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Reverse Logistics and Circular Economy Values - A Comparison

Reverse Logistics and Circular Economy Values - A Comparison

by Adrienna Zsakay, Founder and CEO, Circular Economy Asia Inc.

Reverse Logistics Magazine, Edition 93

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A key component for the efficient functioning of the Circular Economy (CE) lies in Reverse Logistics (RL). However if company’s interested in transitioning to the CE to extract additional economic value from their material assets (products) believe the current Reverse Logistics systems they have in place will be enough, they may have to think again.

In 2016 Eva Faja Ripanti published her PhD thesis titled “A Framework to Design Reverse Logistics Operations based on Circular Economy Values” and she argues, very convincingly, that a robust internal design framework should be established within a company’s RL operations first and then embed Circular Economy values as required for specific purposes by the company (e.g. repair, refurbishment, remanufacturing, cannibalisation and recycle).

Whether RL professionals will agree with Ripant’s thesis is another matter. The value of her work lies in the actual attempt to put together a cohesive RL design framework (not a RL design network for product returns) and then make a comparison between standard RL operations and RL operations based on CE values.

In the example provided comparing product repairs under a standard RL operations and product repairs
based on CE values, we can see there is a lot more detail plus the assessment of waste and waste reduction. Technically for a perfect Circular Economic function there should not be any waste so, in theory, any waste generated would be recycled into new materials for new products.

Of course for any RL professional this adds another layer of complexity, one of material usage in the manufacturing of the products a company sells. For company’s who truly want to embrace CE it would be wise to also consider product design at this point, for ease of repair, refurbishment, remanufacturing, cannibalisation and recycling, thus further cementing profitability.

Ripant’s work is 246 pages long and like most PhD thesis many pages are devoted to the motivation, organisation, literature review and research methodology. It is quite easy to skim through these sections however I would not recommend ignoring them completely. There are some valuable tidbits of information to assist in understanding the current gaps in our knowledge.

CE is an evolving discipline as is RL, each for different reasons. The first being driven by sustainability and improvements in the management of our finite natural resources and the other by growing online sales. As different as these two may appear they actually are not.

With the industry average of 30% of all products sold online are returned, turning RL from cost to profit center’s becomes imperative. While most articles and consultants focus on1:

1. Refurbish/repair/remanufacture.
2. Auction or discount sale
3. Disassemble and recycle
4. Redistribute
5. Donate
6. Energy generation from waste
7. ‘Zero returns’ policy
8. Landfill/incinerate

Incorporating CE values during the product design and selection of materials that can be reprocessed into new materials eliminates points #6 and #8. This should add to a RL’s profit center as any waste material that can be reprocessed holds its sales value by becoming feedstock to a manufacturer.

A copy of Ripanti’s PhD thesis can be downloaded from the University of Cranfield’s website:

1 ‘Turn your reverse supply chain into a profit center’ by Ashutosh Agrawal, CSCMP’s Supply Chain Quarterly, Q1 2012 issue
Ms Adrienna Zsakay is the Founder of Circular Economy Asia Inc., an Australian NGO implementing Circular Systems across the Asia Pacific region with its Asian office in Malaysia. Ms Zsakay has invested a large portion of her adult life in Asia and holds an Asian studies degree from the University of Western Australia.
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