Reverse Logistics Presentation SCM
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Transcript of Reverse Logistics Presentation SCM
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REVERSE LOGISTICS
By.
Prashant M.P.
Rohit C.Shetty.Rosh Rejendran.
Sagar K.
Sannidhi Purushotham.
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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 -
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Reverse Logistics Activities
Handling of returnedmerchandise Damage
Seasonal inventory
Resell via outlet
Salvage of outdated products
Stockbalancing returns
Recycling and reuse Material reuse Remanufacturing / refurbishing
Hazardous materials disposition
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Source: http://www.rlmagazine.com/img/edition04_ups.jpg
The Reverse Logistics Process
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Return Percentages
Source: Rogers and Tibben-Lembke, Going Backwards: Reverse Logistics Trends and Practices, 1998
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Publishing Industry
Highest rate of unsold copies (28% on
average)
Growth of large chain stores: More square
footage requires more books
To secure a prominent display in
superstores, publishers must supply large
quantities of books
Superstores sell less than 70% of books
they order
Shorter shelf life
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Computer / Electronic Industry
Shorter life cycles
How to recover and reuse materials contained within
E-waste?
Lead, copper, aluminum gold, plastics and glass
E-waste includes computers, televisions, cell phones,
audio equipment and batteries
Remanufacturing of toner cartridges: 12,000
remanufacturers, employing 42,000 workers, sell
nearly $1 billion annually
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Automotive Industry
Three primary areas:
Components in working order sold as is
Other components, such as engines,
alternators, starters, and transmissionsare refurbished before they can be sold
Materials are reclaimed through
crushing or shredding
Automotive recyclers handle morethan 37% (on an average) of the
nations ferrous scrap
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Retail Industry
Profit margins are so slim thatgood return management iscritical
Returns reduce theprofitability of retailersmarginally more thanmanufacturers
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Forward vs. Reverse Logistics
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STRATEGIC USE OF REVERSE LOGISTICS
Reverse Logistics as a Strategic Weapon
Many firms have not yet decided to emphasize reverse logisticsas a strategic variable.
The handling of reverse logistics challenges is a strategiccapability.
Reverse logistics is strategically used to:
Reduce the risk of buying products thatmay not be hotsellingitems.
Increase the switching costs ofchanging suppliers.
Source: Rogers and Tibben-Lembke, Going Backwards: Reverse Logistics Trends and Practices, 1998
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STRATEGIC USE OF REVERSE LOGISTICS
Competitive Reasons
Liberal return policies over the last fewyears due of competitive pressures.
Taking back unwanted products or productscustomers believe do not meet needs.
Good Corporate Citizenship
o Use reverse logistics capabilities for altruistic reasons,
such as philanthropy.
o These activities enhance the value of the brand and are
a marketing incentive to purchase their products.
Source: Rogers and Tibben-Lembke, Going Backwards: Reverse Logistics Trends and Practices, 1998
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REVERSE LOGISTICS CHALLENGES
Retailer Manufacturer Conflict
Inefficiencies that lengthen the time for processing returns:
Condition of the item Value of the item Timeliness of response
They have to develop a working partnership to derive mutual benefit.
Problem Return Symptoms
o Lack of information about
the process.o If you arent measuring it,
you arentmanaging it.
Source: Rogers and Tibben-Lembke, Going Backwards: Reverse Logistics Trends and Practices, 1998
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REVERSE LOGISTICS CHALLENGES
Cause and Effect
Poor data collection leads to uncertainty
about return causes.
Improving the return process decreases
costs.
Being able to see defective products and
to track return issues.
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BARRIERS TO GOOD REVERSE LOGISTICS
Numerous barriers to good reverse logistics exist
Management inattention and the lack of importance of reverse logistics.
Corporate strategy for handling returns and non-salable items.
Legal issues do not appear to be a major problem.
Companies can not
continue to overlook thenecessity of good reverselogistics management.
