Circular Economy Glossary

advanced exchange: A repair strategy where a customer is sent a replacement device before returning their defective one, ensuring minimal disruption to the user.

advanced shipping notice (ASN): A detailed accounting of expected return shipments, allowing the creation of expected orders for receipt.

aggregate bulk shipment: Method of shipping where multiple goods are shipped together to streamline transportation and potentially reduce costs.

aggregators: Entities that purchase large lots of products, often from first-tier supply sources, to break down lots into smaller batches for resale.

air and water pollution: Contamination of air and water bodies due to emissions and waste materials, leading to environmental degradation and potential health problems.

analytics: The systematic computational analysis of data, which is pivotal in reverse logistics for understanding and optimizing return processes.

anti money laundering (AML) safeguards: Measures taken to prevent, detect, and report money laundering activities, including background checks and financial tracking.

artificial intelligence (AI): A branch of computer science focused on creating smart machines capable of performing tasks that typically require human intelligence.

“as is” sales: A liquidation method where products are sold in their current condition without detailed descriptions or the possibility of returns.

asset recovery: The process in reverse logistics that involves retrieving value from used or end-of-life products.

augmented reality (AR): Technology that layers computer-generated enhancements atop existing reality to make technology more meaningful through interaction; used in reverse logistics for tasks like identification and repair guidance.

automated cleaning system: A system that uses steam and conveyance to prepare products for reuse in an efficient and environmentally friendly manner.

automated sortation: The process of using technology to sort returned items based on predetermined criteria, such as product mix, category, or condition.

automation: The use of technology to perform tasks with reduced human assistance.

B

background checks: The process of verifying information (either for businesses or individuals) to ensure they are not involved in illegal activities.

Barcode Scanning: A method for capturing data from barcodes, used in WMS for tracking inventory and updating system records.

best practices: Guidelines or principles proven effective in a particular industry or field, often codified into policies that serve as rules or standards that organizations should adhere to.

big data: Extremely large data sets that may be analyzed computationally to reveal patterns, trends, and associations, especially relating to human behavior and interactions; crucial for analyzing returns and customer behavior.

biodiversity loss: A decrease in the variety of species, genes, and ecosystems within a particular habitat, usually as a result of human activities, including waste, emissions, and resource depletion.

blended benefit (BB): The combined advantage specific to each product within every value-generation channel.

blockchain: A distributed database or ledger that allows for secure, transparent, and tamper-proof recordkeeping, often used to track transactions and product journeys.

bounce: A scenario where products are returned, refurbished, reshipped, and returned again, leading to inflated costs and decreased customer satisfaction.

brand reputation: The perceived value and image of a company in the market.

brokers: Middlemen who connect sellers and buyers in the secondary market without adding logistical value.

business rules: Directives that dictate the outcome of the return based on post-inspection information.

buyer’s remorse: The regret a customer feels after making a purchase, which sometimes leads to product returns.

buyout: A process wherein one manufacturer acquires the entire supply of a competitor’s products from a retailer or distributor with the intention of replacing them with their own products.

C

cannibalization: A potential threat where repaired or refurbished products may compete with new products, potentially affecting brand value or new product sales.

Cannibalization Effect: refers to a scenario in business and marketing where a fear exists that the promotion or introduction of a reused or refurbished product leads to a decline in the sales of new products; occurs because customers may choose to purchase the reused product instead of a new one.

cash-to-cash cycle: The process that outlines the time it takes for a company to convert resource investments, like inventory, into cash flows from sales, particularly beneficial in a secondary market where products find new life, potentially offering faster return cycles.

Centralized Warehouse: A single, centralized location where replacement parts or returned products are stored, as opposed to multiple local outlets, aiming to reduce inventory costs.

certified like-new: A term denoting products that have been returned and refurbished to a quality comparable to new products.

certified refurbished: Items that have undergone rigorous functional and cosmetic inspections to ensure like-new quality, complete with verified battery health, original accessories, and the latest software updates.

Cherry-picking: Selectively choosing the best items from a lot for personal gain or to provide an unfair advantage to certain buyers.

circular economy: An economic model that aims to eliminate waste and encourage the reuse of resources by moving products backward to their original source, usually involving the recycling, repairing, and refurbishing of products to extend their lifespan and reduce environmental impact.

circular programs: Initiatives designed to encourage customers to return products, possibly as part of a lease return or annual upgrade program, facilitating the migration to new products.

climate change: Long-term shifts and alterations in temperature and weather patterns, primarily caused by human activities and their cumulative impacts on the environment.

closed-loop recycling: A strategy within the circular economy that involves creating a contained system where the components of a product are recycled to create new products within the same company.

closed-loop system: A circular system that facilitates the recollection, refurbishment, and redistribution of products, aiming to create a continuous cycle that minimizes waste and extends the lifespan of products.

closeout: A sales strategy where excess or discontinued products are sold at discounted prices to clear inventory.

cloud-based systems: Systems that use online platforms to store and manage data, facilitating easier access and sharing of information across different stages of the supply chain.

