What is reverse logistics
Reverse logistics is the backward flow of the supply chain: a product, part or package goes from the customer (or point of consumption) back to the manufacturer to be reused, recycled or properly disposed of. The path is always the same: return, sorting and disposition.
Many countries place legal duties on producers for products at end of life, usually called extended producer responsibility. In Brazil, for example, Law 12,305/2010 makes reverse logistics mandatory for batteries, tires, lubricating oils, lamps, pesticide packaging and electronics, among others. For the forward flow, see supply chain.
Reverse logistics visual map
The map shows the return, sorting, possible dispositions and the calculation in this article's example.
Types of reverse flow
Not every return is the same. Treatment depends on where the material comes from.
| Type | What comes back | Example in manufacturing |
|---|---|---|
| After-sales returns | Defective product, warranty claim or order error | Part returned by a customer for nonconformance |
| End-of-life | Product at the end of its useful life | Battery, tire, used oil, electronics |
| Returnable packaging | Pallets, totes, containers | Plastic tote that circulates between supplier and plant |
| Process waste | Scrap, offcuts, rejects | Metal chips sold to recyclers |
| Recall | Lot withdrawn from the market | See traceability and recall |
The flow: return, sorting and disposition
- Collection and return: the item is picked up from the customer, distributor or drop-off point, with authorization and a record of origin.
- Receiving: identification, lot number and visual inspection on arrival, in an area separate from good stock.
- Sorting: inspection and testing to grade the condition of the item.
- Disposition: direct reuse, repair or remanufacturing, material recycling or environmentally sound disposal.
- Recording and restocking: the recovered item enters stock with traceability; the financial result is calculated.
Physical segregation and location of returned goods follow the logic of picking and storage; a WMS helps control each item's status.
Disposition hierarchy
The closer to the original product, the higher the recovered value. The order of preference is:
| Priority | Disposition | Value recovered |
|---|---|---|
| 1 | Direct reuse or resale | Almost the full product value |
| 2 | Repair or refurbishing | Most of the value, less repair cost |
| 3 | Remanufacturing | Part performs like new, at lower cost than a new one |
| 4 | Material recycling | Value of the material, not the product |
| 5 | Environmentally sound disposal | None; it is a cost |
Worked example: returned used parts
Fictional example. A component plant receives 400 used parts (cores) from customers each month. A new part costs R$ 180; remanufacturing costs R$ 85 per part. Sorting gives:
| Disposition | Quantity | Share | Result calculation |
|---|---|---|---|
| Remanufacturing | 240 | 60% | 240 × (180 − 85) = R$ 22,800 saved |
| Material recycling | 100 | 25% | 100 × 2.5 kg × R$ 4.00/kg = R$ 1,000 revenue |
| Disposal | 60 | 15% | 60 × R$ 12 = R$ 720 cost |
| Reverse freight and sorting | 400 | 100% | 400 × R$ 15 = R$ 6,000 cost |
Result = 22,800 + 1,000 − 720 − 6,000 = R$ 17,080 per month
Recovery rate = (240 + 100) ÷ 400 = 85%
The result per returned part is R$ 17,080 ÷ 400 = R$ 42.70. The reuse (remanufacturing) rate is 240 ÷ 400 = 60%. If sorting recovered 280 parts instead of 240, remanufacturing savings would rise by 40 × 95 = R$ 3,800, which shows where the gain is: in sorting quality and in fewer parts sent to disposal.
When reverse logistics pays off
- Legal obligation: when law or the sector requires the return, the question is how to do it at the lowest cost.
- High residual value: metals, expensive components and remanufacturable parts.
- Returnable packaging: return cost is lower than disposable packaging over its life.
- Image and contracts: customers demand proper disposal; ISO 14001 requires control of environmental aspects.
- Waste reduction: reused scrap reduces loss; see Lean and sustainability.
For returns with expiry dates, also apply FEFO and FIFO rules. To consolidate return loads without storing them, cross-docking can be used.
Common mistakes
- Mixing returns with good stock and losing track of what is recoverable.
- Not recording origin and reason for the return, which prevents finding the root cause of the defect.
- Sorting without written criteria: each person grades differently.
- Looking only at freight cost and ignoring recovered value.
- Handing material to third parties without checking their environmental license and transport documents, which leaves the liability with your company.
- Treating it as an isolated project: the reverse flow must be in supply chain planning and KPIs.
Frequently asked questions
What is reverse logistics?
It is the flow of products, parts and packaging from the customer back to the company for reuse, recycling or proper disposal.
What is the difference between reverse and forward logistics?
Forward logistics moves product from supplier to customer; reverse logistics brings back what was returned, used or no longer needed.
Which products have mandatory reverse logistics in Brazil?
Under Law 12,305/2010, among others: batteries, tires, lubricating oils, lamps, pesticide packaging and electronics. Other countries have their own rules.
What is remanufacturing?
It is restoring a used part until it performs like a new one, at lower cost than making it from scratch.
How do you calculate the recovery rate?
(Reused, remanufactured and recycled items ÷ returned items) × 100. In the example, (240 + 100) ÷ 400 = 85%.
Is reverse logistics profitable?
It can be, when recovered value exceeds freight, sorting and disposal. In the example the result is R$ 17,080 per month.
Sources
- ROGERS, D. S.; TIBBEN-LEMBKE, R. S. Going Backwards: Reverse Logistics Trends and Practices. Reverse Logistics Executive Council, 1999.
- BALLOU, R. H. Business Logistics/Supply Chain Management. Pearson.
- CHOPRA, S.; MEINDL, P. Supply Chain Management: Strategy, Planning, and Operation. Pearson.
- BRASIL. Lei nº 12.305, de 2 de agosto de 2010 (National Solid Waste Policy).
Keep studying: trusted sources and links
- CSCMP: Supply Chain Management Definitions and Glossary
- ILOS: Instituto de Logística e Supply Chain (in Portuguese)
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About the author
Lean Manufacturing & Behavioral Management Specialist
Over 20 years in the automotive and metalworking industries (GM and Dana), Lean Manufacturing practitioner since 2006. SENAI instructor and mentor in Brazil’s Brasil Mais Produtivo program, delivering consulting, training and audits for 50+ companies, combining quality, productivity and people development.
