REVERSE LOGISTICS AND COMPETITIVENESS: A BRIEF

REVIEW OF THIS RELATIONSHIP-SUDIP MITRA PGDMABPM 53

REVERSE LOGISTIC

Is the process of moving goods from the point of consumption to the point of origin for the purpose of recapturing value or proper

disposal.

INTRODUCTION Presently logistic seen by companies as a way to increase their competitiveness.

In the past treated just as cost drivers.

Reverse Logistic is the return of products into the production process.

It is for recycling or for reintegration, considering both post-consumer logistics and aftermarket logistics.

The growing concerns about the environment, coupled with the volume and variety of products manufactured by companies.

1. Reuse

2. Product update,

3. Material recovery

4. Waste management

Successful Reverse Logistics Projects

Example of complete reverse logistic: Estee Lauder

Investment of 1.3 million to build itspropietary reverse logistics system of scanners, business intelligence tolos

linked to an Oracle database

The company has apparentlyrecovered its investment in the

first year through reducing labor and other costs.

When companies decide toembark on a reverse logisticsProject they can leverageknowledge, tolos and processesfrom other successful projects

Such as Estee Lauder s, to preventthem form reinventing the Wheel.

Can be made to:

-Reduce Cost

-Improve customer service and

-Increase revenues

Return Reasons

• when the product is not what is expected

• when the product does not arrive in a defined periodCustomer NOT Satisfied

• The consumer assumes that the product is damaged but really that was installed improperly due to lack of instructions.Installation or Usage Problems

• when the product does not work properly

• when the product has physical damage

• - when the product is repaired by warranty Warranty Claims

Return Reasons

• Incomplete orders

•Misguided amounts

•Premature delivery and duplicateFaulty Order Processing

•Excessive quantities of products

•New orders at the end of trimesterRetail Overstock

•Product life finished

•New product trends

•Old products are eliminated

End of product life cycle orproduct replacement

• Installation by the manufacturer

• Standards of product safety

• Corrective measuresManufacture recall programs

Other Complications

Environmental laws.

50% of the goods sold

are returned.

Obsolence high, product valuefall 12% per

month.

Reverse logisticnot adds valueto the productand generates

financialpressure.

The Green Factor E-Commerce Shorter Product Life Cycles Complex and underdevelopedarea

Attacking the returns challenge(key steps in the process of return)

Local Screening

Collection Sorting Disposition

• Is done at the point of collection of thereturned products.

• To avoid unnecessary costs of transport are due to pick up the products at the point where they were delivered. (scanner)

• Example: Nintendo

• There are many differentways to collect theproducts that are destinedto enter the reverse supplychain

• The complexity of theprocess and the multipleparties involved generatesdifferents systems toreturns

• Example: Ford

• Some large retailers havebeen using centralizedreturn centers (CRCsdedicated to handle theirentire reverse logisticsoperations.When a company use that have anoptimization arise from a whole range of areas

• Example: GM

Sell as-it

Repair orReuse

Dispose

Reverse Logistics - the driving forces

Many companies use reverse logistics in-house or through outsourced specialized companies ……..WHY???

To recapture economic value,

To increase competitiveness,

To demonstrate corporate responsibility

To clean distribution channels through inventory management

To demonstrate compliance with legislation.

Reverse Logistics – the restrictive forces

The life cycle of a product does not end when it is discarded.

The lack of involvement and commitment of the entire supply chain caused by the mismatch of objectives

The lack of complete studies to ensure and prove the efficiency of reverse logistics processes

Absence of clear legislation.

Competitiveness and Reverse Logistics

Chaves; Martins (2005) inform that:

Compliance with environmental demand

Reduced costs

Customer Loyalty

Positive Corporate image

Improvement in the level of service offered to the customer

CONCLUSIONReverse logistics is an important tool for organizations to differentiate themselves from their competitors.

Organizations that adopt reverse logistics have processes well structured.

For the customer this means ensuring capacity to meet their needs, generating customer loyalty and making it difficult for competitors to imitate simple services that are geared towards value creation and the environment.