Commission Chargeback: The practice of reducing or reclaiming commission paid to sales representatives or distributors in the event of product returns.

complimentary recycling assistance: Corporate initiatives that offer help with recycling at no additional charge, aiming to reduce environmental impacts associated with product returns.

condition of packaging: The varying states of packaging when goods are returned, which could be “open,” “damaged,” or “nonexistent,” necessitating different methods of storage or identification.

consignment (“sort and sell”): A liquidation strategy where a partner sells products on behalf of the original seller and retains a percentage of the sale.

consumer data: Personal, confidential, or sensitive information stored on devices such as personal contacts, messages, photos, call histories, financial details, and more.

consumer information (CI): Data stored on a product or package that can identify the previous owner, such as personal contacts, messages, emails, photos, call history, and financial information.

cosmetic condition: The visible state of a product, particularly regarding its appearance and any external damages.

cosmetic grade: A scale denoting the external and aesthetic condition of a product, often ranging from “perfect/new” to “damaged.”

cost management: The process of controlling and reducing the costs associated with returns, including direct and indirect expenses.

Cost of Capital: The opportunity cost of investing resources in the reverse logistics process, which includes the potential interest or revenue foregone from other investments.

cost of goods sold (COGS): The direct costs attributable to the production of the goods sold by a company; this is deducted from revenues to calculate gross profit.

cost to reuse (CR): The operational cost associated with the processes needed to reintroduce returned products into the sales or production cycle.

Counterfeiting Parts in Used Products: The unethical practice of replacing genuine parts with fake counterparts in refurbished or second-hand products.

cumulative impacts: The combined effects of direct and indirect environmental impacts over time, which contribute to larger-scale environmental issues such as climate change, pollution, and loss of biodiversity.

customer feedback: The information coming from customers about the satisfaction or dissatisfaction they feel with a product or a service.

Customer One: Term used to mark the original customer who purchased a product.

customer promise: Commitments made by a company to incentivize customers to purchase their products, which may include various benefits such as warranties, return policies, and trade-in programs.

customer relationship management (CRM): A system for managing a company’s interactions with current and potential customers; may or may not utilize AI to understand and predict customer behaviors and preferences.

customer returns programs: Strategies implemented by businesses to facilitate the return of products from customers, aiming to enhance customer satisfaction and promote sustainability. These programs encompass various policies like satisfaction guarantees, trade-ins, and recycling salvage.

customer satisfaction: The degree to which a customer’s expectations are met or exceeded.

Customer Two+: term used to identify the next potential customer who might receive the product, either through resale, refurbishment, or recycling.

customer warranty: A warranty provided by a distributor or retailer that allows customers to have a faulty product repaired or replaced. It is usually managed through reverse logistics teams and might involve additional offers like extended warranties.

D

data clearing: A multi-level system of ridding devices of sensitive information; per NIST guidelines, there are three levels—clear, purge, and destroy—where data is made inaccessible through normal means and makes devices suitable to be repurposed or resold.

data destruction: The highest level of data clearing where a device is physically destroyed and all data made irretrievable; typically applied to devices containing highly sensitive data.

data erasure: The secure removal of sensitive data from devices, preventing unauthorized access and ensuring privacy.

data layer: A layer of information containing details such as RMA number, serial numbers, tracking information, and more.

Data Security Threats: The potential risks associated with data breaches or unauthorized data access when products containing data are reintroduced in the market.

data-driven insights: Information derived from analyzed data that aids in identifying areas contributing to unwanted returns and formulating strategies to mitigate them.

dead on arrival (DOA): A term that denotes products that do not work upon the customer receiving them, necessitating return or replacement.

decision support system (DSS): Computer-based information systems that support business or organizational decision-making activities.

demonstration devices: A program where customers are given items for temporary use or display before making a purchase.

denial criteria: Specific conditions or criteria that were not fulfilled in order to authorize a return (e.g., packaging not intact or failure to return an item within a specified timeframe).

depreciation: The reduction in the value of an asset over time due to factors like wear and tear, obsolescence, and market trends.

Diffusion of Innovation Theory: A theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures.

Direct (Tested) Standard: A sales method where products are categorized and priced based on their tested functionality and cosmetic condition.

direct costs: Expenses that can be directly linked to the return process, including shipping, handling, and storage.

direct impacts: Quantifiable environmental effects resulting directly from return management activities, such as CO2 emissions and resource usage.

