Introduction
Most of us think of logistics as a one-way street. Products are manufactured, packaged, stored in a warehouse, sold, and then shipped off to the customer ... end of story. Yet for many logistics managers today, that's not the end of the story. In addition to managing outbound goods, they also are responsible for reverse logistics--the flow of returned goods and packaging, including customer service and final disposition of returned items.
The need to manage waste materials and returned goods is growing in all kinds of industries. Today, companies like Xerox, Mobil, Home Depot, and Ethan Allen Furniture - to name just a few - have recycling programs that meet the needs of their individual industries. There are many reasons for the explosive growth of what's come to be known as "reverse logistics" over the past five years or so. The most prominent is increasing public awareness of the social costs of excess waste. A large-scale recycling program, therefore, generates goodwill among consumers and industrial customers. As support for recycling grows, moreover, companies want to be perceived as good citizens that are committed to protecting the environment. Another important reason is the need to control costs. Frequently, manufacturers treat recovery of products and packaging as an afterthought. A well-managed reverse-logistics program, however, can bring enormous savings in inventory-carrying, transportation, and waste-disposal costs.
For these and other reasons, more and more companies are launching reverse-logistics programs today. Unfortunately, it's often assumed that reverse logistics is simply a matter of reversing the outbound distribution process. In fact, recycling and returns management have their own unique and complex issues that affect logistics operations. A brief overview of those issues highlights the five main areas you should consider before starting a reverse-logistics program.
A related issue is what kind of resources you are willing to commit to a reverse-logistics program. The obvious answer is that the level of potential benefits will influence how much a company will invest in such a program. Too often, though, companies shortchange themselves by failing to devote sufficient time, money, and personnel to the project. "A lot of times, [reverse logistics] becomes a side job for somebody. It's not their focus or a hi...
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... of your process and convert these "costs" into investments for profitable, long-term customer relationships.
Selected References
Tom Andel: Reverse logistics. A second chance to profit. Transportation and Distribution Magazine. July, 1997
Toby B. Gooley: There and back again. Logistics Management Distribution Report. Apr 30, 1999
Kathleen Hickey: Rite Aid in Reverse. Traffic World. June,1999.
"IS THIRD PARTY LOGISTICS IN YOUR FUTURE?" Modern Material Handling. Dec,2000.
Ken Krizner: A marriage between technology and operations leads ReturnBuy's attempt to re-invent reverse logistics.(Industry Trend or Event) Frontline Solutions, Feb. 1997.
Mitchell E. MacDonald: Put it in reverse! Logistics Management Distribution Report. May 1, 1997
Ronald A. Marguilis: Reverse logistics. Take it back Materials Management and Distribution. Nov, 1996
John Pogorelec: Reverse logistics is doable, important.(Technology Information) Frontline Solutions. Sept. 2000.
Greg Raimer: IN REVERSE. Materials Management and Distribution magazine. Sept, 1997.
Beth Schwartz: Reverse logistics strengthens supply chains. Transportation and Distribution Magazine. May, 2000.
...to deal with inbound and outbound logistics, one that is made up mostly of the personnel from outbound logistics. These professionals deal with the second core competency of Deere, logistics, separate from the manufacturing of tractors and lawnmowers. The creation of this team helps eliminate the risk Fedex’s poor performance (managers were not pleased with Fedex’s centralized transportation management service) and need to measure performance of a 3rd part continuously. As a result, performance is self-managed. We expect as the IT system is used to optimize and plan transportation routes amongst inbound and outbound trucks, cost savings will increase more rapidly. We believe internal continuous improvement, leaner logistics operations and synergies amongst all logistics activities will lead to the $69 million goal being met by the third year after implementation.
Prior to Ford partnering with Penske, all of the automotive companies 20 plants in the United States handled their own logistics. This caused unnecessary costs in the transportation and material-handling sector of the company due to the fact that suppliers...
