REVERSE LOGISTICS

Definitions

Logistics (Forward)
Process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements - Council of Logistics, 1988 -

Reverse Logistics
Process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal - Rogers and Tibben-Lembke -

Reverse Logistics Activities

Hand ing of ret!rned "erc#andise

Da"age Seasona inventor$ Rese via o!t et Sa vage of o!tdated %rod!cts Stoc&'(a ancing ret!rns

Rec$c ing and re!se

)ateria re!se Re"an!fact!ring * ref!r(is#ing

Ha+ardo!s "ateria s dis%osition

T#e Reverse Logistics 2rocess

So!rce, #tt%,**www-r "aga+ine-co"*i"g*edition./0!%s-1%g

Ret!rn 2ercentages

So!rce, Rogers and Ti((en3Le"(&e4 Going 5ac&wards, Reverse Logistics Trends and 2ractices4 6778

2!( is#ing Ind!str$

Hig#est rate of !nso d co%ies (98: on average) Growt# of arge c#ain stores, )ore s;!are footage re;!ires "ore (oo&s To sec!re a %ro"inent dis% a$ in s!%erstores4 %!( is#ers "!st s!%% $ arge ;!antities of (oo&s

S!%erstores se ess t#an <.: of (oo&s t#e$ order S#orter s#e f ife

Co"%!ter * E ectronic Ind!str$

S#orter ife c$c es How to recover and re!se "ateria s contained wit#in E3waste=

Lead4 co%%er4 a !"in!" go d4 % astics and g ass E3waste inc !des co"%!ters4 te evisions4 ce %#ones4 a!dio e;!i%"ent and (atteries

Re"an!fact!ring of toner cartridges, 694... re"an!fact!rers4 e"% o$ing /94... wor&ers4 se near $ >6 (i ion ann!a $

A!to"otive Ind!str$

T#ree %ri"ar$ areas,

Co"%onents in wor&ing order so d as is Ot#er co"%onents4 s!c# as engines4 a ternators4 starters4 and trans"issions are ref!r(is#ed (efore t#e$ can (e so d )ateria s are rec ai"ed t#ro!g# cr!s#ing or s#redding

A!to"otive rec$c ers #and e "ore t#an ?<: (on an average) of t#e nation@s ferro!s scra%

Retai Ind!str$

2rofit "argins are so s i" t#at good ret!rn "anage"ent is critica Ret!rns red!ce t#e %rofita(i it$ of retai ers "argina $ "ore t#an "an!fact!rers

Forward vs- Reverse Logistics

STRATEGIC ASE OF REVERSE LOGISTICS

Reverse Logistics as a Strategic Bea%on

)an$ fir"s #ave not $et decided to e"%#asi+e reverse ogistics as a strategic varia( eT#e #and ing of reverse ogistics c#a enges is a strategic ca%a(i it$Reverse ogistics is strategica $ !sed to,

Red!ce t#e ris& of (!$ing %rod!cts t#at "a$ not (e C#ot se ingD ite"sIncrease t#e switc#ing c#anging s!%% ierscosts of

Source: Rogers and Ti

en-!em "e, #oing $ac"wards: Reverse !ogistics Trends and Practices, %&&'

STRATEGIC ASE OF REVERSE LOGISTICS

Competitive Reasons

Li(era ret!rn %o icies over t#e ast few $ears d!e of co"%etitive %ress!resTa&ing (ac& !nwanted %rod!cts or %rod!cts c!sto"ers (e ieve do not "eet needs

Good Corporate Citizens ip

o

Ase reverse ogistics ca%a(i ities for a tr!istic reasons4 s!c# as %#i ant#ro%$T#ese activities en#ance t#e va !e of t#e (rand and are a "ar&eting incentive to %!rc#ase t#eir %rod!ctsen-!em "e, #oing $ac"wards: Reverse !ogistics Trends and Practices, %&&'

Source: Rogers and Ti

REVERSE LOGISTICS CHALLEEGES

Retailer ! "anufacturer Conflict

Inefficiencies t#at engt#en t#e ti"e for %rocessing ret!rns,

Condition of t#e ite" Va !e of t#e ite" Ti"e iness of res%onse

T#e$ #ave to deve o% a wor&ing %artners#i% to derive "!t!a (enefit

#roblem Return $%mptoms

o

Lac& of infor"ation a(o!t t#e %rocessIf $o! aren@t "eas!ring it4 $o! aren@t "anaging it-