Direct Liquidation: A process where surplus or returned products are sold in bulk, often through auctions, to various buyers, including those in the secondary market.

discrepant returns: Situations where a returned product does not match expectations or agreed-upon conditions.

disposal: The act of getting rid of unsellable goods, which could involve methods like landfilling or recycling.

disposition: The methods or strategies employed to manage returned goods, including resale, refurbishment, recycling, or disposal.

distribution centers: Facilities that play a role in aggregating products from different manufacturers for sale.

distribution channel: A network of intermediaries or middlemen that facilitates the transfer of goods from producers to consumers; sometimes involves leveraging other organizations to aid in the sales process.

distribution points: Locations where products are transferred to, in large quantities, through forward logistics processes, which could be outlets or retailers.

E

early adopters: Individuals who adopt new products early in the product lifecycle, often willing to pay premium prices and serve as opinion leaders.

early pragmatics: Consumers who purchase new products but do not upgrade immediately with each new release, opting to use products until they no longer meet their needs.

early upgrade: A customer-oriented program where customers, under a contractual agreement, can exchange their current device for a newer one before the end of the contract. The value of the returned device goes toward fulfilling the remaining contractual obligations. This approach fosters customer loyalty and encourages continued engagement by keeping customers updated with the latest releases.

eco-friendly logistics: Methods and strategies that aim to minimize negative impacts on the environment, promoting sustainability and conservation.

eco-friendly: term to describe sustainable methods and practices that minimize environmental impact and promote conservation of resources.

e-commerce marketplaces: Online platforms where goods and services are bought and sold. The rise of these platforms has facilitated the matching of supply and demand for used products, fostering trade-in and trade-up programs.

e-commerce: A method of buying and selling goods and services over the internet.

edge computing: A distributed computing paradigm that brings computation and data storage closer to the location where it is needed to improve response times and save bandwidth.

EDI (Electronic Data Interchange): The structured transmission of data between organizations electronically.

Electronic Validation Tools: Tools that provide an electronic record verifying that data has been cleared from a device and the device is restored to its original configuration.

empowered consumer: A shopper who uses their knowledge and resources to make informed decisions about their purchases, focusing on sustainability, value retention, and repairability.

end customers: The final consumers who purchase products for usage.

end of life (EOL): The phase in a product’s lifecycle when a manufacturer stops production and support, often leading to liquidation of remaining inventory.

end of support (EOS): The point at which a manufacturer discontinues active support and updates for a product.

energy consumption: The utilization of energy during the transportation and processing of returned goods, contributing to environmental impacts like greenhouse gas emissions.

enterprise resource planning (ERP): Integrated management of main business processes, often in real time; mediated by software and technology.

environmental and regulatory compliance: Ensuring that business practices, especially in reverse logistics, adhere to environmental laws and regulations; facilitated by ERP systems.

environmental impact: The effect of business operations on the environment.

environmental stewardship: The responsible management and conservation of the environment through sustainable practices and initiatives.

Environmental Sustainability and Governance (ESG): Tools and metrics that help to evaluate and emphasize the unique focuses of green logistics and circular economy strategies, aiding in better decision-making processes aligned with environmental sustainability goals.

executive information system (EIS): A type of management information system intended to facilitate and support the information and decision-making needs of senior executives.

extended producer responsibility (EPR): Policies that hold brands accountable for the environmental impact of their products throughout the lifecycle, including disposal.

F

failure to deliver: A situation where a shipped product fails to reach the customer due to various reasons such as incorrect address or shipping errors.

fast fashion: A model of mass-producing inexpensive clothing rapidly in response to the latest fashion trends; may result in environmental and social issues.

financial accounting: The field of accounting concerned with the summary, analysis, and reporting of financial transactions pertaining to a business.

First Industrial Revolution: The period marked by the shift from manual labor to mechanization in the late 1700s to mid-1800s.

first tier supply sources: The initial points where products are returned by customers, which can include manufacturers, distributors, or third-party entities.

fish market analogy: A comparison used to describe value-generation optimization in reverse logistics, illustrating how returned products are like fish in a market, with a need for quick and strategic value extraction before deterioration.

forced internalization: A government-introduced regulation that mandates companies to bear the full costs of environmental impacts associated with the production and consumption of their goods and services.

forecasting: The process of making predictions about future events, based on historical data and analysis of trends; used in both manufacturing and reverse logistics.

forward logistics: the movement of products from manufacturers to end users, typically encompassing the processes of manufacturing, distributing, and selling.

forward supply chain: A process that begins with the acquisition of raw materials necessary for manufacturing a product, involving several stages including manufacturing, distribution, and retail.

four desired outcomes of reverse logistics: Core principles or approaches that encompass the desired outcomes a business wants from its reverse-logistics teams.

