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FAQ- Industry Definitions- Guide To The Reverse Logistics Industry

Updated: Jul 8, 2023

Reverse Logistics In-depth Educational Articles and Glossary

FAQ- Industry Definitions- Guide To The Reverse Logistics Industry
FAQ- Industry Definitions- Guide To The Reverse Logistics Industry

Reverse Logistics Industry Glossary

“A” Channel — This is the primary, most important sales channel.

Advanced Ship Notifications (ASN) — A system that tracks the product through the distribution and shipping process, alerting users to important tracking data such as delivery status and method of transportation.

Advanced Exchange — The provision of an Exchange Component as replacement for an Unserviceable Component on payment of an exchange fee.

Asset Recovery — Maximizing returns and minimizing costs or liabilities by efficiently classifying and disbursing products or assets that fall under surplus, scrap, excess, obsolete and waste status.

“B” Channel — The secondary sales channel for materials and products that have previously been processed through the reverse flow.

Barter Companies — Establishments that support the disposal or recycling of unwanted goods in trade for commodities (i.e. airline miles or advertising space).

Bill of Materials (BOM) — A comprehensive list of all components, parts, and raw materials required to manufacture a product, specifying the quantity and hierarchy of each item.

Brokers — Firms that specialize in products that have reached the end of their sales life, who are often willing to purchase any product in any condition if they are given a low enough price (typically a last-resort option for disposal of goods).

Brown Goods — Electronics.

Buy-Out — The term for when a manufacturer buys out the inventory of another via a retailer, which allows the manufacturer purchasing the inventory to replace the products of their competitor.

Cannibalization of Demand — When the sales of the secondary market or “B” channel reduce the sales in the primary or “A” channel.

Cannibalization of Parts — Removing parts or components from one item and using them to refurbish or rebuild another item.

Centralized Return Center (CRC) — The facility where returns are processed.

Chargeback — A deduction from a vendor’s invoice for the amount of product returns, which may happen without the vendor’s authorization.

Close-Out Liquidators — Companies that specialize in buying out a retailer’s product within a particular area when the retailer has decided to remove themselves from that area of business.

Controlled Tip — A landfill that is sanitary because waste is sealed into containers made from clay or dirt.

Core — A reusable part or sub-assembly that is of high value because it can be remanufactured and/or used as a replacement part.

Core Charge — The amount that a supplier charges on products that can be remanufactured in order to encourage the return of the defective item that is being replaced.

Cycle Time— The total time required to complete a process or operation, often measured from the start to the finish of a specific task within the supply chain.

Design for Disassembly (DFD) — A method of design intended to make the end-of-life disassembly of a product more easy.

Demand Forecasting— The process of estimating future customer demand for a product or service to facilitate supply chain planning and optimization.

Distribution— The process of moving goods from a manufacturer or supplier to the end customer through various channels, such as wholesalers, retailers, or e-commerce platforms.

Design for Logistics (DFL) — Product design with logistics functionality in mind, considering the processes for handling, shipping and storing the product.

Design for Manufacturing (DFM) — Considering the ease, cost-effectiveness, and quality of the manufacturing process when designing a product.

Design for Reverse Logistics (DFRL) — Ensuring improved return flow functionality by designing requirements for effective reverse logistics into the packaging and product itself.

Disposition— The method of disposal for a product.

Disposition Cycle Time — The window of time between an item’s return to the point when it arrives at its final destination.

Duales System Deutschland (DSD) — A German organization that collects and recycles consumer packaging.

ERP (Enterprise Resource Planning)— A software system that integrates various business processes and functions, such as finance, human resources, and supply chain, into a unified platform, facilitating data sharing and process automation.

Electronic Data Interchange (EDI) — An electronic system of communication for business-to-business transactions.

Extended Producer Responsibility (EPR) — When an item’s original manufacturer is required to carry responsibility for its proper disposal.

EOL End Of Life — End of life (EOL), in the context of manufacturing and product lifecycles, is the final stages of a product's existence. The particular concerns of end-of-life depend on the product in question and whether the perspective is that of the manufacturer or the user.

Factory-Renewed — The classification for products that have been refurbished by the original manufacturer with a new-product warranty.

Freight Forwarder A company or agent that organizes the transportation of goods on behalf of shippers, typically handling documentation, customs clearance, and shipping arrangements.

Footprint — The size of a building in square feet, which determines the warehousing space a store will need.

Gatekeeping — Screening of products before they enter the reverse flow of the supply chain in order to minimize necessary returns or eliminate unnecessary ones.

