Going green: a hype that keeps people busy in all fields of life. From consuming healthy food to the usage of green energy; many people are willing to act “green”. Also an increasing number of businesses are taking green steps, but there is still a long way to go. Many companies perceive “going green” as expensive and are not aware of prospective benefits that are luring. An example that can lead to these potential gains is Green Reverse Logistics (GRL), which is a combination of Reverse Logistics and Green Logistics. It can be defined as the green activities subsequent from the point of consumption toward the point of origin, including recycling, remanufacturing, and reusable packaging.

GRL2

GRL activities are an important field for companies. Many traditional businesses are not pursuing these activities because they do not see the importance. Nowadays, luckily more firms start to realize the importance of their reverse logistics flow. Especially remanufacturing is an activity which can save a significant amount of money.

Remanufacturing
Remanufacturing comes to mind when the possibility for reuse is no longer an option because either the product is in a used condition or there is at the later point no market available for the product which makes it not economically beneficial anymore. Products can be returned for remanufacturing in different ways. A few examples are: repair or warranty returns, end-of-life take-back, trade-ins, or flexible return policies. Remanufacturing an item creates an economically beneficial situation. There is some residual value from the original core unit, which can be combined with new value through remanufacturing. In this way, the product can return to functional use again. Moreover, the product can be upgraded to meet higher standards or to be in line with the current technological pace.

In general the material costs to build something new covers 70% off all costs. The other 30% are labor costs. When a company implements remanufacturing, only 40% of the costs is in the materials, which reduces the total costs drastically. The company Caterpillar made more than $1 billion in sales in 2005 with remanufacturing. Moreover, the company expects to grow by at least 15% annually for the next several years thanks to this GRL activity. This example proves that remanufacturing results into a cost advantage for firms.

Recycling

GRL

Another aspect of GRL is recycling. Recycling is currently becoming increasingly important for companies. Not only because it ensures a green image, or provides a company with more raw materials or raw parts, but also because regulatory pressure is rising. Companies in some fields are forced to take back their products. For example, the Waste Electrical and Electronic Equipment (2006) forces producers of electronic devices in Europe to take back their products from customers, after they are used. Researchers point out that these take-back laws are expanding to other products and regions as well.

A company who integrates recycling efficiently in their supply chain is Ikea. To move their products from one place to another, they use pallets made of carton, instead of the wooden pallets they used before. After filling the shelves, the carton pallets are thrown into a crushing machine, whereafter new pallets are produced from the recycled carton. Ikea saves about 140 million euro by using carton pallets. It is not only good for the environment, but also transportation costs decrease drastically. The carton pallets are smaller and lighter and, therefore, trucks can be loaded more efficiently. Hereby, the number of trucks needed are declined and Ikea saves, next to transportation costs, on carbon emissions and contributes to a greener environment.

Much to gain

As indicated in the abovementioned examples: GRL is full of benefits and there is a lot to gain. Easy access to raw materials, less energy usage, less landfill space, less waste, and contribution to a greener environment are all benefits that one can achieve by implementing GRL activities. Moreover, the green activities can ensure a green image for the company, which can attract new customers and gratify the existing customers.

 

It sounds like there are only pro’s for these green activities, so why not implement them immediately? Unfortunately, it’s not that easy. It requires changes in your business plan and alignment with your processes. This may be costly, but think of what you can achieve. This investment should not be viewed as thrown away money. It should be seen as an opportunity to build competitive advantage.

 

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