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REVERSE LOGISTICS Henrique Mendonca Bouchra Mrabet Daniel Restrepo Mario Velez Definitions Logistics (Forward) Process of planning, implementing and controlling … PowerPoint PPT presentation

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

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

Size of Reverse LogisticsReverse logistics costs in the United States are

estimated to be approximately 4 of total U.S.

account for almost 1 of the total United States

University of Nevada conservatively estimates

that 6 of all goods may be returned, but

concedes that the true number may be closer to

Source Rogers and Tibben-Lembke, Going

Backwards Reverse Logistics Trends and

remanufacturers, employing 42,000 workers, sell

starters, and transmissions are refurbished

Retail IndustryProfit margins are so slim that good return

Source Rogers and Tibben-Lembke, Going

Backwards Reverse Logistics Trends and

and are a marketing incentive to purchase their

Source Rogers and Tibben-Lembke, Going

Backwards Reverse Logistics Trends and

disposal of hazardous material decrease, legally

disposing of non-salvageable materials becomes

Source Dowlatshahi S. Developing a theory of

reverse logistics. Interfaces May/Jun 2000

Source Rogers and Tibben-Lembke, Going

Backwards Reverse Logistics Trends and

investment in improving reverse logistics systems

BARRIERS TO GOOD REVERSE LOGISTICSNumerous barriers to good reverse logistics exist

Source Rogers and Tibben-Lembke, Going

Backwards Reverse Logistics Trends and

Goal design its merchandise and systems in a

manner that will minimize returns since the

impossibility of fully prevent customers from

Preventive MeasuresTo increase Quality minimize returns by

The screening of defective and unwarranted

returned merchandise at the entry point into the

reverse logistics process Rogers, Dale, and Don

The Nintendo example – Rebate retailers if

they register the game player sold to the

Nintendo/retailers can determine if the product

is under warranty, and also if it is being

returned inside the allowed time window – The

impact from this new system on their bottom line

was substantial 80 drop in return rates

Goal to reduce the amount of time to figure out

what to do with returned products once they arriveImportant to know beforehand what to do with

distribution center, it is not clear whether the

items are defective, can be reused, or

in forward is difficult employees have

difficulty making decisions when the decision

rules are not clearly stated and exceptions are

One of the most serious problems that the

companies face in the execution of a reverse

logistics is the dearth of a good information

systems. To work well, a flexible reverse

logistics information system is required.The system should create a database at store

level so that the retailer can begin tracking

returned product and follow it all the way back

information programs about important reverse

logistics measurements, such as returns rates,

helpful. New innovations such as two-dimensional

bar code and radio frequency identification

license plates (RFID) may soon be in use

dedicate as much of the shop floor to salable

employees can typically handle returns more

items represent can be an appealing service to

retailers, and may be a deal-maker for obtaining

to obtain higher credits and refunds stay idle

for smaller periods of time, thus losing less

advantage to manufacturer who can detect and fix

quality problems sooner than if these returns

were handled entirely by customer service

accept returns from its customers. Rather, it

gives the retailer an allowable return rate, and

proposes guidelines as to the proper disposition

of the items. Such policies are usually

retailer, while reducing costs for the

The advantage to using reworked parts is felt

through cost savingFive categories of remanufacture and

Make the product reusable for its intended purpose

Retrieving reusable parts from old or broken

Reusing parts of products for different purpose

1) Repair 2) Refurbishing 3) Remanufacturing

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 Rogers, Dale,

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. Rogers, Dale, and

Don Tibben-LembkeThis is a good cash generating opportunity for

companies who can sell these goods that would be

the reverse logistics process. Because of the

inherent lack of expertise on product returns,

negotiations usually are informal and approached

without formal pricing guidelines. Firms often do

not maximize the residual value of returned

People in the sales department may tend to fight

returns and delay them as much as possible.

Furthermore, accounts receivables are impacted by

competence of the firm. In many cases, however,

it makes more sense for the firm to outsource

their reverse logistics functions than keep those

Reverse Logistics and the EnvironmentEnvironmental considerations have a greater

Green Logistics and Reverse LogisticsReverse Logistics refers to all efforts to move

goods from their typical place disposal in order

ecological impact of logistics, for example,

reducing energy usage of logistics activities and

existing landfills by reducing the volume of

can be achieved through recycling, composting and

Disposal Bans and Reverse LogisticsProducts are banned from being placed in a

landfill either because they present a health

risk, example the cathode ray tubes (CRTs) in

computer monitors, or because they take up too

household batteries, household appliances, paper

products, tires, and some medical and electrical

Product Take-BackA number of societal changes regarding the

environment are having a profound impact on

they are banned this benefits the firms in two

ways. They reuse the products and recapture their

value. The firm is exposed as an environmentally

Product Take-BackCompanies have begun to examine new ways to

regain value from products once they have reached

Product Take-BackMany companies such as Compaq, Hewlett-Packard,

and Xerox have adopted the Extended Product

Responsibility (EPR) program. EPR focuses on the

total life of the product, looking for ways to

prevent pollution and reduce resource and energy

CONCLUSIONSMore firms will give considerable attention on

CONCLUSIONSWithin reverse logistics, maintaining the

Reverse logistics is not simply a matter of

driving the truck the opposite way.About

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