Gray Market — Unauthorized channels or dealers of products that typically don’t carry a manufacturer’s warranty.

Green Dot — A packaging symbol for products sold in Germany to indicate that the item can be recycled via the Duales System Deutschland.

Green Logistics — Logistics that minimize and/or measure their activities for environmental impact.

High Learning Products — Products that cannot be operated without prior education or instruction, such as electronics.

Insurance Liquidators — Companies in the secondary market that specialize in buying products that were damaged in shipment and subsequently declared under losses for insurance purposes.

Investment Recovery — See Asset Recovery.

Inventory— The stock of goods or materials held by a company for production, distribution, or sale.

Irregular — Materials or products that are sub-standard for the qualifications of a first-quality item, sometimes for cosmetic reasons that don’t affect the baseline requirements for performance.

JIT (Just-in-Time) Inventory— An inventory management approach that aims to minimize carrying costs by receiving and producing goods only when they are needed in the production or delivery process.

Just-in-Time (JIT)— A production and inventory strategy that aims to minimize inventory levels by receiving and producing goods or materials just in time for their use or delivery.

Job-Out Liquidators — Companies in the secondary marketplace that buy end-of-season or excess inventory products from retailers.

KPI (Key Performance Indicator)— A measurable value that indicates the performance or progress of a specific aspect of the supply chain, such as on-time delivery, order accuracy, or inventory turnover.

Lead Time — The time it takes for an order to be processed, produced, and delivered from the supplier to the customer.

Logistics —The process of planning, implementing, and controlling the efficient flow and storage of goods, services, and related information from the point of origin to the point of consumption.

Liquidator — Secondary market businesses that purchase product at the end of its “A” channel sales life.

Lift — See Buy-Out, above.

Logistics — The process of moving raw materials, finished goods, or product inventory from the point of origin to consumption to meet consumer demand. Efficiency and cost-effectiveness is the goal with strategic logistics planning, implementation and control.

Made-For-Outlet — Products that are specifically made for sale at discount and outlet stores, which are typically of a slightly lower quality than products in the “A” channel.

Marketing Returns — Unsold product that a retailer is able to return to the supplier (generally overstock items), which may have been shipped to the retailer under an agreement that sales were guaranteed.

Non-Defective Defectives — Products that are returned under a customer claim of defectiveness, when they are not actually defective but the customer was unable to operate the products properly.

NTF No Trouble Found — No fault found (NFF), no trouble found (NTF) or no defect found (NDF) are terms used in the field of maintenance, where a unit is removed from service

Non-Defective Returns — Non-defective items that a customer returns as defective.

NR Non Repair —Non-Repairable means Component(s), which have defects, or discrepancies, considered to be beyond established and approved repair criteria.

Outlet Sales — Products – typically off-season or irregular – that are sold at an ‘outlet’ store.

Overstock — Additional inventory beyond demand, which is usually caused by a failure to sell as expected, excessive ordering, or order cancellations.

Point of Sale (POS) — The point in the transaction where the customer gains ownership of the product being sold.

Point of Sale Registration — The process of collecting the customer’s information when the product is sold, in order to retain it for warranty purposes.

Partial Returns Credit — Providing a partial refund due to missing components.

Prebate — A discounted purchase price provided on the promise that it won’t be sold to a re-manufacturer at the end of its life, or a customer discount given at the time of purchase in compensation for returning the product once it reaches the end of its life.

Pre-selling — Contracting during or before the selling season with a job-out company who will purchase any excess product remaining at the end of the selling season.

Primary Packaging — The main, first level of packaging for a product, such as a bottle containing wine or a tube of toothpaste.

Producer Pays — A principle that puts the responsibility of proper disposal or recycling of an end-of-life product on the manufacturer.

Procurement— The process of acquiring goods, services, or works from an external source, often involving supplier selection, negotiation, and contract management.

Reverse Logistics— The process of managing the return, recycling, or disposal of products, typically involving the handling of returned goods, repairs, refurbishment, or recycling.

Reclaim Materials — See Recycling, below.

Reclamation Centers — Facilities that are designated to process returns (this term is typically used in the grocery industry).

Reconditioning — Cleaning and repairing a product to “like new” state.

Recycling — Reducing a product to its basic elements in order to reuse them.

Refurbishing — Reconditioning to a greater level of detail, with more in-depth repairs to bring a product to “like new” condition.

Remanufacturing — The third level of updating a product to “like new” condition, with more extensive work that often involves disassembling the product to conduct more detailed repairs and reconditioning.

Re-Returns — When a customer attempts to return a product they had purchased as a (discounted) returned item for full price.

