By Leslie Doyle | 05/30/2025
Ever been wowed by how easy it was to return a purchase? That’s reverse logistics in motion.
Reverse logistics involves the behind-the-scenes processes that move products from the consumer back to the seller. Companies that master reverse logistics build loyalty, save time and money, and improving operational efficiency.
Reverse logistics is a critical component of complex supply chains in both the military and the corporate world. It essentially involves reversing the process used in a forward supply chain.
While a forward supply chain involves getting a product or service into the hands of the end consumer, reverse logistics gets products from an end consumer back to the original source. The reverse supply chain is utilized when there are:
- Customer returns
- Delivery failures
- Delivery refusals
- Product recalls
- Leased/rental equipment coming to the end of term
- Products under warranty in need of repair
- Restocking of seasonal or excess inventory
“With the rise of e-commerce and increasing consumer expectations for hassle-free returns, businesses must refine their reverse logistics strategies to minimize costs, enhance efficiency, and improve customer satisfaction,” says Dr. William Oliver Hedgepeth, Professor of Reverse Logistics at the Dr. Wallace E. Boston School of Business at American Military University. Dr. Hedgepeth has more than 30 years of experience working in military logistics and data management roles for the Department of Defense and the U.S. Army.
He notes, “Companies like Amazon®, Target®, and Walmart®, alongside other industry leaders such as FedEx®, UPS®, Kuehne + Nagel®, and goTRG®, have invested heavily in optimizing their reverse logistics operations. These businesses continue to set benchmarks in reverse logistics efficiency, demonstrating the importance of strategic investment in this critical supply chain function.”
Streamlining Reverse Logistics
Product returns represent roughly 17% of retailers’ annual sales, reports the National Retail Federation. The growth of online purchases has driven up the rate of product returns. When consumers can’t see and feel items in person, they’re more likely to return them.
By streamlining reverse logistics processes, businesses can exceed customer expectations when handling a delivery failure, returns, or repairs. When a customer is pleasantly surprised that a company handled their return smoothly, that often results in positive reviews and repeat business.
Customers also respond positively to generous return policies. L.L. Bean® is a great example.
This company has built a reputation around hassle-free returns. Its satisfaction guaranteed policy allows customers to return many items for a refund for up to one year and even some items without a receipt.
These types of policies give consumers confidence in their purchases. In fact, more than 80% of shoppers consider a company’s return policies before making buying decisions. The converse is also true. In a recent survey, nearly 60% of consumers said strict return policies kept them from making a purchase.
“Organizations are optimizing their reverse logistics operations through several strategic approaches such as implementing a customer-centric returns policy to ensure that customers can easily understand how to return products,” says Dr. Hedgepeth.
The Benefits of Streamlining Reverse Logistics
In addition to helping build customer loyalty, a solid reverse logistics plan brings numerous advantages. These advantages include:
- Improved inventory management
- Increased asset recovery
- Leveraging of secondary markets
- Support of regulatory compliance
Improved Inventory Management
Companies need to pay attention to their inventory management and maintain the right volume of products to meet customer demand. Also, they want to avoid having more inventory than they need.
Reverse logistics can help organizations gain insight into how customer returns impact inventory. For example, if an organization notices a trend in a type of product being returned, they may choose to make pricing adjustments, work on product quality control, or refine their demand planning.
Increased Asset Recovery
Reverse logistics operations play a vital role in helping companies recoup the value from returned items. By having a smooth process for directing products to be refurbished or resold, companies can increase their revenue. They also may find opportunities to reuse raw materials to help the business save money and reduce their environmental impact.
Leveraging of Secondary Markets
Once retailers have transparency into data from a reverse logistics system, they can identify excess inventory and poor sales as well as refurbished products that are not appropriate to return to stock. Depending on the industry and product, these items may be sold to secondary markets like discount stores or liquidation markets.