Fourth Industrial Revolution (Industry 4.0): The current era of industrial revolution, characterized by data exchange and automation in manufacturing technologies, including AI and ML.

functional status: An indicator of whether a product is fully functional, partially functional, or non-functional, influencing its grade and value.

G

General Data Protection Regulation (GDPR): European Union regulations that require businesses to protect the personal data and privacy of EU citizens.

goTRG: A company that provides third-party logistics, software solutions, and re-commerce services for reverse logistics.

grading and assessment process: The process where returned products are inspected to determine their condition and potential for reuse, which might include refurbishment, repairs, or repackaging.

grading funnel: A visual representation of the process where products are inspected, tested, and graded to determine their quality and marketability.

green consumer: Shoppers who prioritize purchasing products that are environmentally sustainable and have a reduced ecological footprint.

green logistics: The planning and implementation of environmentally friendly and sustainable practices in the logistics industry, encompassing efforts to reduce waste, emissions, and resource depletion.

green sanitization: An eco-friendly sanitization process, such as the use of ozone chambers, to clean garments without the heavy use of water or electricity.

greenhouse gas emissions: Gases emitted into the atmosphere as a result of energy consumption during transportation and processing of returns, contributing to global warming.

greenwashing: Misleading consumers by falsely marketing products as environmentally friendly or sustainable.

H

happy path returns: Successful return processes where the returned product matches original expectations without issues.

harvesting: A strategy involving dismantling a product to use its parts for repairing other devices or selling for residual value.

hidden costs: Costs that are not readily apparent or allocated to returns, often absorbed into the broader financials of the company, making them difficult to track and manage.

holistic approach: A comprehensive method to green logistics management that integrates strategies for reducing environmental impacts across all aspects of logistics operations.

I

idle inventory: Products that are not being actively sold or used, typically resulting in a net benefit of zero and increasing costs over time due to storage and depreciation.

Image Capture Technology: Technological systems that use cameras to recognize, capture, and process images of returned items for identification and grading.

indirect costs: Expenses that are not directly attributed to returns but are incurred due to the consequences of returns, including lost sales and harm to brand reputation.

indirect impacts: Environmental effects that are secondary or less tangible and harder to measure directly, occurring as a result of managing returns.

Industry 4.0: Also known as the Fourth Industrial Revolution, this term refers to the ongoing automation and data exchange in manufacturing technologies, including the Internet of Things, cloud computing, and artificial intelligence.

information consumption logic: Used to discern subsequent actions in the return process, from issuing refunds to identifying variances.

infrastructure: Expenses for facilities and equipment necessary for reverse logistics operations, like warehouses and repair centers.

innovation: The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

insourced reverse logistics: When a company handles the reverse logistics process internally using its own resources, such as personnel and facilities.

inspection: The process of assessing the condition of returned products and identifying any defects or damages.

intentional misgrading: Deliberately misrepresenting the condition of a product to manipulate its market value.

interface tools: Digital or physical platforms facilitating the returns process. They capture essential return data and streamline product shipment details.

Internet of Things (IoT): A network of interconnected devices that can exchange data without human intervention, used in logistics to track product movements and gather data for decision-making.

inventory control: The process of managing the supply, storage, and accessibility of items to ensure an adequate amount without excess.

inventory: The stock of finished goods or products that a company holds at any given time, including items that have been manufactured or remanufactured and are awaiting sale or distribution.

J

job-out: A program where products are sold to other parties at discounted rates to fulfill specific orders or contracts.

K

key performance indicator (KPI): A measurable value that demonstrates how effectively a company is achieving key business objectives; in WMS, this commonly includes inventory turns, order accuracy, and warehouse efficiency.

L

labor: work needed to oversee, handle, inspect, and repair returned products.

lease: A customer return program where products can be returned after a period of time, offering customers flexibility and avoiding long-term ownership commitments.

Level One Process Flow: A fundamental tool in business-process management and engineering that provides an overarching view of a system or process.

license plate identification (LPN): A system used in WMS that assigns a unique identifier to items, enabling easier tracking and management of inventory.

