Reverse Logistics

Reverse logistics, an important principle in green, or sustainable, business, refers to any systematic reversal of the traditional flows in a value chain. A value chain is the chain of activities and institutions, such as wholesalers, agents, brokers, shippers, and retailers that add value to a product on its way from the manufacture to its end consumer.

Value chains, or marketing channels, are typically depicted as linear throughput systems with goods and services flowing downstream from manufacturers to consumers, and with money flowing upstream from consumers, back through the channels toward manufacturers, with each member of the chain benefiting along the way. From the standpoint of sustainable business, such linear systems are problematic because, although they work well for managing throughput flows of materials, they fail to account for the ultimate origination or destination of those materials. For example, the raw materials that make up a television or a mobile phone originate from the Earth, and the process of extracting them inevitably reduces the Earth's ability to provide ecosystem services. Similarly, the television or cell phone that ends up in a landfill or an incinerator doesn't disappear there. It degrades and cycles back into the Earth's ecosystems, along with all of its toxic components.

Business becomes sustainable only to the extent that value chains can be converted into value circles. A value circle, in contrast to a value chain, is a system in which all waste is reclaimed and converted back into resources. Reverse logistics are the processes of reclamation.

Value circles are the result of biomimicry, meaning that they are modeled after natural systems, all of which are inherently cyclic and sustainable. In nature there is no waste, because the waste from every process or organism functions as food or fuel for some other process or organism. The concept that waste equals fuel is central to the philosophy, developed by Michael Braungart and William McDonough, of cradle-to-cradle design and manufacturing, which maintains that all commercial waste can be eliminated by ensuring that all product materials either serve as biodegradable nutrients for natural systems or are reclaimed for reuse in technological systems. Again, reverse logistics is the mechanism by which reusable or recyclable materials reenter a value circle.

There are a number of forms of reverse logistics that function to close the loop from value chain to value circle. They include the following:

• Refurbishing and remanufacturing
• Product take-back
• Collection and consolidation of recyclables
• Secondary markets
• Deconstruction and design for disassembly
• Leasing, renting, or substituting products with services

Refurbishing or remanufacturing converts end-of-life products back into usable and, therefore, marketable products. The process requires product take-back, a form of reverse logistics, to move a used product or components from users back into manufacturing cycles. For example, Caterpillar achieves this through parts and engine exchanges, wherein customers can exchange worn out machinery for like-new remanufactured machinery at a [Page 432]fraction of new prices. Retailers Staples and OfficeMax collect ink and toner cartridges for remanufacturing by offering customers store credit for returned ones.

Organizations can also achieve product take-back by offering customers free or convenient handling of recyclables, such as electronics, compact fluorescent light bulbs or appliances, and toxic substances, such as paint, motor oil, or batteries. For example, Metro Paint of Portland, Oregon, collects unused house paint from consumers or contractors and recycles it into new, high-quality, low-cost paint in several colors. Dell's Asset Recovery System provides its small-business customers with free pickup of old computers, scrubs the drives of all data, and dismantles the machines to recover usable parts and materials.

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