Support of Regulatory Compliance
Many companies face strict regulations for tracking the shipping and return of goods. For example, the Food and Drug Administration’s Food Traceability Rule enacted traceability requirements for companies that create, process, and pack food.
Reverse logistics processes help organizations comply with these rules. In addition, retail companies use reverse logistics processes to help properly dispose of hazardous materials, such as batteries and electronics.
Industries Using Reverse Logistics
Retailers, manufacturers, and e-commerce businesses rely on reverse logistics to increase customer satisfaction, save money, and reduce waste. The reverse supply chain has become more important for these businesses in recent years, as the percentage of returns has nearly doubled in the past decade.
Construction companies also find reverse logistics valuable for tracking the movement of building waste. Managing these materials better can have a significant impact on the environment. As of 2018, the Environmental Protection Agency (EPA) estimated that roughly 600 million tons of construction and demolition waste was generated in the U.S. per year.
Reverse logistics also plays a crucial role for pharmaceutical and food & beverage companies, helping to facilitate product recall management. Using reverse logistics strategies eases the process of recalling items from end sites, such as retail stores or pharmacies. Having a strong reverse logistics strategy helps ensure that recalled products are recovered for safe disposal.
The Steps of Reverse Logistics
In supply chain management, there are several steps that make up a common reverse logistics process. These steps include:
- Processing a return: Initiating the steps involved with receiving a returned product
- Determining the type of return: Identifying the reason for the return and categorizing the item so it goes to the right place
- Keeping the product moving to the right department: Sending the product for repair, recycling, return to stock, resale, or disposal
- Initiating repairs: Quickly determining whether an item is still usable, and fixing it if possible
- Recycling: Reusing an entire product or components of a product
Improving a Reverse Logistics Strategy
As organizations take a closer look at how to optimize reverse logistics, they’re seeking opportunities to make these processes more efficient for both customers and employees. Removing the friction points in reverse logistics supply chains results in happier customers and an improved bottom line.
There are several techniques for enhancing a reverse logistics strategy, including:
- Automating returns management processes
- Examining existing return policies
- Analyzing reverse supply chain data
- Considering transportation logistics
- Creating a centralized processing center for returns
- Enhancing workforce management
Automating Returns Management Processes
Businesses continue to evaluate their reverse supply chains to find ways to speed up the return management process. For example, some retailers use smart routing so that when customers initiate returns, the items are automatically directed to the right place based on their condition and the reason for return. Others use robotics to swiftly move returned items through their fulfillment centers.
Examining Existing Return Policies
E-commerce companies like Amazon frequently review their return policies to find cost savings opportunities. In 2024, the company added a returns processing fee for many products with a high rate of return.
Analyzing Reverse Supply Chain Data
Each step in the reverse logistics process is an opportunity to capture and analyze a wealth of data across the supply chain. Businesses can learn which products have returns and why, what customers think of the return policy, and where the organization has experienced high return costs. These insights provide opportunities to optimize reverse logistics operations and policies.
The management consulting firm Deloitte® notes, “Understanding the dynamics behind how, when, and why customers return items is critical to understanding purchasing behavior and improving overall experience.”
Considering Transportation Logistics
Examining the role transportation plays in the reverse supply chain is an effective way for businesses to lower their costs. For instance, consolidating shipments reduces associated fuel and labor costs as well as carbon emissions.
Centralizing Return Centers
Returns management requires different workflows than a traditional fulfillment center that is a part of the forward supply chain. That’s why many large retailers and e-commerce companies centralize their return centers so they can quickly process large volumes of returned products.
Enhancing Workforce Management
Reverse logistics is intrinsically tied to workforce management. The better an organization can automate its reverse logistics processes, the lower its labor costs will be. To that end, retailers and other organizations are looking to reduce manual touchpoints and optimize workflows across the reverse supply chain.