Like-for-Like or Like-for-Better Alternatives: A practice where companies offer replacements that are identical or superior to the returned or defective products.

like-new or excellent-condition product: A product that has been returned but retains a condition that is indistinguishable from a brand-new item.

linear finance models: Financial structures associated with traditional linear supply chains, which prioritize product sales and typically view returns negatively.

line-level auctions: Auctions where participants bid on specific items based on make, model, and grade, allowing for precise purchases.

liquidation: The process of converting assets into cash, often by selling them in bulk to liquidators or through auction platforms.

logistics operations: Activities and processes that involve the movement, storage, and flow of goods, materials, and information from the point of origin to consumption points. These operations encompass transportation, warehousing, inventory management, and distribution.

logistics: Originally referred to the art of calculation in ancient Greece; now pertains to the comprehensive process of managing the movement and storage of products or goods, including activities such as warehousing, resource management, packaging, transportation, and services. It aims to ensure the right product is in the right place, at the right time, in the right condition, to meet the four desired outcomes.

Lot Complexity: The variety and assortment within a batch of products that affect sorting, processing, and the overall cost of managing the lot.

Lot-Based Auctions: Sales of large quantities of inventory at once, which may include a mix of high- and low-demand items.

M

machine learning (ML): A subset of AI that involves the use of algorithms that improve automatically through experience and by the use of data.

manufacturer warranty: A guarantee provided by the manufacturer that defective or malfunctioning products can be returned for repair, replacement, or refund within a specified period.

manufacturers: Entities or companies that produce goods in large quantities, which are then transferred to distribution points.

market value accounting: An approach that values returned items based on their current market price, considering their condition and market demand.

Market Value Depreciation: A method of gauging depreciation based on real-time market conditions and trends, which can fluctuate significantly.

market value: The current sale price of an asset in the open market, influenced by supply-demand dynamics, technological advancements, or broader economic conditions.

money laundering: The illegal process of making large amounts of money generated by criminal activity appearing to have come from a legitimate source.

Money-Back Warranty Options: Policies that provide refunds to customers, allowing them to purchase their next products, reducing the company's burden of maintaining parts supply.

N

natural resource scarcity: The limited availability or depletion of vital natural resources due to overconsumption, environmental degradation, or other factors, resulting in an inability to meet the current and future demand of human populations and ecosystems.

New Equipment Product Curve: A model illustrating the lifecycle of a product, including its market entry, pricing strategy, sales volume, and value over time.

O

Omni Channel Returns Programs: A system that allows customers to return products purchased from one channel (like online) through another channel (like a physical store), offering convenience and flexibility in the return process.

omni-channel shopping: A retail strategy that offers a seamless and integrated shopping experience across various channels, including physical stores, online platforms, mobile apps, and social media.

Open Auctions: Public auctions where the current highest bid is visible to all participants, encouraging competitive bidding.

operational processing: The set of procedures involved in maneuvering the product through various stages of the return process to maximize value and minimize costs.

order fulfillment: The complete process from point of sales inquiry to delivery of a product to the customer, streamlined by WMS.

order issue reduction: Strategies to decrease problems like incorrect item shipment or delivery, leveraging feedback from reverse logistics teams.

outflow methods: The strategies employed to move returned products onto their next use or customer, aiming to realize value from returned goods.

over-repair(ing): The act of unnecessarily repairing or replacing non-defective parts of a product, leading to increased costs.

P

packing: Preparing products for the next phase, which may include shipment, refurbishment, or recycling; includes the relevant documentation.

partial credit(s): A practice where customers are offered only a partial refund or credit for returned products.

picking: The act of retrieving specific products from storage based on determined criteria or specific orders.

point of sale (POS) systems: Systems used for processing sales transactions that can update inventory levels in real time and may integrate with CRM and other functionalities.

post-inspection information: Data regarding the actual condition of the received product after it has undergone evaluation.

pre-inspection information or return data: Information acquired during asset recovery which ensures that the correct device is returned in the specified condition and timeframe.

procurement: The process of obtaining goods or services, typically for business purposes. In the context of new product launches, it involves direct purchasing and budgeting based on sales forecasts.

Product Curve Model: Notations used to describe the lifecycle stages of a product, especially for frequently updated models.

product descriptions: Detailed information provided about a (used) product’s condition, history, and specifications to inform potential buyers.

product design: The blueprint of a product’s construction, can be refined to decrease return rates and associated costs by enhancing quality; shifts in blueprints may foster sustainability through the incorporation of repairability aspects and the utilization of recycled or recyclable materials in manufacturing.

product identification: The use of unique identifiers like SKUs and UPCs to manage and track inventory in a WMS.

Product Lifecycle Loop: A model that maps out the journey of a product from manufacturing to the hands of first and subsequent users, encouraging continuous use and minimizing waste. This loop includes stages like manufacturing, sales, forward logistics, reverse logistics, repair/refurbishment, and resale, ending in responsible recycling when the product can no longer be economically circulated.

product one: The first product that is sold to the primary customer, the sale of which initiates a cycle of demand generation and potential reuse or repurposing through upgrade incentives.

product two+: A newer model or version of a product that primary customers are encouraged to upgrade to, fostering a cycle of consumption and facilitating the potential resale or repurposing of the first product (Product One).

production schedule: A plan that outlines the timing and quantity of production to align with demand forecasts and sales projections.

promotional trade-in: A return program where the value offered to the customer in exchange for returning an old product exceeds its standard trade-in value. It combines marketing budget with the old product’s value to create attractive market offers, aiming to boost customer acquisition, promote upgrades, and persuade customers to switch brands.