Dell, a global major IT infrastructure provider, has been at the forefront of applying the concepts of Circular Economy to the industry. With improved supply chain management, it has been able to tackle the problem of huge accumulations of e-waste, which comprises metals as well as plastics. A research has revealed that around 50 million tons of e-waste get discarded every year globally, which is a massive burden on the planet. By practicing reverse logistics of takeaways of obsolete computer hardware, Dell is able to release metals like gold, tin, and tungsten into the commodity markets and plastics back into
The United Parcel Service is a global leader in shipping and logistics. UPS was founded in 1907 as the American Messenger Company with a value proposition that still holds true today: best service and lowest rates (UPS History, 2014). After rapid growth and mergers with competition, the company became the United Parcel Service in 1919. Throughout the next decades they continued to broaden their services and horizons. In 1953 they started offering two-day air service to major cities in the United States (UPS History, 2014). Another notable event occurred in 1975 when they obtained authorization to ship freely in all 48 contiguous states. Prior to this, some packages had to be transferred between several carriers before reaching their final destination. (UPS History, 2014) This undoubtedly created challenges in their operations and supply chain. Their ability to overcome this issue is just one example of their determination to be the best shipping company. To compete with some of its largest competitors, UPS started their Next-Day-Air service in 1982. In the late 1980s, they streamlined their air services with the creation of UPS Airlines. This has been an important component of their supply chain, especially with the use of the Computerized Operations Monitoring, Planning and Scheduling System (COMPASS). (UPS History, 2014) During the 1980s UPS also expanded their international services. The 1990s saw more advances in technology as well as services. UPS realized that they were in a strategic position to offer supply chain solutions. The UPS Logistics Group was formed in 1995 with the purpose of providing global supply chain management solutions and consulting services (UPS History, 2014). Over the last decade, UPS has continued to ...
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.
In the reverse logistics system, there is a high degree of uncertainty on the time and quantity in recovery process of the consumer or
Reverse logistics has become an increasing concern for many companies over the last decade. It is the process of the movement of goods, moving in the opposite direction, such as from the customer to the business. Some important processes involved are the physical movement of goods, customer support, warehousing and repair. Reverse logistics handles the issue of handling resources effectively. Rogers and Tibben-Lembke (1999) defines reverse logistics as the ‘process of planning, implementing, and 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 purpose of recapturing value or proper disposal’. This definition is seen to...
Reverse logistics is a concept that has attracted considerable attention in the recent past because of the new interest in its processes. The increased interests in reverse logistics occur regardless of the little information regarding the size and extent of reverse logistics processes and activities. As the interests on reverse logistics have grown, the concept and its processes have been characterized by the emergence of new trends and practices. The focus of this project is to describe the current state of reverse logistics and attempt to determine and evaluate trends and practices. The determination of the recent trends and practices in reverse logistics incorporates examining the degree of its activities and processes
Logistics is the designing and managing of a system in order to control the flow of material throughout a corporation. This is a very important part of an international company because of geographical barriers. Logistics of an international company includes movement of raw materials, coordinating flows into and out of different countries, choices of transportation, cost of the transportation, packaging the product for shipment, storing the product, and managing the entire process. The concept of logistics is fairly new in the business world. The theoretical development was not used until 1966. Since then, many business practices have evolved and logistics currently costs between 10 and 25 percent of the total cost of an international purchase.
Micheal A P Taylor, Y.-y. T. W. L. Y., 2005. The Role Of Transportation in Logistics Chain. [Online]
Logistics involve the integration of information, transportation, inventory, warehousing, material-handling & packaging. In terms of value, global logistics industry has been estimated to be more than USD 235 billion & make up significant part of the GDP with regard to
Zanjirani F., Rezapour, S. & Kardar, L. (2011) Logistics operations and management concepts and models, 1st ed. London ; Elsevier.
Chapter 5: Logistics cost management solutions and suggestions. This section will summarize findings from the previous chapter and suggestions to the problems.
Hum,Sin Hoon (2000), “A Hayes-Wheelwright framework approach for strategic management of thrid party logistics services”,Integrated Manufacturing Systems,Vol .11/2,pp 132-137
Creating logistics value is costly. Logistics accounts for one of the highest costs of doing business. Logistics expenditure normally ranges from 5% to 35% of sales depending on the type of business. Thus logistics even though very important for any business success is expensive.