Resell — When a returned product can be sold again, sometimes as new.

Restocking Fee — A charge billed to the customer in acceptance of their returned product.

Return Abuse — When customers engage in fraudulent actions involving the return of their product, for example attempting to return a product at a different chain from the original purchase, trying to get a refund amount higher than the price they paid for the item, or returning the item for a refund after the warranty has expired.

Returnable or Reusable Tote — Packaging used in transport of an item or items that may be reused multiple times to move goods within or between facilities.

Return Authorization (RA) or Return Material Allowance (RMA) — The clearance to return an item to the original supplier.

Returns — Products or goods that a customer decides to send back to the distributor for a refund because the items either fail to perform or do not meet the customer’s needs.

Returns Allowance — The limited amount of product that a customer may return, which is typically based on a percentage of their total purchases.

Returns Center — See Centralized Return Center.

Return to Supplier or Return to Vendor — Sending customer returns or damaged materials back to the vendor or supplier from whom they were originally purchased.

Reuse — The act of using a product again for a somewhat different purpose than the one it was designed to perform.

Reverse Distribution — The logistical process of moving products or materials backward from the consumer or retail level to the manufacturer or supplier.

Reverse Logistics — The process of moving goods or materials from the consumer back to the point of origin in order to recapture value or dispose of it properly. Reverse logistics may include planning, implementation, and control of the process flow in order to ensure efficiency and cost-effectiveness.

Radio Frequency Identification (RFID) — A technology that supports product tracking by way of a low-frequency radio signal broadcast from a tag, which is attached to each item as it navigates the distribution cycle.

Return Material Authorization (RMA) — The classification of permission for returning a product or material to its supplier.

Rotatable Parts — A closed loop system for handling products that can be repaired, such as when a customer returns a broken product and a repaired product is sent to replace it, and the customer’s broken product is then repaired to be sent to another customer.

Salvage — Products that can only be sold to a low-revenue customer or a broker.

Secondary Market – A group of companies that sell products once they have completed their “A” channel selling season.

Secondary Packaging — The level of packaging beyond Primary Packaging, such as a box or case containing wine bottles or a box containing a tube of toothpaste.

Secure Disposal — Ensuring the destruction of a product by requiring that the disposal process be supervised by a security guard.

Secure Returns — A process of reverse logistics that minimizes product leakage, eliminates shrinkage and stops products from unintentional disposal.

Source Reduction — Minimizing resource consumption at the source, or the original production facility.

Supply Chain: The network of organizations, people, activities, information, and resources involved in the production, delivery, and distribution of goods or services from the supplier to the customer.

Supply Chain Position — The role within the supply chain that an organization fulfills, such as the distributor, manufacturer, wholesaler, retailer, or a combination of different roles.

Supply Chain Management (SCM)—The strategic coordination and integration of all supply chain activities, including sourcing, procurement, production, and distribution, to achieve optimum efficiency, cost-effectiveness, and customer satisfaction.

Sourcing— The process of identifying, evaluating, and selecting suppliers or vendors for the procurement of goods or services.

Supplier— A company or individual that provides goods or services to another organization.

Take-Back — A requirement that the manufacturer collects products at the end of their sellable life in order to retrieve recyclable materials and dispose of the products appropriately.

Transport Packaging — The external, final layer of packaging that is used to protect products in transport between the manufacturer and distributor or retailer.

Two-Dimensional Bar Coding — A technology in bar coding that stores much more information than a single row of lines and instead storing it in a two-dimensional grid of dots.

Vendor— A supplier or seller of goods or services.

Warehouse— A facility used for the storage and handling of goods, typically in a logistics or distribution network.

Zero Returns — When returns are always either disposed of by a retailer or other third party in the field, instead of coming back to the manufacturer.

More Great Resources on Remaunufactung-Reverse Logistics and Returns Management

Metrofuser Reverse Logistics At A Glance

Metrofuser Reverse Logistics is a returns management and remanufacturing solutions company that helps OEMs, distributors, and retailers reduce costs, protect brands, improve customer experience, and access critical data from returned products. With a unique position as the sole vertically integrated solutions company in the Northeast corridor (Washington DC - Boston), Metrofuser Reverse Logistics provides comprehensive services including receiving and processing of returns, remanufacturing, technical support, recycling, core management, and recommerce services. Metrofuser Reverse Logistics has been named to Inc. Magazine’s fastest-growing companies five consecutive years.

Contact: Will DeMuth 908-245-2100 Ext 107 Connect On LinkedIn


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