The costs of reverse logistics amount to more than $750 billion per year, and the demand for reverse logistics has risen in recent years with the rise of e-commerce.
According to Stacy Rudolph of Business to Community, up to 30% of all products ordered online become returns, placing an insurmountable burden on reverse logistics.
Using a combined blockchain and reverse logistics strategy can help alleviate these costs, and supply chain executives need to understand a few things about it.
Risk within reverse logistics is higher than that and forward logistics. Manufacturers and shippers have a duty to ensure sustainability, reports Supply Chain Dive, and an effective sustainability program must consider what happens to products after their lifespan.
In other words, the final resting place for products is the burden of manufacturers, and some products, such as smartphones and electronics, can pose a risk of harm to the environment and the personal information of device users.
Consumers are turning toward eco-conscious decisions in purchases, and blockchain technology could be the solution.
They expect manufacturers to adhere to the guidelines within the International Organization for Standardization (ISO), governing proper disposal of goods, including reclamation of raw materials and removal of personal information from electronic devices.
ISO standards are essential to effective returns management. Since products may be used before returned, the burden of ensuring the privacy of consumer data and integrity of the product falls to the manufacturer or shipper. Other products, such as those used for hygiene or personal uses, could increase the risk of cross-contamination throughout the supply chain. This is why blockchain in reverse logistics go well together.
Download the White Paper: An Introduction to Blockchain in Supply Chain Management
Blockchain technology has major implications for monitoring products at the end of their lifespan through devices connected to the Internet of things, and in the spare parts supply chain, which is part of reverse logistics, blockchain technology can be used to reduce over- and under-ordering, ensure compatibility of spare parts with items being repaired.
This is not limited to small items, and it includes major sectors of the economy, like the automotive industry. As explained by a Technavio Report, asserts Business Wire, blockchain technology can enhance the flow from information in reverse logistics, helping manufacturers understand the full cycle of their products, even after disposal. The technology also has implications for handling product recalls, especially in the food and drug sector.
The road to better reverse logistics is not always clear, and supply chain leaders need to understand a few best practices for implementing combined blockchain and reverse logistics strategies. These practices include:
Shippers and supply chain leaders have a big opportunity to recapture lost costs through more effective reverse logistics and comprehensive, easy returns management. It’s not just about saving money in returns; it’s about positive customer experiences and interactions.
Combining blockchain and reverse logistics will generate a hassle-free way of connecting existing supply chains to reverse logistics and keeping costs down for consumers.
Related Article: How Will Blockchain Ledger Technology Impact Shippers?
Related Blockchain White Papers
An Introduction to Blockchain in Supply Chain Management
In the new, exclusive, and educational resource, “An Introduction to Blockchain and Its Potential Benefits and Drawbacks in Supply Chain Management,” you will learn and understand Blockchain's role in the industry and what supply chain executives need to consider now and in the future. Download Now!
Why Blockchain will Create Extreme Supply Chain Management Optimization
This is a must read for those in the supply chain who are keeping their eye on Blockchain technology and looking for supply chain management optimization. Download Now!
How Blockchain will Aid Retailers & Shippers in Achieving Omnichannel Supply Chain Goals
This educational white paper is a must read for shippers & retailers alike to learn how blockchain can aid in achieving omnichannel supply chain goals. Download Now!