Visibility into reverse logistics as defined by the Association of Supply Chain Management — the supply chain process of returning products from end users back through the supply chain to either the retailer or manufacturer — is essential for strong, resilient supply chains. But, despite the numerous visibility technology tools available on the market today, people still play an important role in providing visibility through communication and collaboration between the “front end” and “back end” of supply chains.
The front-end of supply chains typically includes procurement, transportation, warehousing, fulfillment and last-mile deliveries while the back end of supply chains includes reverse logistics such as returns, refurbishment and recycling and also transportation.
Effective communication, combined with technology, ensures that data from the back end of supply chains including product condition, and recovery opportunities are understood and shared across the organization to optimize inventory, reduce waste and improve overall supply chain performance.
“Everyone thinks software-only solutions will save the day, but someone actually needs to do the work. Reverse logistics is not a computer program. It’s an entire ecosystem of players, including companies that provide logistics, product grading, repair, refurbishment, resale, recycling and more,” said Scot Case, a circularity strategy consultant with more than 30 years of experience.
Indeed, HP has embraced building team ecosystems to ensure that communication across its organization is part of its solutions. “I hired a senior executive to manage the Renew business end-to-end. We moved folks from supply chain, customer care, sustainability, and life cycle services all into one group… If we were fragmented internally, managing that ecosystem would have been impossible,” HP Workforce Solutions president Dave Shull said in a 2024 interview with consulting firm McKinsey. The HP Renew program focuses on refurbished HP computing products.
Building collaborative cultures
Creating a collaborative culture is important in connecting the entire supply chain. Collaborative cultures build trust and cooperation among supply chain teams and with their outside partnerships and ultimately lead to more innovation and better outcomes, such as new or improved products, improved forecast accuracy, and reduced costs.
Sharing and communicating data also plays a role in collaborative cultures. For example, the lack of insight into returns, repairs, recycling, and disposition processes often leads to fragmented data, inefficiencies, increased costs, and missed opportunities for asset recovery and reuse. By leveraging advanced data analytics, companies can mitigate costs and gain valuable insights into demand patterns, inventory levels, and supply chain efficiency.
Dan Main, Director at BidPath, an auction management technology provider, notes that returns data, for example, helps organizations understand why an item is returned and whether it can be resold to recoup some of its cost or donated as a tax write-off. “Don’t ignore returns data,” said Main. “It should always be fed back into procurement systems to provide accurate forecasts and orders.”
Creating circular supply chains
This need for the front- and back-ends of supply chains to communicate and collaborate serves as the basis for circular supply chains. As a reminder, supply chains are often not linear but rather circular, with multiple mini-circles across supply chains – i.e. returns, the use of refurbished and recycled items, and alternative fuel usage for freight transportation – all of which can occur at any point or multiple points across supply chains. However, truly successful circular supply chains are those that embrace data, collaboration, and communication across entire organizations.
The interest in circularity is often attributed to regulatory pressure and consumer demand for sustainable products with the benefits often reported in organizations’ annual Environmental, Social, and Governance (ESG) reports instead of how it benefits the bottom line in financial reports.
According to Dr. Corrine Chen of the University of Nebraska Omaha, most companies treat circularity as a sustainability initiative rather than a supply chain design problem and this is why many circularity programs fail. For circularity programs to succeed, Chen believes that circularity requires alignment between product design, supply chain structure, and market conditions such as pricing, infrastructure and policy.
To align across all supply chain departments, building a collaborative culture is crucial. “Software is an integral part of reverse logistics and broader circular solutions, but it is not a solution. It is only one piece of the puzzle,” said Case. Indeed, it’s people communicating with each other and utilizing technology tools that will create successful supply chains in which all internal departments and partners are collaborating and thus, connecting the back end to the front end of supply chains.
The importance of communications and collaboration
For many organizations, poor communication and limited collaboration remain the biggest obstacles to linking the front and back ends of the supply chain. The solution lies in fostering a strong collaborative culture that enables information about returns, product defects, and end-of-life recovery to flow back to the teams responsible for product design, inventory planning and customer experience. When these insights are shared across the organization, companies can make better decisions, recover more value and build more efficient and resilient supply chains.
This story was updated at 5:05 pm ET.
