Supply Chain Management is an integral part of any business operations. Reports have predicted a market value increase from US$ 15.85 billion in 2019 to US$ 37.41 billion in 2027 and these estimates are holding true despite the COVID-19 pandemic. In recent times increasing pressures from both within and beyond organisations have led to a growing interest in evaluating supply chains in terms of sustainability. A green supply chain management is one in which all products are created, used, and recycled or disposed of in a closed-loop manner. Reverse supply chain management plays a critical role in ensuring the socioeconomically and ecologically sustainable recovery of used or unused products. During the COVID-19 pandemic, a dramatic change has been witnessed in the global supply chain management. A need has emerged to explore supply chain management strategies to overcome the challenges caused by COVID-19-like situations.
The lockdown has spiked the E-commerce business due to the closure of physical stores. The increase in online sales created an increase in returns. According to global statistics, approximately 30 per cent of products purchased online are returned, compared to just nine per cent of products that are shopped and purchased in-store. This trend has intensified the need for the development of Reverse Supply Chain practices. With time, the reverse part of the supply chain management becomes more and more important due to the growing stakeholders’ concerns, environmental legislation, higher volume of returns, etc. As a result, organisations have to overlook the additional costs of managing the reverse supply chain processes and plan strategically. The right strategy for the reverse supply chain can help organisations achieve a competitive advantage. The global reverse logistics market is forecasted to reach approximately US$ 600 billion by the year 2025.
According to global statistics, approximately 30 per cent of products purchased online are returned, compared to just nine per cent of products that are shopped and purchased in-store.
Reverse Supply Chain Management can not only solve Pakistan’s supply chain problems but also play an important role in creating environmental sustainability. The majority of the industries operating in Pakistan produce large amounts of the environmentally hazardous waste which is further augmented by improper product disposal by the consumers. Research reveals that 40 per cent of food in Pakistan is wasted. This includes food loss during the supply chain (production, post-harvest handling, agro-processing, distribution and consumption). This can be minimised through the effective implementation of Reverse Supply Chain Management in the Food Industry. It can also minimise the huge amounts of e-waste creating environmental degradation in Pakistan. In Pakistan, the low level of internal capabilities and external support are major barriers to the implementation of Reverse Supply Chain in organisaations. In the absence of an adequate information system, training and qualification of workers, management commitment, infrastructure and technology, Reverse Supply Chain initiatives would be limited as organisations cannot generate economies of scale to reduce the cost of product recovery. Other barriers include inadequate environmental regulations, uncertainty regarding obtained results and a lack of partners’ awareness concerning Reverse Supply Chain Management. Stakeholder collaboration and governmental support can green the country’s supply chain industry and take all the value partners forward by adopting Reverse Supply Chain Management.
The writer is the Group Head (Administration, Engineering Projects, BCP & IT) and looks after Green Banking at Bank AL Habib Limited, Pakistan. He can be reached at [email protected]