Environmental Sustainability Demands
The Reverse Logistics Association found that in recent years, consumers are focusing more on sustainability. “This shift to sustainability is fundamentally reshaping reverse logistics, causing retail companies to refine their processes and align their strategies with environmentally responsible practices,” says Dr. Hedgepeth.
“Reverse logistics is driven by cost efficiency and regulatory compliance,” adds Dr. Hedgepeth. “However, due to the current tariff situation in 2025, environmental sustainability concerns have intensified, pushing businesses to rethink their reverse supply chain to meet the expectations of eco-conscious consumers. The impact of tariffs is reshaping supply chains, cost structures for logistics and reverse logistics, and sourcing strategies, for good and bad.”
The Environmental Impact of a Circular Economy
The current economy is a linear one, where products are created, used, and discarded. However, the global climate crisis has encouraged people to seek a better, more cost-effective way to reduce their carbon footprint. Increased consumer demand for sustainable goods has spurred more businesses to rethink their product life cycles through the lens of a circular economy.
A circular economy extends product lifespans and reduces waste. Instead of simply disposing of products at the end-of-life stage, more companies are considering how to repurpose or resell them. The more products that can be redesigned, recycled, or refurbished, the fewer materials that end up in landfills.
Reverse Logistics in the Circular Economy
Reverse logistics processes offer an efficient and transparent way for companies to optimize their recycling programs and find new sources of revenue. A circular economy also considers how raw materials are sourced. Using more sustainable sources for just a few industrial materials (such as aluminum, plastics, and cement) could reduce worldwide greenhouse gas emissions by 40% by 2050.
“Many companies are embracing refurbishment, remanufacturing, and resale programs as part of their reverse logistics efforts,” observes Dr. Hedgepeth. “Consumers are increasingly favoring brands that integrate sustainability into their operations, leading companies to enhance their reverse logistics network to support closed-loop systems. Electronics manufacturers, for example, are designing products with easier disassembly to facilitate component reuse and reduce dependency on raw materials.”
Reverse Logistics in the Military
Various branches of the military use a reverse supply chain to support the repair and recycling of products used in the field.
“The military has evolved significantly, especially in response to the environmental impact of discarded wartime equipment,” notes Dr. Hedgepeth. “During wartime, military equipment was often abandoned or destroyed, leading to severe environmental consequences.
“Tanks, aircraft, and other machinery left in battle zones contributed to pollution, soil contamination, and hazards for both wildlife and human populations. The disposal of hazardous materials, such as fuel and ammunition, further exacerbated ecological damage.”
“Over time, the military recognized the need for more sustainable logistics and supply chain operations. The Army started an AI Center for Logistics in the 1990s to get a head start on managing the volume of equipment being used and discarded.”
Reverse logistics became a crucial strategy for managing equipment returns, recycling materials, and reducing waste. Hazardous materials are now carefully processed to minimize environmental harm, and specialized programs ensure the proper disposal of chemicals, electronics, and other waste.
Reverse logistics helps streamline inventory management, ensuring that excess or outdated equipment is efficiently redistributed or recycled. For example, as an operations research systems analyst for the Department of Defense's Training and Doctrine Command, Dr. Hedgepeth analyzed and promoted the recycling of military helicopters to help extend the life of aircrafts. He studied how helicopter failures occurred and worked with the Dover Air Force Base, which is dedicated to rebuilding older airplanes instead of abandoning them to the scrap yard.
Packaging Materials Management and Reverse Logistics
According to the EPA, Americans produce more than 82 million tons of container and packaging waste a year. Reverse logistics operations can incorporate packaging materials management to help companies:
- Reduce their environmental impact
- Save costs
- Improve their image as a sustainable brand
- Increase their customer retention
“Consumers and business owners have concerns about packaging decisions, with consumers increasingly demanding recyclable or biodegradable packaging,” says Dr. Hedgepeth. "Many companies are transitioning toward minimalistic and reusable packaging designs to align with sustainability goals, which consequently affects reverse logistics processes.”