Source: Rogers and Ti %&&'

en-!em "e, #oing $ac"wards: Reverse !ogistics Trends and Practices,

REVERSE LOGISTICS CHALLEEGES

Cause and &ffect

2oor data co ection eads to !ncertaint$ a(o!t ret!rn ca!sesI"%roving t#e ret!rn %rocess decreases costs5eing a( e to see defective %rod!cts and to trac& ret!rn iss!es-

5ARRIERS TO GOOD REVERSE LOGISTICS

'umerous barriers to good reverse logistics e(ist

)anage"ent inattention and t#e ac& of i"%ortance of reverse ogisticsCor%orate strateg$ for #and ing ret!rns and non3sa a( e ite"sLega iss!es do not a%%ear to (e a "a1or %ro( e"-

Co"%anies can not contin!e to over oo& t#e necessit$ of good reverse ogistics "anage"ent-

Source: Rogers and Ti %&&'

en-!em "e, #oing $ac"wards: Reverse !ogistics Trends and Practices,

Fe$ Reverse Logistics )anage"ent E e"ent

G)T&*&&#+'G CT#e screening of defective and !nwarranted ret!rned "erc#andise at t#e entr$ %oint into t#e reverse ogistics %rocessD
Rogers, (ale, and (on Ti en-!em "e

Fe$ Reverse Logistics )anage"ent E e"ent

Co"%acting Dis%osition C$c e Ti"e

Goa , to red!ce t#e a"o!nt of ti"e to fig!re o!t w#at to do wit# ret!rned %rod!cts once t#e$ arrive

I"%ortant to &now (efore#and w#at to do wit# ret!rned goods

B#en "ateria often co"es (ac& in to a distri(!tion center4 it is not c ear w#et#er t#e ite"s are, defective4 can (e re!sed4 or ref!r(is#ed4 or need to (e sent to a andfi

T#e c#a enge of r!nning a distri(!tion s$ste" in forward is diffic! t ' e"% o$ees #ave diffic! t$ "a&ing decisions w#en t#e decision r! es are not c ear $ stated and eGce%tions are often "ade

Fe$ Reverse Logistics )anage"ent E e"ent

Reverse Logistics Infor"ation S$ste"s

One of t#e "ost serio!s %ro( e"s t#at t#e co"%anies face in t#e eGec!tion of a reverse ogistics is t#e deart# of a good infor"ation s$ste"s- To wor& we 4 a f eGi( e reverse ogistics infor"ation s$ste" is re;!iredT#e s$ste" s#o! d create a data(ase at store eve so t#at t#e retai er can (egin trac&ing ret!rned %rod!ct and fo ow it a t#e wa$ (ac& t#ro!g# t#e s!%% $ c#ain

Infor"ation s$ste" s#o! d a so inc !de detai ed infor"ation %rogra"s a(o!t i"%ortant reverse ogistics "eas!re"ents4 s!c# as ret!rns rates4 recover$ rates4 and ret!rns inventor$ t!rnover

Asef! too s s!c# as radio fre;!enc$ (RF) are #e %f! - Eew innovations s!c# as two3 di"ensiona (ar code and radio fre;!enc$ identification icense % ates (RFID) "a$ soon (e in !se eGtensive $

Fe$ Reverse Logistics )anage"ent E e"ent

Centralized Return Centers ,CRCH

Consistenc$ in dis%osition decisions and "ini"i+ations of errors S%ace saving advantage for retai ers w#o want to dedicate as "!c# of t#e s#o% f oor to sa a( e "erc#andise as %ossi( e La(or cost red!ction ' d!e to s%ecia i+ation4 CRC e"% o$ees can t$%ica $ #and e ret!rns "ore efficient $ t#an retai c er&s can Trans%ortation cost red!ction ' e"%t$ tr!c& oads !sed to %ic& !% ret!rn "erc#andise A se ing too ' t#e eas$ dis%osition of ret!rned ite"s re%resent can (e an a%%ea ing service to retai ers4 and "a$ (e a dea 3"a&er for o(taining or retaining c!sto"ers

