Reverse Logistics

Introduction

All the physical and administrative processes can be related into one movement in trading and packaging of materials. Right from the point of manufacturing processes up to the point of re-processing or disposal of the returned items, the role of the single managerial approach is significantly great. However, there are still confusion on what is the definition, purpose, importance, and action of the reverse logistics that in return, be reflected in the business performance of an organization.

Definition of the Reverse Logistics

Reverse logistics describes the process in shipping. The scope of the reverse logistics eventually refers to the role of logistics in terms of the product returns, source of reduction, recycling materials, waste disposal, and refurbishing, repair and remanufacturing. The accepted definition f the reverse logistics is defined as the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information fro m the point of consumption to the point of origin for the purpose of recapturing value, or proper disposal (Banomyong and Supatn 2003; Rowley, et al., 2005; Verstrepen, et al., 2007). Other researches defined the reverse logistics to be in more functions. It is also interfaced with the internal and external functions in an organization. The generated decisions from the functions have an impact on the ability of logistics to both conserve resources and optimize revenues. The intention of reverse logistics is to process goods to either recapture their value or dispose of them. In the objective of the reverse logistics, the function should be to minimize the on-cost of handling while maximizing the value from the goods or correct disposal (Rowley, et al., 2005).

Managing the supply chains through the use of the logistics is supported with the technological software. Promoting the cost transparency and measuring the performance is all part of the reverse logistics management. However, there are many challenges on the organization on how to effectively use the reverse logistics such as linking it to the accounting information and determining the true costs.

Issues on Reverse Logistics

The reverse logistics is commonly applied in the retailing and manufacturing. Still, the exact amount of the reverse logistics activity is proven difficult because most of the organizations aren’t careful enough to track the reverse logistics costs. The size, scope, and impact of reverse logistics will vary by industry and channel position as well as the means of distribution. Often, the process is not well defined and minimal automation is utilized. The quality of the returned goods may also vary in terms of the packaging and the goods themselves. In addition, the transport and vehicle running costs to return the goods from retailers to manufacturer can be significant, especially where part loads lead to low vehicle utilization. Once returned there are the costs associated with warehouse operations in terms of space, labor and management of the goods. Finally, the carrying cost of inventory, including the working capital, depreciation, shrinkage, and others are needed to be taken into account (Banomyong and Supatn 2003; Rowley, et al., 2005).

Importance of the Reverse Logistics

The reverse logistics management has become increasing important due to its ability to generate superior customer satisfaction, cost reduction, and more profit to a firm. Many studies on reverse logistics have focused on certain aspects of reverse logistics such as product life cycle management, information support, and total cost of ownership. When the returned product re-enter the distribution system, it frequently involves movement along the distribution chain back to a factory for after sales supports such as repairs, or reconfiguration which may present significant problems. The challenge is to handle the returned products as quickly and cost-efficiently as possible. In this paper, the discussion will focus on how to apply a particular logistics strategy on the reverse logistic process to reduce costs and increase responsiveness to customer demand simultaneously (Banomyong and Supatn 2003).

Reverse Logistics in Globalization

It is common that due to the influences and challenge sin available in the globalization, the role of the reverse logistics also changes significantly. The broad approach on the process of planning, implementing and controlling the backwards flows of raw materials, in-process inventory, packaging and finished goods from a manufacturing, distribution or use point to a point of recovery or proper disposal was established to accommodate the various changes and challenges along with the reverse logistics. In today’s economy, the reverse logistics can also deal with not only with the returns processing but also with repair, customer service, parts management, end-of-life manufacturing, and order fulfillment. In addition, it also gained popularity within the large companies as a means to benchmark and re-engineer supply chain flows and processes (Verstrepen, et al., 2007).

Works Cited:

Banomyong, R., & Supatn, N., 2003. Leagility in Reverses Logistics Process: A Case Study of Electronic Appliance Manufacturer [Online] Available at: http://www.bus.tu.ac.th/usr/ruth/file/Leagility%20in%20reverse%20logistics.pdf [Accessed 16 March 2010].

Rowley, J., Bernon, M., Cullen, J., & Rowat, C., 2005. The Efficiency of Reverse Logistics, Department for Transport [Online] Available at: http://www.ciltuk.org.uk/download_files/reverseloglit.pdf [Accessed 16 March 2010].

Verstrepen, S., Cruijssen, F., Brito, M., & Dullaert, W., 2007. An Exploratory Analysis of Reverse Logistics in Flanders, European Journal of Transport and Infrastructure Research, Vol. 7, No.4 [Online] Available at: http://www.ejtir.tbm.tudelft.nl/issues/2007_04/pdf/2007_04_03.pdf [Accessed 16 March 2010].