Reverse logistics is an area of supply chain, which is becoming popular only in recent years. Reverse logistics is the process of moving goods from the end customer to the source for purposes of proper disposal or capturing value. It involves collecting goods from the customers, sorting, disposal and retrieval of components at various levels in the supply chain and remanufacturing processes. Reverse logistics plays an important role in improving the value extraction from returned goods, hence improving the economics of the company.
Reverse Logistics in Pharmaceuticals
Reverse logistics in the pharmaceutical industry is extremely important, not only from the economic point of view, but also from the environmental as well as regulatory point of view. The pharmaceutical returns industry is worth $2.5 billion dollars. There is also an estimated reverse flow of goods worth $5 billion. Some of the common reasons for returns faced by the industry are expiry and damages, product returns due to wrong shipments, counterfeits, product recalls and trial recovery for clinical trials.
Some important considerations for the industry when it comes to reverse logistics are the security of the returned goods, keeping the costs low with the help of automation, traceability of the goods returned from the customer to the final stage of disposition.
Complexity of Reverse Logistics in Pharmaceuticals
Reverse logistics in the pharmaceuticals industry works differently from many other industries. Drugs or products returned in a pharmaceutical industry are seldom repaired or resold. Instead, they need to be destroyed and disposed properly. There are various considerations to be taken into account such as
- Need for accurate tracking and visibility
- Batches and Expiry control
- Cold Chain requirements
- Proper storage and disposal
- Pedigree reporting
- Anti-counterfeiting and so on.
Reverse logistics is considered a bullet in company’s profits and an expensive process most times. Yet, it is an imperative process in modern times due to various reasons such as government regulations, growing environmental concerns, growing consumerism, and competitive advantage. An important consideration for companies is to perform the operations in reverse logistics effectively so that it reduces the cost involved.
When it comes to legal complexities, especially in the Indian context, the regulation states that, goods once sold by the manufacturer can be brought back only through declaration to excise authorities and proper documentation. This process is cumbersome and takes time. Non-compliance also leads to legal actions.
Technological Advances in Handling Reverse Logistics
Product recalls are never easy for a company. It adds additional strain on warehouse management. There are several problems a warehouse encounters when products are returned, such as small or poorly laid out work area, poor tracking and visibility, etc. Warehouse management system and warehouse automation helps in reducing these problems.
Warehouse management systems (WMS) plays an important role in reducing many problems a warehouse faces during returns. Integrating returns processing modules with WMS can help in inventory allocation, real-time inventory control and efficient picking from returns storage area.
RFID technology helps in measuring and managing inventory levels, reducing costs and detecting thefts. Most importantly, RFID technology helps in achieving reverse visibility and traceability. You can attach passive RFID tags to pallets and bins. Using RFID readers, you can associate the pallet to a bin and hence determine the accurate warehouse location. It also makes sure that lesser time is spent in searching for a pallet.
Hologram in its simplest sense helps in avoiding the counterfeits that could pose potential harm. One of the major streams in which counterfeits enter the market is through distributors and contract manufacturers. Holograms do a good job in identifying the original from the counterfeit. Reverse logistics is where the counterfeit is first detected. Once the counterfeits are identified, they can be isolated to take further action.
Serialization and Databar
Many pharmaceutical companies are moving towards serialization. Companies can provide unique serial numbers to every drug or bottle and associate it to the way it is packaged, the batch it came from, the suppliers that delivered the ingredients etc. This information can be finally linked to the transportation and order data. Having this unique serial number and serialization helps in targeted recalls.
The Databar is an emerging technology that can make it easier to use serialization. It can carry more information than the normal bar code, such as lot numbers, serial numbers and expiration dates.
How PALMS can help in fast and accurate Returns Management
PALMS supports returns management process. Its advanced location management features help warehouse operators in automatically redirecting return shipments to separate storage areas, leading to improved efficiency with minimal errors. PALMS supports Batch number and Serial number tracking, which is crucial for tracking returns. It also supports bar-coding and RFID. PALMS has a unique functionality that helps to prevent short-expiry goods from being shipped to market. This considerably reduces returns management for expired goods.