Necessity and Benefits of Reverse Supply Chain

The first important reason for adoption of the reverse supply chain process by the companies is, it reduces operating costs by reusing products or components. Reverse supply chains are becoming essential part of business because companies started recognizing the importance of the used products. Some companies are using reverse supply chains as an integral part of new businesses. Reverse supply chain is the very common criterion in the automobile industry as the number of automobile parts like batteries, tires, plastic materials used in the automobiles are reused. The reverse supply chain also saves money and time for the businesses.

Some companies are setting up reverse supply chains because of environmental regulations. For example, from 2003, European Union bought a legislation that will require tire manufacturers operating in Europe to arrange for the recycling of one used tire for every new tire they sell.

Better management of reverse supply chain results in higher customer service, satisfaction and thus generates high revenues. For large companies after sales service is one of the main revenue source and it provides competitive advantage. Apart from these two after sales services are used to collect the damaged parts and the damaged products itself.

Some firms have also set up reverse supply chain capabilities for altruistic reasons and these activities increases their brand image. For example Nike collects the used shoe from the customers, they are shredded and are donated to make basket ball courts and running tracks.

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