REVERSE LOGISTICSREVERSE LOGISTICS

Copyright © Ahmed Meyaki

IBA 2005

TABLE OF CONTENTTABLE OF CONTENT

INTRODUCTIONINTRODUCTION WHAT IS REVERSE LOGISTICSWHAT IS REVERSE LOGISTICS

– The five basic questionsThe five basic questions– Contrast between reverse and forwardContrast between reverse and forward– Categories of revlog networks and Categories of revlog networks and

destinationsdestinations DIMENSIONS DIMENSIONS ACTIVITIESACTIVITIES STRATEGIC USE STRATEGIC USE CHALLENGESCHALLENGES BARRIERSBARRIERS CONCLUSIONCONCLUSION

INTRODUCTIONINTRODUCTION

Logistics does not end with the delivery of Logistics does not end with the delivery of goods to customersgoods to customers

Customer awareness; product liabilityCustomer awareness; product liability Environmental issues and regulationsEnvironmental issues and regulations Economic benefits- reverse logistics accounts Economic benefits- reverse logistics accounts

for around 4% of total logistics cost of US for around 4% of total logistics cost of US companiescompanies

Hence returned goods managementHence returned goods management– Traceability of productsTraceability of products– Waste elimination JITWaste elimination JIT– Product recallsProduct recalls

WHAT IS REVERSE WHAT IS REVERSE LOGISTICSLOGISTICS

””The process of planning, implementing The process of planning, implementing and controlling the efficient, cost-effective and controlling the efficient, cost-effective flow of raw material, in-process inventory, flow of raw material, in-process inventory, finished goods and related information finished goods and related information from the point of consumption to the point from the point of consumption to the point of origin for the purpose of recapturing or of origin for the purpose of recapturing or creating value or for proper disposal”.creating value or for proper disposal”.

Rogers and Tibbern-Lemke 1999Rogers and Tibbern-Lemke 1999

THE FIVE BASIC THE FIVE BASIC QUESTIONSQUESTIONS Alternatives to recover products, Alternatives to recover products,

product parts and materials?product parts and materials? Who performs activities?Who performs activities? How to perform activities?How to perform activities? Possibility of integrating revlog Possibility of integrating revlog

activities with classical production and activities with classical production and distribution systems?distribution systems?

Costs/benefits from environmental and Costs/benefits from environmental and economic points of view?economic points of view?

FORWARD VRS REVERSE FORWARD VRS REVERSE LOGISTICS 1/3LOGISTICS 1/3

ForwardForward ReverseReverse

One to many transportationOne to many transportation Many to one transportationMany to one transportation

Forecasting is straightforwardForecasting is straightforward Forecasting more difficultForecasting more difficult

Product packaging uniformProduct packaging uniform Product often damagedProduct often damaged

Product quality uniformProduct quality uniform Product quality not uniformProduct quality not uniform

Destination/routing clearDestination/routing clear Destination/routing unclearDestination/routing unclear

Disposition options very clearDisposition options very clear Disposition not clearDisposition not clear

Pricing is relatively uniformPricing is relatively uniform Pricing depending on many Pricing depending on many factorsfactors

Standardised channelStandardised channel Exception drivenException driven

FORWARD VRS REVERSE FORWARD VRS REVERSE LOGISTICS 2/3LOGISTICS 2/3

ForwardForward ReverseReverse

Importance of speed is often Importance of speed is often recognisedrecognised

Speed often not considered Speed often not considered a priority(pharmaceuticals?)a priority(pharmaceuticals?)

Inventory mgt consistentInventory mgt consistent Inventory mgt. inconsistentInventory mgt. inconsistent

PLC manageablePLC manageable PLC is more complexPLC is more complex

Negotiation between parties Negotiation between parties straightforwardstraightforward

Complicated by additional Complicated by additional considerationsconsiderations

Marketing methods well Marketing methods well knownknown

Marketing complicated by Marketing complicated by several factorsseveral factors

Real-time info readily Real-time info readily available to track productsavailable to track products

Visibility of process less Visibility of process less transparenttransparent

FORWARD VRS REVERSE FORWARD VRS REVERSE LOGISTICS 3/3LOGISTICS 3/3

CATEGORIES OF REVLOG CATEGORIES OF REVLOG NETWORKSNETWORKS Depends on the source of reverse flow:Depends on the source of reverse flow:

– Catalogue/e-commerce customer returnsCatalogue/e-commerce customer returns– Retail customer returnsRetail customer returns– Retailer returnsRetailer returns– Manufacturer returns to a supplierManufacturer returns to a supplier

