Reverse Logistics

1267 Words6 Pages
Reverse logistics and the return portion of the supply chain is often an overlooked and mismanaged process. Companies tend to focus their efforts on the forward portion of supply chain management, while failing to take advantage of the many opportunities that reverse logistics presents (Benton, 2007). What these companies do not realize is that the effective management of reverse logistics has the potential to make them more profitable, and to add value to many other parts of their supply chain. In the case of Johnson Automotive, we will analyze their current supply chain processes to determine their effectiveness while answering the following questions:

1. What is reverse logistics?

2. What are the key elements of reverse logistics in the automotive industry?

3. How can Johnson optimize its reverse logistics channel?

What Is Reverse Logistics?

The Reverse Logistics Association (2008) defines reverse logistics as “all activity associated with a product/service after the point of sale, the ultimate goal to optimize or make more efficient aftermarket activity, thus saving money and environmental resources”. Because all of these processes take place post-sale, this portion of the company’s activities could simply be viewed as a cost center. This could not be further from the truth. The objective of any intelligent business manager should be to optimize all activities and ensure that the maximum value is achieved for every Dollar that is spent by the company.

Some of the activities associated with reverse logistics are remanufacturing, recycling, reconditioning, warranty management, call-center management, and transportation.

The main goal of reverse logistics is to facilitate these activities in a manner that helps the company to meet its corporate objectives.

That is why the design of the reverse supply chain processes is so important. Every company needs specific processes that are aimed at increasing value for the company and its customers based on the type of industry in which it operates and the type of products that it supplies.

The major stumbling block for most companies that are attempting to optimize their return supply chain is the chaotic nature of reverse logistics. Volume within the return supply chain is highly variable and difficult to predict or control (O’Reilly, 2005). In addition, returning the product in a timely manner is often not of major importance to the end users and retailers. Therefore, any processes that rely on the availability of cores or supplies will have to be flexible enough to handle variations in supply.
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