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Lecture 9 Reverse LogisticsBM0472 International Trade
Management
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LessonObjectives
Appreciatetheimportanceofreverseflows
Discusstherecovery optionsinreverselogistics
UnderstandReverseLogisticsSystemsvs.ClosedLoops
UnderstandestablishingReturnsPolicies
Discussthemajor forcesforreverselogisticsprograms
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ImportanceofReverseFlows
Traditionally,reverseflowswerenotviewedasaddingvaluefor
customersorrevenueforthemanufacturerorproducer
Interestandexpectationsinsupplychainsustainabilityhas
increased.Sustainabilityapproaches: Reuse Remanufacturing
Reconditioning Recycling
Anincreaseinvolumeofreverseflowspossiblybroughtaboutby:
Internetsales Retailerscustomerservicepolicies
Consumerrecyclingprogrammes
Highobsolescencerateintechnologicalproducts
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HP_Reuse_&_Recycle.mp4
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Reverse Logistics Systems
Reverseflowsaregoodsandmaterialsmovingupstreaminthesupplychain.
Reverseflowsweretraditionallyignored,butregulationandeconomicshaveincreasedattentiononthem.
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A generic reverse logistics system with recovery options
Source Parts Manufacture
Parts Manufacture
Market
CollectionTestRe-distribution
DisposalReverse Logistics
Recycle Remanufacture Reuse
Forward Logistics
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Recoveryoptionsinreverselogistics
Reuse
referstoaprocessinwhichtherecoveredproductisusedagainforapurposesimilartotheoneforwhichitwasoriginallydesigned.
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Recoveryoptionsinreverselogistics
Remanufacturing
involvesaprocessofreducingaproductintoitsconstituentparts.Itrequiresmoreextensivework,oftencompletedisassemblyoftheproduct.
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Recoveryoptionsinreverselogistics Remanufacturing
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Recoveryoptionsinreverselogistics
Recycling
istheprocessofcollectinganddisassemblingusedproducts,componentsandmaterials,andseparatingthemintocategoriesoflikematerials,suchasplastic,glassetc.,andthenprocessingthemintorecycledmaterials.
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Recoveryoptionsinreverselogistics
Recycling
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Recoveryoptionsinreverselogistics
Recycling
6 =
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Eightcategoriesofreverseflows
1.
Productsthathavefailed;areunwanted,damaged,ordefective;butcanberepairedorremanufacturedandresold.
2.
Productsthatareold,obsolete,orneartheendoftheirshelflifebutstillhavesomevalueforsalvageorresale.
3.
Productsthatareunsoldfromretailers,usuallyreferredtoasoverstocksthathaveresalevalue.
4.
Productsbeingrecalledduetoasafetyorqualitydefectthatmayberepairedorsalvaged.
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Eightcategoriesofreverseflowscontinued
5.
Productsneedingpullandreplacerepairbeforebeingputbackinservice.
6.
Productsthatcanberecycledsuchaspallets,containers,computerinkjetcartridges,etc.
7. Productsorpartsthatcanberemanufacturedandresold.8.
Scrapmetalthatcanberecoveredandusedasarawmaterial
forfurthermanufacturing.
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Reverse Logistics Systems vs. Closed Loops Reverselogistics
Theprocessofmovingortransportinggoodsfromtheirfinaldestinationforthepurposeofcapturingvalueorforproperdisposal.
Involvestheprocessesforsendingneworusedproductsbackupstreamforrepair,reuse,refurbishing,resale,recycling,orscrap/salvage.
Closedloopsupplychains
Designedandmanagedtoexplicitlyconsiderbothforwardand
reverseflowsactivitiesinasupplychain.
Explicitlydesignedandmanagedforbothflows
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Closed Loop Supply Chain for Cartridges
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HP_Closes_the_Loop_Worldwide.mp4
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Closed Loop Supply Chain for Tire Retreading
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Establishing Returns Policies Gatekeeping
Processofscreeningallreturnedgoodsatthepointofentryintothereverselogisticssystem
Objectiveistobalancethevalueofsatisfyingcustomerswiththecostandcomplexityoftakingbackreturnedmerchandise
Somemerchandisecanbereturnedtotheretailfloorforresale,otherreturnsarenotresalablebecauseofdefectsordamagedpackaging.Thesehastobereturnedtothemanufacturerorsoldatadiscounttoathirdparty,henceincurcosts
Companyreturnpoliciesstatethegatekeepingprocessclearlytocustomerse.g.within7days,innewcondition,withoriginalreceipt,withpackaging&accessories
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Establishing Returns Policies Avoidance
Companiescantrytoavoidorminimizereturnrequeststhroughvariousmeans
e.g.customerreturnhistorychecktodisallowcustomerswhorepeatedlyreturn;adoptareturnforstorecreditonlypolicy;customertotalktoacustomersupportrepresentativefirst
upsellingorcrosssell
Disposition Mayberestockedandresoldifstillinnewcondition.
Maybesoldtootherpartiesoutsidetheoriginalsupply
chain secondarymarkets(outletstores,onlineauctions)
Mustconsiderlegalandenvironmentalrequirements
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Major forces for reverse logistics programs
CustomerService
Avarietyofreasonsforcustomerreturnsincludingdefectiveorunwanteditems,warrantyproblems,recalls,andmissshipments.
EnvironmentalIssues Increasingenvironmentalchallenges
Corporationsplayanactiverole ethicsandsocialresponsibility
Publicrelations Regulatorypolicy
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EconomicValue
Potentialforviewingreverseflowsasavaluestreamasopposedtoawastestream
Makingreverseflowsprofitableisachallengeaswellasanopportunity.
Costbenefittradeoffs
Commonmistakemadeistheassumptionthatheprocessesarethesameasforwardflowsandthereforethecostsarethesame.
Major forces for reverse logistics programs