Q

quality control: The process of ensuring that repaired products meet the expected standards to prevent negative customer experiences and protect brand reputation.

quick response (QR) codes: A type of matrix barcode that is machine-readable and contains information about the item to which it is attached, used in WMS for detailed inventory management.

R

radio frequency identification (RFID): The use of radio waves to read and capture information stored on a tag attached to an object, used in WMS for advanced inventory tracking without the need for a direct line of sight.

receiving: Accepting returned products into the reverse logistics system, initiating warehouse tracking, and verifying items against the return merchandise authorization (RMA).

reclamation: The process of reclaiming or recycling components from returned products, often as part of warranty management or green logistics strategies.

re-commerce: The process of selling previously owned or used products, often through online platforms, to give items a second life and promote sustainability.

recycling salvage: A program encouraging customers to return old products voluntarily for environmentally responsible disposal. It ensures that the products undergo proper disposal methods, such as recycling or material reuse, securing data, and preventing landfill disposal.

refurbishment: An extensive process aimed at enhancing a product’s aesthetic and functionality, including cleaning, repair, or part replacement.

regional, mid-Tier, and niche Distributors: Entities specializing in handling medium-sized lots and catering to specific markets or product types in the secondary market.

Remote Diagnostics: Tools or applications that help identify and resolve product issues remotely, reducing the need for physical returns.

repackaging: The act of packing returned products in new packaging for resale, which can involve costs and resource consumption.

repair operations: Processes focused on improving the cosmetic and/or functional aspects of a returned product or packaging to prepare it for resale or support a warranty program.

repair: The act of mending or fixing a product to regain its functionality.

re-registration: The process where a subsequent user officially registers a used product to access legitimate software or services.

resale value effect: A strategic benefit for companies in promoting the reuse of returned products; includes generating additional revenue from software and warranties, leveraging products’ residual value to encourage future purchases quicker, and expanding the market by reselling the same product to new customers.

residual value: The remaining benefit of a product that has become unwanted, which can potentially be reclaimed, reused, or resold in the reverse supply chain.

residual value upgrade effect: refers to the increased value perceived by customers when they can trade in a used product and the residual value of that product can be leveraged towards the purchase of a new item; encourages customers to invest more in new product sent or resale.

resistance: In the context of returns management, resistance refers to the strategies and processes employed to reduce the volume of product returns, which can include implementing return windows, charging restocking fees, and establishing denial criteria.

restocking fees: Fees charged to customers for returning products, typically to offset the costs associated with processing returns and restocking products.

restoration: Cleaning and reviving a product to enhance its aesthetics and value.

retailers: Entities acting as distributors collecting products from distribution centers or receiving direct shipments, catering to both other businesses (distributors) and end customers.

return material authorization (RMA): A formalized process ensuring that product or material returns are properly documented, tracked, and managed.

return prevention and cost management (RPCM): A strategic approach in logistics focusing on reducing the frequency and costs associated with product returns, which may involve improving product quality or refining return policies.

return rights: A policy where manufacturers or distributors allow retail outlets to return items that customers no longer want in exchange for credit, thus shifting the risk of customer returns upstream.

return stream: A concept within sales enablement programs that refers to the processes and paths that returned products follow, which can vary based on a company’s return policies and the expectations of value from customers. The strategy may aim to either decrease or increase returns depending on company goals and customer satisfaction priorities.

return to vendor (RTV): An event where a returned product moves from a point back to its originating supplier or manufacturer.

returned equipment product curve: A representation of the availability and pricing behavior of returned or used products over time in the circular economy.

returns enablement programs: The guidelines which dictate the terms of return to customers.

returns programs: Strategies designed by companies to manage the return of products, offering avenues for recouping value and maintaining positive business relationships in the supply chain.

reuse as new: Introducing returned products that can be restored to a “new” state back into forward distribution channels for resale.

reuse: The practice of using products or materials more than once, rather than discarding them after a single use, to reduce waste and environmental impacts.

reventory: Products that have been sent back to the company through the reverse-logistics flow and are awaiting disposition. It represents a phase where the products have been returned and are awaiting further processing.

