Professional Documents
Culture Documents
• Definition
• Sectoral Returns Percentage
• The Network Process
• Reverse Logistics Process
• Elements
• Challenges
• Barriers
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
SINGNIFICANCE
• Rising competition
• Increasing expectations from the
consumers
• To extract max efficiencies
• To get max value out of returns, bad
products and defectives.
• To reduce operating costs by
reusing products and components
• Operational Factors in Reverse Logistics
Systems
– A holistic view of reverse logistics is essential for a profitable
and sustained business strategy.
Return Percentages
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
Computer / Electronic
Industry
• Shorter life cycles
Opportunities to reuse and create value
out of a nearly omnipresent asset
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
Automotive Industry
Three primary areas:
– Components in working order
sold as it is
– Other components, such as
engines, alternators, starters,
and transmissions are
refurbished before they can be
sold
– Materials are reclaimed
through crushing or shredding
Retail Industry
Profit margins are so slim
that good return
management is critical
Returns reduce the
profitability of retailers
marginally more than
manufacturers
Returns reduce the
profitability of retailers by
4.3%
The average amount that
returns reduce profitability
among manufacturers is
3.80%
APPAREL INDUSTRY
• The ‘Reverse’ for an apparel return
is that the merchandise finds its way
back in the supply chain, is restocked
in the warehouse, resent for finishing
and then supplied back to either
multi brands discount outlets,
departmental stores or end-of-season
sale.
U.S. Reverse Logistics Costs
Total U.S. Logistics Costs
$1,006,000,000
Approximate RL cost %
4.00%
$40,240,000
Forward vs. Reverse
Logistics
Reverse Logistics Activities
Handling of returned merchandise
– Damage
– Seasonal inventory
– Resell via outlet
– Salvage of outdated products
– Stock–balancing returns
4. disassembling
and crushing
Treatment
centre
5. transport
3. transport
containers
collecting point
consumer
1. Collecting 2. selection
and sorting
retailer
The Reverse Logistics
Process
ELEMENTS
• GATEKEEPING – “Screening of
defective and unwarranted returned
merchandise at the entry point into
the reverse logistics process”
• To limit the no of items.
• To control & reduce the rate of
returns without damaging customer
service.
COLLECTION
• “ The stage at which the products for
return are assembled and directed
towards the reverse logistics system”
• The stage of SORTATION is the point
where what is to be done with the
product is decided.
• Asset Recovery
“Asset recovery is the classification and disposition of
returned goods, surplus, obsolete, scrap, waste and excess
material products, and other assets, in a way that
maximizes returns to the owner, while minimizing costs and
liabilities associated with the dispositions”
• “the objective of asset recovery is to recover as much of
the economic (and ecological) value as reasonably possible,
thereby reducing the ultimate quantities of waste.”
• Negotiation
Reactive Response
o Government regulation or pressure from
environmental agencies .
o It has not been possible to justify a large
investment in improving reverse
logistics systems and capabilities.
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 the necessity of good
reverse logistics management
• Avoidance
• Goal: design its merchandise and systems in a manner that will
minimize returns since the impossibility of fully prevent customers
from sending purchased products back
Preventive Measures:
• To increase Quality – minimize returns by defective products
It passes the returns responsibility onto the retailer, while reducing costs
for the manufacturer or distributor
APPARELS
APPARELS APPARELS
PUBLISHING
PUBLISHING
PUBLISHING WAREHOUSE
PUBLISHING
RETAIL
RETAIL
RETAIL
RETAIL