Supply Chain Management and Reverse Logistics

Reverse Logistics Trends and Practices

Drake Nash

RLMT 401 Reverse Logistics Data and Security Resilience -- Summer 2015

Reverse Logistics Trends and Practices

Reverse Logistics (RL) entails the management of materials from their points of use to the disposal or recovery stages. In this case, focus relates the current practices and trends in RL as employed in various organizations. The paper addresses different aspects relating to RL that include performance metrics, returns processing, and collaboration. Present patterns in RL emanate from results of typical return processes. Further, the paper endeavors to discuss economic challenges experienced in reverse logistics and other supply chain issues.

Introduction

In most cases, supply chain management (SCM) research entails the forward flow process. The process engages the transformation of raw materials into final products (Dekker & Fleischmann, 2012). Further, the flow process incorporates the movement of goods from the suppliers to the end consumers. However, little attention has characterized the reverse material movement from the end customers to consumers. Researchers have defined RL as the activities entailing planning, implementation, and control of the cost-effective and efficient flow of raw materials. Other activities include finished goods, in-process inventory, and related information derived from the end user point to the supply point of the chain for proper disposal and recapture of values. The definition of RL incorporates refurbishing and remanufacturing activities.

In the U.S. In 2004 for example, RL market hit an estimate of approximately $58 billion. The figure engulfed 0.5% of the gross domestic product (GDP) of the country. The year depicted an increasing RL that covers a myriad of industries that include electronics, publishing, automobile, and chemical sectors, among others. Fierce market competition has propelled retailers to set liberal return policies. Ill preparation of RL has significantly brought losses to various companies in the U.S.

Background

Rise in competition resulting from rapid advancements in technology and globalization has led organizations to focus on, and endeavor to enhance their supply chain's efficiency. Boosting reverse logistics efficiency, including improved returned products' recovery or end-of-life (EOL) product disposal is one means through which companies aim at maintaining and increasing market share and competitiveness. Reverse movement of materials, packaging and product returns come under the reverse logistics field and incorporate, but aren't limited to, recycling, remaking, reselling, refurbishing, repairs and disposal activities. Product returns range from 15% of merchandisers and manufacturers to 35% for e-commerce sector (Huscroft, 2010).

The process of reverse logistics in a firm comprises predominantly of two facets; product returns and packaging returns to manufacturer or place of origin. Research has proven that goods are returned either to the production or distribution point for dealing with the product's EOL for recycling, refurbishing or disposing. Another aspect of the RL process is: it is almost always a component of a closed loop, wherein packaging or product flows out to customers, accompanied by reverse flow of these same assets, normally in a transformed condition or state (Huscroft, 2010).

Companies have recognized the reverse path as the target for efficiency gains and cost reductions. They have begun concentrating on this reverse channel, employing the reverse process in the form of a differentiator, with the channel being treated as a value-added facility. This differentiation has to facilitate maintenance/increase of market share, improvement in revenue, and perhaps decreased inventory and transportation costs via gained efficiencies and continuous monitoring of their RL process. The recent enhanced focus on RL process has begun a transformation in organizations beyond mere customer service accompanied by timely product delivery, to overall customer satisfaction; organizations are moving beyond initial business transaction with customers to ascertain fulfillment of customer needs if purchased products have to be exchanged or returned (Huscroft, 2010).

The paper employs various literature reviews in the identification of intersecting and mutually constitutive aspects engulfing RL and logistics centers. With such information, the study seeks to identify the best industry practices incorporated in various activities of information sharing, performance metrics, and collaboration.

Literature Review

Hundreds of millions of electronic products contain a myriad of hazardous materials that include mercury and lead. Currently, industry leaders such as Sony and Apple have commenced on take-back programs. Ill preparation in RL has made U.S. companies lose billions of dollars over the years. In the recent years, commodity price hikes have made RL economically attractive through materials such as copper and iron ore.

Effective RL management in the modern workplace offers a platform for a competitive advantage steering a positive profit center and a tool for cutting costs to enhance customer satisfaction. Research questions focus on the examination of the current environmental practices with an emphasis on performance metrics, management commitment, and information technology.