Faster dis%osition ti"es ' it a ows t#e co"%an$ to o(tain #ig#er credits and ref!nds sta$ id e for s"a er %eriods of ti"e4 t#!s osing ess va !e Easier to identif$ trends in ret!rns ' an advantage to "an!fact!rer w#o can detect and fiG ;!a it$ %ro( e"s sooner t#an if t#ese ret!rns were #and ed entire $ ($ c!sto"er service %ersonne

Fe$ Reverse Logistics )anage"ent E e"ent

Iero Ret!rns
A %rogra" w#ere t#e co"%an$ in ;!estion does not acce%t ret!rns fro" its c!sto"ers- Rat#er4 it gives t#e retai er an a owa( e ret!rn rate4 and %ro%oses g!ide ines as to t#e %ro%er dis%osition of t#e ite"s- S!c# %o icies are !s!a $ acco"%anied ($ disco!nts for t#e retai er It %asses t#e ret!rns res%onsi(i it$ onto t#e retai er4 w#i e red!cing costs for t#e "an!fact!rer or distri(!tor

T#e draw(ac&, t#e "an!fact!rer osses contro over its "erc#andise

Fe$ Reverse Logistics )anage"ent E e"ent

Re"an!fact!re and Ref!r(is#"ent

T#e advantage to !sing rewor&ed %arts is fe t t#ro!g# cost saving

Five categories of re"an!fact!re and ref!r(is#"ent,

Retrieving reusable parts from old or broken products Reusing parts of products for different purpose

"ake t e product reusable for its intended purpose

6) Re%air 9) Ref!r(is#ing ?) Re"an!fact!ring

/) Canni(a i+ation

J) Rec$c ing

Reverse Logistics and t e &nvironment

Environ"enta considerations #ave a greater i"%act on "an$ ogistics decisionsFor eGa"% e, )an$ %rod!cts can no onger (e % aced in andfi s Fir"s forced to ta&e (ac& t#eir %rod!cts at t#e end of t#eir !sef! ifeti"e Decrease of andfi avai a(i it$ and increase in Landfi costs-

Green Logistics and Reverse Logistics

H

Reverse Logistics refers to a efforts to "ove goods fro" t#eir t$%ica % ace dis%osa in order to reca%t!re va !eGreen Logistics refers to "ini"i+ing t#e eco ogica i"%act of ogistics4 for eGa"% e4 red!cing energ$ !sage of ogistics activities and red!cing !sage of "ateria s-

#roduct Take-.ack
H

A n!"(er of societa c#anges regarding t#e environ"ent are #aving a %rofo!nd i"%act on reverse ogisticsFir"s are forced to ta&e t#eir %rod!cts (ac& w#en t#e$ are (annedK t#is (enefits t#e fir"s in two wa$s- T#e$ re!se t#e %rod!cts and reca%t!re t#eir va !e- T#e fir" is eG%osed as an environ"enta $ friend $ co"%an$-

#roduct Take-.ack

)an$ co"%anies s!c# as Co"%a;4 Hew ett3 2ac&ard4 and LeroG #ave ado%ted t#e EGtended 2rod!ct Res%onsi(i it$ (E2R) %rogra"- E2R foc!ses on t#e tota ife of t#e %rod!ct4 oo&ing for wa$s to %revent %o !tion and red!ce reso!rce and energ$ !sage t#ro!g# t#e %rod!ct@s ife c$c e-

COECLASIOES

)ore fir"s wi give considera( e attention on reverse ogistics Efficient #and ing and dis%osition of ret!rned %rod!ct can "a&e a co"%etitive differenceEGce ent reverse ogistics %ractices add to t#e co"%an$@s (otto" ine

As%ects to red!ce t#e cost of reverse ogistics,

I"%roved Gate&ee%ing tec#no og$ 2artia ret!rns credit Ear ier dis%osition decisions Faster %rocessing * s#orter c$c e ti"es 5etter data "anage"ent

COECLASIOES

Bit#in reverse ogistics4 "aintaining t#e environ"ent and "a&ing %rofits are co"% e"entar$

Fewer dis%osed %rod!cts can (enefit co"%anies and t#e environ"entA ternate !ses of reso!rces ($ eGtending %rod!cts@ nor"a ife c$c esCost effective and eco ogica $ friend $ so !tions-

Reverse ogistics is not si"% $ a "atter of Cdriving t#e tr!c& t#e o%%osite wa$D-