In today’s take-make-waste world, companies are reimagining how products move through their lifecycle. With approximately 50 million metric tons of e-waste and billions of tons of general waste generated annually (Global e-Waste Monitor 2024), the traditional linear economy model has reached its limits. In that sense, reverse logistics is a key enabler of a circular economy.
The Circular Economy Revolution in Logistics
The circular economy is accelerating an existing trend in the logistics sector. Reverse logistics – the process of moving products from customers back to sellers or manufacturers for reuse, refurbishing, recycling, or proper disposal – has become an important part of the circular economy and a critical component in creating circular value networks. It enables the return, reuse, refurbishment, remanufacturing, and recycling of products and materials after their initial use. By keeping resources in circulation and minimizing waste, reverse logistics supports the circular economy’s goal of extending product lifecycles and reducing environmental impact.
Reverse logistics enables the recovery of products, parts or materials.
Business Resilience Through Reverse Logistics and Circular Economy
By creating reverse flows of materials, products and components, businesses can gain access to significant quantities of resources, counter rising costs while building more resilient supply chains. This shift is happening across sectors, from retail and consumer goods to electronics and medical devices.
Thus, implementing reverse logistics will strengthen business resilience and open new avenues for growth:
- Reduced exposure to volatile raw material prices and supply chain risks
- New revenue streams from secondary markets and service-based business models
- Enhanced brand reputation and compliance with evolving regulations
“By looping the supply chain and circular economy, companies can cut the rising cost of raw materials and cope with volatile availability,” explains Yann Pithon, Business Value Consultant Expert in the Business Services Industry at Dassault Systèmes.
Depending on how existing supply chains and operations are structured, businesses can face challenges in developing reverse flows of products and materials. This is especially true for production localization (local versus global production) or product ownership (partial versus full ownership of the recovered products). The complexity of these challenges can affect the financial viability of recovering used product. However, digital solutions offer valuable tools to help manufacturers establish efficient reverse flows.
Building Effective Reverse Flows
Creating effective reverse flows requires understanding the difference between biological and technical materials. Biological materials like wood can cycle between the economy and nature, while technical materials like plastics and metals cannot cycle back into nature and need specialized reverse logistics networks.
Originally, networks enabled manufacturers to get their products to their customers. They must now be optimized to enable the product’s recovery as well. Dassault Systèmes solutions enable companies to design production systems that facilitate product disassembly, simulate and optimize supply chains and material flows -including reverse logistics-, assess the quality of the used products or facilitate data management. To know where to collect and how, it is key to ensure the traceability of the products in use.
Additionally, real-time monitoring and effective data sharing among stakeholders can facilitate this operation.
Carlijn Goedhart, DELMIA Sustainability Industry Process Expert at Dassault Systèmes, notes: “For the reverse flow, a solid network of reverse logistics must be in place on an operational level. Dassault Systèmes can help simulate these concrete logistics reverse flows by optimizing frequent routings.”
Once recovered, products or parts quality and performance must be checked before putting them back into the loop returning. By tracking the asset’s performance all along the product lifecycle, manufacturers can understand if the fatigue limit has been reached or not. Going further, manufacturers can use insights gained from analyzing returned products to improve future designs and processes.
Strategies for Implementing Reverse Logistics
For companies looking to implement or scale their reverse logistics operations, these four approaches offer a starting point:
- Design with reverse flows in mind: Incorporate circular economy practices from the earliest design phases, to increase the usability, repairability and recyclability rates during ownership and end-of-life.
- Implement closed-loop systems: where products, parts or materials are recaptured and reintegrated into production processes.
- Optimize through simulation: Use virtual twins to model reverse logistics networks before implementing them in the real world, identifying potential bottlenecks and inefficiencies.
- Focus on customer engagement: Educate consumers about the importance of returning products and materials, making it easy for them to participate in the circular economy.
Example of Real-World Applications of Reverse Logistics
Several industries have already implemented circular practices through reverse logistics:
- Retail and Consumer Packaging: Supermarket bottle return systems represent one of the most visible examples of reverse logistics. When consumers return bottles to stores, these items travel back to warehouses on trucks that would otherwise return empty. The challenge comes when volumes increase and logistics puzzles become more complex.
- Electronics and High-Tech: Companies in the high-tech sector are designing products with disassembly and material recovery in mind. Michel Monsellier, Solution Experience Director in the High-Tech Industry, points out that in 2021, “e-waste represented an incredible amount of the weight equivalent to 144,000 Airbus A380s.” Reverse logistics can help capture the value in these discarded products.
- Textiles: When consumers hand in second-hand clothes at retail locations, reverse flows become more complex but also more valuable. These systems require complex planning to maintain profitability. As such, some companies have already developed online second-hand markets of their products.
Scaling Reverse Logistics Systems
As companies expand their reverse logistics operations, several challenges or barriers must be addressed:
Manage Complexity
When reverse flows grow from small-scale operations to large systems, logistics planning becomes significantly more complex. Digital tools can help manage this increasing complexity. With DELMIA, companies can virtually simulate their supply chain, compare different scenarios and identify the best scenario based on selected KPIs.
Cross-Industry Collaboration
The success of circular reverse logistics depends on collaboration across industries as well as among stakeholders in a value chain. In addition to strong cross-industry networks, companies should adopt and end-to-end approach by extending their scope of product assessment from solely manufacturing to cradle-to-cradle point of view. In that respect, the 3DEXPERIENCE platform enable manufacturers to collaborate securely and transparently with their suppliers, partners, clients.
Data-Driven Optimization
Data science plays a crucial role in optimizing reverse logistics networks. With NETVIBES, companies can collect and analyze data from across the value chain and eventually detect inefficiencies, prevent waste and optimize the global systems in operation.
Industry Success Stories
Several companies have already achieved significant results through their reverse logistics programs:
- A major automotive manufacturer reconfigured its processes to reuse bumpers as bumpers for new cars rather than downcycling them into other plastic products, creating significantly more value from what was previously considered waste.
- Electronics remanufacturers are extending product lifespans through targeted repair and component recovery, creating new business opportunities while reducing environmental impact.
- The medical device industry has implemented systems to refurbish high-capital equipment, with companies like Stryker able to remanufacture devices at 60% of the original price, making healthcare more affordable while reducing waste.
The Future of Reverse Logistics
As regulations tighten and consumer awareness grows, reverse logistics will play an increasingly crucial role in business operations. Companies that invest now in building robust reverse logistics capabilities will gain a significant competitive advantage.
By transforming how products and materials flow through the economy, reverse logistics isn’t just reducing waste – it’s creating new value streams that benefit businesses, consumers and the planet alike.