reverse logistics: The process of moving goods from their final destination back to a collection point for the purpose of capturing value (refurbishment, recycling, and redistribution) or proper disposal; the central mechanism in enabling the goals of the circular economy by minimizing waste and aligning economic operations with environmental sustainability desired outcome.

reverse supply chain: Contrary to being a linear process moving backward from the customer to the manufacturer, it involves various paths where the product can move from the customer back into the hands of the next user, fostering competition to maximize product value through alternative points of return.

reverse value chain: The sequence of activities a company performs to reintegrate returned products back into the market, including repair, refurbishment, or recycling.

right to repair movement: A campaign advocating for consumers’ ability to repair the products they own by having access to parts, tools, and information.

rules of engagement: Guidelines or stipulations set by suppliers on how their returned products should be liquidated, including minimum pricing and buyer qualifications.

S

sales enablement programs: Initiatives managed often as a marketing function, focused on enhancing the processes and tools that help in selling products efficiently and effectively.

sales outlet: The various channels, both online and offline, where products are sold, influencing customers’ buying behaviors and return rates.

sales racetrack model: A model in which the customer is encouraged to continuously consume products, moving from one product to the next. It represents a traditional approach focusing on customer-centric sales and consumption patterns.

sales teams: Groups within organizations that play a central role in marketing products to primary customers, fostering demand for both new and reused products, and contributing to revenue generation.

same-unit repair: A strategy where only the defective part of a product is fixed, reducing the need for complete product replacement.

satisfaction guarantee: A policy where customers have the option to return a product within a specified period if not satisfied with the purchase, ensuring a risk-free buying experience.

second industrial revolution: The period of rapid industrial growth with the emergence of mass production and electrification in the late 1800s to early 1900s.

second tier supply sources: Entities that purchase products from the first tier of supply sources, often specializing in consolidating larger lots into smaller batches.

secondary market: A market where used products are acquired and sold, either by the end customers themselves or through other companies, often at lower prices compared to new products; highlights the growth of platforms and services facilitating the recirculation of products between different users.

seed-stock management: The use of brand-new products to support warranty replacements, eventually transitioning to using refurbished returns to maintain the “like new” promise.

selective partner liquidation: A strategy where companies choose specific, often certified, wholesalers to liquidate their products, ensuring responsible treatment and minimizing cannibalization.

self-service diagnostics: Tools or applications that enable customers to diagnose and potentially fix issues on their own, reducing the need for product returns or in-person repairs.

service level agreement (SLA): A formal documented agreement that outlines the level of service expected by a customer from a supplier, laying out the metrics by which that service is measured, and the remedies or penalties, if any, should agreed-upon service levels are not achieved.

shell companies: Businesses established with no significant assets or operations, often used as a front for illegal activities such as money laundering.

shipping: The process of sending products to their designated destinations after all preceding activities are completed.

software as a service (SaaS): A software-licensing and delivery model where software is licensed on a subscription basis and is centrally hosted.

sort & sell (consignment): A secondary market sales method where products are sorted and sold on behalf of the original seller, who then shares in the proceeds.

sortation: Categorizing returned products based on various parameters, such as product type or condition, for easier processing.

stock keeping unit (SKU): A unique code that identifies each distinct product and service that can be purchased, crucial for inventory tracking in WMS.

straight-line depreciation: A method of calculating depreciation where the asset’s value is reduced by an equal amount over its useful life.

strategy: A high-level plan or set of guidelines created to achieve specific goals or desired outcome within an organization. In reverse logistics, strategy outlines the approaches and plans for managing product returns, repairs, and refurbishments effectively.

supply chain management: The management of the flow of goods and services, encompassing all processes that transform raw materials into final products. It includes a wide range of activities such as procurement, production, distribution, and logistics.

supply chain: Comprises multiple points and involves the movement of goods and services, with logistics being a crucial component including storage, distribution, and various customer-tailored elements. It facilitates the efficient movement of products between different elements, integral to the overall supply chain process.

surplus: Products that fail to sell as anticipated, resulting in excess stock with diminished demand. These unsold items need to be removed from the shelves and might be returned to the supplier or disposed of through alternative channels to generate value.

sustainability: The use of resources in a way that meets the needs of the present without compromising the ability of future generations to meet their own needs, typically encompassing environmental, economic, and social dimensions.

sustainable practices: Initiatives and strategies adopted by companies to minimize their negative impacts on the environment, often involving efforts to implement circular-economy principles.

swim lanes strategy: A controlled liquidation approach where suppliers restrict sales to a select group of wholesalers to manage supply and market segments.