Packaging management supports organizations looking to reuse or recycle their packaging. Doing so can help increase sales. There has been a 71% increase in online searches for sustainable goods, according to a report by the Economist Intelligence Unit.
Interest in sustainability extends to eco-friendly packaging. Surveys found that customers are willing to pay higher prices for products that use environmentally-friendly packaging.
The environmental nonprofit organization GreenBlue defines reusable packaging as “packaging that allows either the business or the consumer to put the same type of purchased product back into the original packaging, is designed to be returnable and/or refillable, is free of chemicals of concern, and accomplishes a minimum number of reuses by being part of a system that enables reuse.”
Reverse Logistics Examples That Reduce Environmental Impact
Many in the retail industry are taking advantage of trends in upcycling to capture the eco-conscious consumer:
- In recent years, the clothing brand Eileen Fisher® has taken back more than two million pieces of their own clothing to resell, donate, or repurpose into new items.
- Companies like Coca-Cola® use returnable packaging. When a Coca-Cola customer returns a product, the company reuses it for another product delivery.
- The personal care brand Unilever® is also scaling its reuse-refill models as part of its goal to make 100% of its flexible plastic packaging reusable, recyclable, or compostable.
Reverse Logistics Tips
Many management experts recommend that companies devote as much attention to their reverse supply chain as they do to their forward supply chain. In particular, Deloitte advises retailers to optimize good reverse logistics management to maintain a healthy inventory and lower operating costs. There are a number of methods for reducing delays in the reverse supply chain, such as:
- Determining the root cause of returns
- Tracking returns from the moment they are initiated
- Providing return labels and packaging to simplify steps for customers
Leveraging Artificial Intelligence in the Reverse Supply Chain
Artificial intelligence (AI) and automation have improved the tracking and processing of returned goods, making reverse logistics more efficient and sustainable. In the military, these technological advancements reduce environmental impact and enhance operational readiness by ensuring resources are effectively managed.
“In the corporate world, companies are hiring staff who understand how to use AI prompts, so they can better analyze data to recognize customer return trends,” says Dr. Hedgepeth. “This type of data analysis is necessary to understand why products are returned, track down product quality issues, and optimize distribution and transportation networks. Companies are also using AI to automate returns, keep customer satisfaction high, and reduce operational costs.”
AMU’s Reverse Logistics Management Degrees
For adult learners seeking to improve their knowledge of supply chain management, reverse logistics, and similar topics, American Military University (AMU) offers two degrees:
- An online Bachelor of Arts in Reverse Logistics Management
- An online Master of Arts in Reverse Logistics Management
The courses for these degrees cover topics such as an introduction to reverse logistics management, environmental issues in reverse logistics, and technology in reverse logistics. Other courses include reverse logistics policies and regulations, the fundamentals of business analysis, and global issues in supply chain management.
Both degrees have received specialty accreditation from the Accreditation Council for Business Schools and Programs (ACBSP®). This type of accreditation ensures that these programs have undergone professional examination to ensure high academic quality.
For more information about these degrees, visit our business administration and management degree program page.
Amazon is a registered trademark of Amazon.com, Inc.
Target is a registered trademark of Target, Inc.
Walmart is a registered trademark of Walmart, Inc.
FedEx is a registered trademark of the Federal Express Corporation.
UPS is a registered trademark of the United Parcel Service of America, Inc.
Kuehne + Nagel is a registered trademark of Kuehne + Nagel International AG.
goTRG is a registered trademark of The Recon Group LLC.
L.L. Bean is a registered trademark of L.L. Bean, Inc.
Deloitte is a registered trademark of Deloitte Touche Tohmatsu.
Eileen Fisher is a registered trademark of Eileen Fisher, Inc.
Coca-Cola is a registered trademark of the Coca-Cola Company.
Unilever is a registered trademark of Conopco, Inc.
ACBSP is a registered trademark of the Accreditation Council for Business Schools and Programs.