As much as it has weakened lately in Angola, the food retail industry still has huge growth potential. A shift to focus upon logistics and sustainable development are what underline the standpoint that Leonel Alargado took in his article “Reverse Logistics in Developing Countries: The case study of the food retail sector in Angola.
” This study is the fruit of a research project and a market survey conducted to unlock the potential of reverse logistics in developing countries like Angola.
The Scope:
Many companies have been implementing reverse logistics spontaneously, or as Alargado puts it « subconsciously ». In order to identify a clear framework for this specific niche, as a retailer you need to ask yourself these questions:
- Am I reusing the non-purchased goods?
- Am I returning goods to my supplier or from the store to the distribution center/warehouse?
- Am I recapturing the value of waste and/or recycling it?
- Am I donating unsold food products?
An affirmative answer to one of these questions indicates that you are already or have started implementing reverse logistics. Whereas negative answers to all of the aforementioned questions entail that the company has to follow the Priority Reverse workflow, a tailor-made process to help food retailers narrow and organize their focus.
A Reverse Process Designed to Food Retail:
1- Transportation Accessories:
Minding the fact that there is no ideal implementation process to be followed, it is advisable to prioritize first transport accessories.
In other terms, the focus upon transportation reflects the operations taking place at the retail chain process. Retail chains should guarantee that transport accessories match the requirements or needs of the goods, thus ensuring products’ safety and optimizing distribution.
Inventory management also falls under the umbrella of transport accessories. Keeping constant track of your inventory is crucial in order to be aware of returned, perished, or unsold goods and to mitigate the risk of losing your goods.
If we take a lifter, for example, as a transport accessory, the reverse logistics framework ensures that this item is collected once it has fulfilled its purpose.
While there needs to be a space for returned goods, a specific area dedicated to transport accessories has to be installed close to the distribution center.
Depending on the storage area, volume handled and other parameters, this particular step requires larger human resources compared to the remaining logistics activities.
2- Non-perishable Goods:
Once the transport accessories are defined, your focus needs to shit to non-perishable goods; the merchandise that is not sold within the specified timeframe the value of which can be recaptured. The reverse logistic activity tackling non-perishable goods requires a mutual agreement with your supplier by:
- setting return policies and negotiating contracts
- defining the reasons according to which returns take place, as well as their final destinations.
- identifying the reverse logistic process from A to Z
Algardo builds upon this by drawing our attention to contracts types:
- Buy-Back Agreement
- Contract Quantity, Flexibility
- Quality Contract
- Seasonality Contract
- Seasonality – No Contract
- Quantity-Contract
- Quantity-No Contract
Food retail is among the most critical industries that call for retailers to be mindful of every single detail starting with the contract that binds the latter with other stakeholders.
3- Recyclable Waste:
The act of collecting, sorting, and finally recycling defines this process. According to Leonel, the activity that is far from being cost-effective is collecting.
Whether through door-to-door or Eco points, this step often requires transportation and delivery in specific areas.
Food retailers have the ability not only to create and streamline a sub-system business by selling recycled merchandise but also to be granted sponsorship or governmental aid.
In a nutshell, recycling waste has an immense social impact. Unfortunately in developing countries such as Angola, waste management systems are not advanced and tailored enough to recycle any type of waste; yet, many countries are still paving their way towards upgrading their systems.
4- Perishable Goods:
Food surplus and food waste; these are the two clusters according to which the inverse flow of perishable goods is divided. Important things you need to keep in mind concerning this activity:
- it is a developed activity that is not accessible to every food retailer but only to those who have an upgraded level of supply chain management
- it can be done whether independently using top-notch machines or through relying on a 3PL partner/ logistics provider
- it results in the production of fertilizers, biofuels, energy, and animal nutrition.
In countries wherein e-commerce is still following baby steps, this inverse activity should not be a priority, which explains why in our context Alargado puts it by the end of the process.
“The amount of food surplus produced is smaller in developing countries, but the need for them is considerably higher. The donation of food surplus should be viewed as a very important activity by the food retail in developing countries. However, given the difficulties encountered in those markets, the development of operations should be the responsibility of charity institutions. The food retail companies should only take control and responsibility for the activity when the expectations of society and social responsibility factors so request. These measures, in addition to the social image generated, can benefit from a free collection service.”
Long Story Short:
Reverse logistics is no longer a luxury for retailers in developing countries, as you can adjust it according to your business model and logistics needs. It is undeniable that there are « barriers to its development » due to the costs it puts upon retailers. Alargado concludes by saying that « the lack of financial resources or capacity infrastructure and technologies (..) takes minor importance in countries like Angola given the simplicity of the reverse logistics process and its implementation.”
With this being said, Angola was taken by Alargado as a case study measuring to a certain extent the feasibility of upgrading reverse logistics in specific countries; yet, the study is still uprooted in the idea of raising awareness about this process among retailers.
