This improves the speed, accuracy, and quality of service. Working with a reverse logistics partner effectively supports the volume of products with the right equipment, tools, and technicians, increasing the yield.

The speed of processing is key in combating the factors behind depreciation. Quicker product processing and turnaround means fewer risks facing the potential value recovery.

Improving product development

A full end-to-end reverse logistics process will involve product strip-downs and root cause analysis. You'll understand common problems that end-users face when using or experiencing the product. You need to keep track of faults via product returns and customer services.

These factors are key for feeding up the supply chain and influencing future product development.

The more you can do to reduce issues, the lower the impact these will have on future sales and product returns. Both affect costs generated.

Trade-in programs

Trade-in programs support the environmental pillar, reducing products headed for landfill. Additionally these assess their residual usefulness. This supplies products for secondary market sales.

These assets that came in via the reverse supply chain have a residual value and can be monetized. Using a third-party trade-in partner means they do the legwork. The retailer or manufacturer doesn't need to involve themselves with the product itself. This makes it a very low-effort process. The reverse logistics partner can process, reuse, and remarket the products to unlock greatest value.

This opens up the potential for capturing new customers. 1 in 6 people in the UK have bought a refurbished smartphone, with 1 in 3 expected to buy refurbished technology throughout Q4 of 2023, Your products are accessible through the offer of potential discounts on new purchases in exchange for an eligible product trade-in.

Recommerce

This is sometimes known as remarketing, but that term can mean something else. Recommerce is the re-sale of a previously owned product. Think second-hand, preloved, used… It was once owned and then unwanted. This provides a forward outlet for goods you’ve recovered via reverse logistics.

Recommerce provides the opportunity for a whole new generation, a subset of the market, and consumers to experience the product at a lower cost. Through recommerce practices, new sales of higher-end items are pushed into the market which customers may not be able to access because of price. As a result, it drives awareness of the brand, unlocks the affordability challenges, and introduces new buyers to other associated products.

For example, a potential customer may not be able to afford the product brand-new. With the lower cost of a recommerce product, they can make the purchase. Once they associate your brand with quality and products they can trust, there’s the possibility of purchasing more recommerce products from your brand.

Through recommerce opportunities, you can monetize the assets after they’ve been repaired and refurbished. With these assets, you can balance and fund the supply chain, benefitting from considerable revenue returns.

Ownership options

Companies no longer have to fund the purchase of technology outright. Through a device as a service (DaaS) program, these can be paid for monthly, with the upfront cost provided by a financial solution. The financial services provider then owns the products with the company paying the monthly fee to use them.

Without a robust reverse logistics process to retrieve these devices at the end of the contract, the products would be unavailable for re-use or re-lease, which is the foundation of the program.

Ready to improve your economic impacts with reverse logistics?

The economic benefits of your reverse logistics process, when optimized, can include an untapped revenue stream, new financing solutions, and cost savings further up the supply chain.

Ingram Micro Lifecycle are market-leaders in reverse logistics, working to create solutions through innovation that enable a circular economy for our customers’ technology.

Look out for our next article in this series covering the pillars of sustainability, when we’ll discuss the social pillar. In the meantime, if you have any questions about our package of reverse logistics solutions, reach out to our team of experts.