Source: Rogers and Tibben-Lembke, Going Backwards: Reverse Logistics Trends and Practices, 1998
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Key Reverse Logistics Management Element
GATEKEEPING
The screening of defective and unwarranted returned merchandise
at the entry point into the reverse logistics process
Rogers, Dale, and Don Tibben-Lembke
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Key Reverse Logistics Management Element
Compacting Disposition Cycle Time
Important to know beforehand what to do with returned goods
When material often comes back in to a distribution center, it isnot clear whether the items are: defective, can be reused, or
refurbished, or need to be sent to a landfill
The challenge of running a distribution system in forward isdifficult employees have difficulty making decisions when thedecision rules are not clearly stated and exceptions are oftenmade
Goal: to reduce the amount of time to figure out what to do withreturned products once they arrive
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Key Reverse Logistics Management Element
Reverse Logistics Information Systems
One of the most serious problems that the companies face in theexecution of a reverse logistics is the dearth of a good informationsystems. To work well, a flexible reverse logistics information
system is required.
The system should create a database at store level so that the retailer can begintracking returned product and follow it all the way back through the supply chain
Information system should also include detailed information programs about
important reverse logistics measurements, such as returns rates, recovery rates, andreturns inventory turnover
Useful tools such as radio frequency (RF) are helpful. New innovations such astwo-dimensional bar code and radio frequency identification license plates (RFID)may soon be in use extensively
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Key Reverse Logistics Management Element
Centralized Return Centers (CRC)
Consistency in disposition decisions andminimizations of errors
Space saving advantage for retailers whowant to dedicate as much of the shop floor tosalable merchandise as possible
Labor cost reductiondue to specialization,CRC employees can typically handle returnsmore efficiently than retail clerks can
Transportation cost reductionempty
truckloads used to pick up return merchandise
A selling toolthe easy disposition of returneditems represent can be an appealing serviceto retailers, and may be a deal-maker forobtaining or retaining customers
Faster disposition timesit allows thecompany to obtain higher credits and refundsstay idle for smaller periods of time, thus
losing less value
Easier to identify trends in returnsanadvantage to manufacturer who can detectand fix quality problems sooner than if thesereturns were handled entirely by customerservice personnel
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Key Reverse Logistics Management Element
Zero Returns
A program where the company in question does not accept returns from itscustomers. Rather, it gives the retailer an allowable return rate, and proposesguidelines as to the proper disposition of the items. Such policies are usually
accompanied by discounts for the retailer
It passes the returns responsibility onto the retailer, while reducing costs for themanufacturer or distributor
The drawback: the manufacturer losses control over its merchandise
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Key Reverse Logistics Management Element
Remanufacture and Refurbishment
Five categories of remanufacture and refurbishment:
The advantage to using reworked parts is felt through cost saving
1) Repair2) Refurbishing3) Remanufacturing
Make the product reusable for
its intended purpose
Retrieving reusable parts from
old or broken products
4) Cannibalization
Reusing parts of products for
different purpose
5) Recycling
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Reverse Logistics and the
Environment
Environmental considerations have agreater impact on many logistics decisions.
For example: Many products can no longer be placed
in landfills
Firms forced to take back their productsat the end of their useful lifetime.
Decrease of landfill availability andincrease in Landfill costs.
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Green Logistics and Reverse
Logistics
Reverse Logistics refers to all efforts to movegoods from their typical place disposal in
order to recapture value. Green Logistics refers to minimizing the
ecological impact of logistics, for example,reducing energy usage of logistics activities
and reducing usage of materials.
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A number of societal changes regarding theenvironment are having a profound impact
on reverse logistics. Firms are forced to take their products back
when they are banned; this benefits the firmsin two ways. They reuse the products and
recapture their value. The firm is exposed asan environmentally friendly company.
Product Take-Back
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Product Take-Back
Many companies such as Compaq, Hewlett-
Packard, and Xerox have adopted theExtended Product Responsibility (EPR)program. EPR focuses on the total life of theproduct, looking for ways to prevent pollution
and reduce resource and energy usagethrough the products life cycle.
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CONCLUSIONS
More firms will give considerable attention on reverse logistics
Efficient handling and disposition of returned product can make a
competitive difference.
Excellent reverse logistics practices add to the companysbottom line.
Aspects to reduce the cost of reverselogistics:
Improved Gatekeeping technology Partial returns credit
Earlier disposition decisions
Faster processing / shorter cycle times
Better data management
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CONCLUSIONS
Within reverse logistics, maintaining the environment and making
profits are complementary.
Fewer disposed products can benefit companies and the environment.
Alternate uses of resources by extending productsnormal life cycles.
Cost effective and ecologically friendly solutions.
Reverse logistics is not simply a matter ofdriving the truck the opposite way.