T

takeback guarantee: A commitment by companies to accept returns of their products, often bearing all associated costs.

tested (direct) standard: A sales method where products are tested, categorized, and priced based on their functionality and condition.

testing: Evaluating the functionality and performance of returned products to determine their condition and the necessary next steps.

third industrial revolution (the Digital Revolution): The period characterized by the advancement of electronics, computers, and automation in the late twentieth century.

third parties: Entities in the secondary market that source products from various suppliers and cater to different marketplaces and regions.

third tier supply sources: The niche market wholesalers, refurbishers, and smaller retailers that operate at the end of the secondary market supply chain.

third-party logistics (3PL) providers: An external company hired to handle specific aspects of the reverse logistics process, such as product collection, transportation, sorting, and disposal or resale.

third-party service providers (3PSP): Companies that handle the return, repair, refurbishment, recycling, or disposal of products for other businesses.

Their role includes managing return policies, processing returns, and determining cost-effective methods for reprocessing or disposing of goods.

third-party solutions partners: Businesses that collaborate to provide custom reverse logistics solutions. They offer technological and logistical expertise to optimize reverse supply chains, including software for tracking returns and strategies for reducing waste and maximizing recovery value from returned items.

threat asset: An entity with motivation to exploit vulnerabilities, which could be an actor, such as an individual or organization, looking to gain unauthorized access to sensitive information.

tiered re-registration fees: A pricing strategy that adjusts re-registration or relicensing fees based on the product-lifecycle stage to balance new sales with secondary market opportunities.

trade-in: A return process where customers return used products to receive residual value, applicable toward a new purchase or as an alternate payment method. This circular program incentivizes product upgrades and brand switching, potentially generating additional revenue streams through the refurbishment and resale of returned products.

transaction processing systems (TPS): Computerized systems that perform and record the daily routine transactions necessary to conduct business, such as sales-order entry, hotel reservations, payroll, employee record keeping, and shipping.

transfer order: An order or notice that outlines the transfer of inventory between locations, which can be linked to an RMA.

transparency: The practice of reporting costs clearly and accurately to facilitate informed decision-making and efficient management of returns.

transportation (in Forward Logistics): Focuses on moving goods from the point of origin to the point of consumption, involving activities such as selecting appropriate modes of transportation, arranging shipping routes, and coordinating deliveries.

U

unethical practices: Actions that are dishonest, unfair, or illegal, particularly in business dealings in the secondary market.

universal product code (UPC): A barcode symbol that is widely used in the United States and Canada for tracking trade items in stores, used in WMS for product identification and tracking.

unrestricted access to lists: Illegally obtaining access to business databases, customer lists, or other proprietary information.

V

value generation methods: Strategy employed by companies to maximize the value derived from products through various stages of their lifecycle, including return and recycling processes.

value generation optimization: A strategy that involves using various channels to generate value from returned products, maximizing revenue by engaging the most profitable outlets based on supply and demand dynamics.

value generation outlets: The endpoints in the reverse supply chain where refurbished, repaired, or recycled products are sold to end customers.

value generation: The decision-making process related to the subsequent use of a returned product, be it redeployment for value or responsible disposal.

value seekers: Customers who are price sensitive and only purchase new products when the price has decreased, typically after newer models are released.

Value-stream mapping: A visualization tool utilized in lean manufacturing to depict and improve the flow of production and information.

Velocity: The speed at which a returned product is received, and its value realized.

Venn diagram: A diagram using overlapping circles to illustrate the relationships between different sets. In this context, used to illustrate the similarities and differences between forward and reverse logistics.

W

warehouse automation: The application of specialized equipment and storage and retrieval systems to automate tasks in a warehouse managed by WMS.

warehouse management system (WMS): A software application designed to support and optimize warehouse or distribution center management.

warehousing: The act of holding or storing returned products until their next designated action is determined. In forward logistics, this involves facilities to store products before distribution to customers, where activities such as inventory management and order fulfillment occur, handling new products that are identically packaged. In reverse logistics, it involves facilities to handle returned products, with processes like sorting returned items, assessing their condition, and determining the appropriate disposition (repair, refurbishment, recycling).

warranty management: A critical function in returns management overseeing the application of repair and refurbishment protocols and determining strategies for handling products under warranty.

warranty options: Various forms of guarantees offered by manufacturers to provide repair or replacement services for their products within a specified period; helps foster customer trust and satisfaction.

warranty replacement: The process of replacing a defective product under the company’s warranty policy, often involving stringent quality and functional standards to uphold brand reputation and customer satisfaction.

waste generation: The creation of waste due to disposal of defective products that cannot be repaired or recycled, contributing to environmental impacts.

Whistleblower Mechanisms: Systems that allow individuals to report illegal or unethical activities anonymously within an organization.

wholesale liquidation: The bulk sale of products to the secondary market, transferring the responsibility of distribution to other partners.