But not just China’s reverse logistics systems are overloaded. About a year ago the EU’s Circular Economy Package (CEP) was published, bringing new legislation to the marketplace. According to the European Commission, the CEP should "help European businesses and consumers to make the transition to a stronger and more circular economy where resources are used in a more sustainable way."
With the fulfilment of this ambition, reverse logistics is set to skyrocket in the coming years for returned products as well as waste materials. Besides recycling targets for municipal waste, the CEP includes specific reduction targets for packaging waste, and member states are to set up separate collections of hazardous waste and textiles waste from consumers.
As is the case in China, this predicted upswing of reverse logistics is amplified by the growth of e-commerce. Consider the substantial returns from online retailing: right now, an estimated 30% of e-commerce merchandise is returned, while the traditional retail return rate stands at about 10%.
Both the CEP and the digital transformation of retail present a clear conclusion: with the moving of goods flows from the traditional linear model to a regenerative circular one, reverse logistics is increasingly touted as an essential part of business success. This not only involves the development of new business models but also technologies and change processes to make those same business models work within the existing operations.
In their report on reverse logistics,** the Ellen MacArthur Foundation proposes five maturity levels considering project and process management stages, broadly used for continuous process improvement.
On a more operational level, three main challenges for maturing reverse logistics, present themselves. First, availability of suitable load devices such as the containers at H&M for clothes and the specific Nespresso bags to return used capsules. Second, the predictability of quantity and quality of the resource waste stream to become a reliable feedstock for instance in the case of chemical recycling of end-of-life plastics. And last but not least: a demonstratable impact on society.
Reverse logistics could be the next material topics for retailers around the world. According to Optoro, a UPS-backed service provider focused on eliminating waste from returns, the retail industry still has a long way to go. In its Retailer Sustainability Research on 128 prominent U.S. and global retailers, the company found that less than a quarter of the retailers analyzed were implementing programs and adopting initiatives to advance the circular economy, with or without set goals. And, only 30% of retailers had implemented product take-back or recycling programs for consumers, even without explicitly tying these programs to the circular economy. With the projected growth of waste and return flows this explains why reverse logistics is rapidly becoming the cornerstone of circular economy thinking. How prepared is your supply chain?
In case you are interested in maturing your circular economy solutions and reverse logistics, Finch & Beak can help you. Contact Jan van der Kaaij, Managing Partner, at firstname.lastname@example.org or +34 6 82 04 83 01 to find out more.
* NY Times (2019, 28 May) Food Delivery Apps Are Drowning China in Plastic.
** Ellen MacArthur Foundation (2016), Waste not, want not. Capturing the value of the circular economy through reverse logistics.