DestinationsDestinations– Return to vendorReturn to vendor– Sell as newSell as new– Repackage, sell as newRepackage, sell as new– Sell via outletSell via outlet– Remanufacture/refurbishRemanufacture/refurbish– Sell to brokerSell to broker– Donate to charityDonate to charity– RecycleRecycle– LandfillLandfill

REVLOG ACTIVITIES 1/2REVLOG ACTIVITIES 1/2

Products– Return to SupplierReturn to Supplier– ResellResell– Sell via outletSell via outlet– SalvageSalvage– ReconditionRecondition– RefurbishRefurbish– RemanufactureRemanufacture– Reclaim materialsReclaim materials– RecycleRecycle– LandfillLandfill

REVLOG ACTIVITIES 2/2REVLOG ACTIVITIES 2/2

Packaging

– ReuseReuse

– RefurbishRefurbish

– Reclaim materialsReclaim materials

– SalvageSalvage

STRATEGIC USE OF STRATEGIC USE OF REVLOGREVLOG

Competitive reasonsCompetitive reasons

Clean channelClean channel

Protect profitabilityProtect profitability

Legal disposal issuesLegal disposal issues

Recapture value and recover Recapture value and recover assetsassets

CHALLENGESCHALLENGES

Difference in Objectives Between Difference in Objectives Between Manufacturers and RetailersManufacturers and Retailers– Condition of the itemCondition of the item– Value of the ItemValue of the Item– Timeliness of responseTimeliness of response

Other challenges:Other challenges:– Gate keepingGate keeping– Shortening disposition cycle timeShortening disposition cycle time– Information systemsInformation systems– Reasons for returns and how to dispose ofReasons for returns and how to dispose of

BARRIERSBARRIERS

Importance of revlog relative to other Importance of revlog relative to other issuesissues

Company policiesCompany policies Lack of systemsLack of systems Management inattentionManagement inattention FinanceFinance PersonnelPersonnel Legal issuesLegal issues

CONCLUSIONSCONCLUSIONS

Revlog gaining prominenceRevlog gaining prominence

Companies stand to gain Companies stand to gain

Activities vary according to industryActivities vary according to industry

Faces huge challenges and barriersFaces huge challenges and barriers

Future trend is towards improvement Future trend is towards improvement in systems and technologiesin systems and technologies

REFERENCES 1/2REFERENCES 1/2

Tibben- lemke R. S (1998) Going Back wards: Reverse Tibben- lemke R. S (1998) Going Back wards: Reverse Logistics trends and PracticesLogistics trends and Practices

Rakesh, Vinayak (2005) Reverse Logistics: An Important Rakesh, Vinayak (2005) Reverse Logistics: An Important Dimension of supply Chain managementDimension of supply Chain management

De Brito and Dekker (2002) Reverse Logistics: A De Brito and Dekker (2002) Reverse Logistics: A Framework Framework

Haw-Jan Wu, Steven C. Dunn International Journal of Haw-Jan Wu, Steven C. Dunn International Journal of Physical Distribution & Logistics Management; Volume: Physical Distribution & Logistics Management; Volume: 25 Issue: 2; 1995 Technical paper . Environmentally 25 Issue: 2; 1995 Technical paper . Environmentally responsible logistics systemsresponsible logistics systems

Liz Ritchie, Bernard Burns, Paul Whittle Richard Hey Liz Ritchie, Bernard Burns, Paul Whittle Richard Hey Supply Chain Management: An International Journal; Supply Chain Management: An International Journal; Volume: 5 Issue: 5; 2000 Case study : The benefits of Volume: 5 Issue: 5; 2000 Case study : The benefits of reverse logistics: the case of the Manchester Royal reverse logistics: the case of the Manchester Royal Infirmary PharmacyInfirmary Pharmacy

REFERENCES 2/2REFERENCES 2/2

Ronald S. Tibben-Lembke, Dale S. RogersRonald S. Tibben-Lembke, Dale S. Rogers Supply Chain Management: An International Journal; Supply Chain Management: An International Journal;

Volume: 7 Issue: 5; 2002 General review Differences Volume: 7 Issue: 5; 2002 General review Differences between forward and reverse logistics in a retail between forward and reverse logistics in a retail environmentenvironment

Rakesh, Vinayak (2005) Reverse Logistics: An Rakesh, Vinayak (2005) Reverse Logistics: An Important Dimension of supply Chain management Important Dimension of supply Chain management

Reverse Logistics Executive council www.revlog.comReverse Logistics Executive council www.revlog.com