The Use of Reverse Supply Chains in Companies Essay

The Use of Reverse Supply Chains in Companies Essay

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MNC’s are being forced to set up reverse supply chains because of environmental regulations or consumer pressure. From 2003, for example, European Union legislation will require tire manufacturers operating in Europe to arrange for the recycling of one used tire for every new tire they do. Companies are taking the initiative, seeing opportunities to reduce their operating costs by reusing products. For instance, Kodak remanufactures its single-use cameras after the film has been developed. Over the past decade, the company has recycled more than 310 million cameras in more than 20 countries. Companies are using reverse supply chains as integral parts of new businesses. Bosch, for instance, has built a successful business selling power hand tools.
Whether a company is establishing a reverse supply chain by choice or necessity, it will face many challenges. It will have to educate customers and establish new points of contact with them, activities to outsource and which to do itself, and in general figure out how to keep costs to a minimum while discovering innovative ways to recover value. It may also have to meet stringent environmental level.
As rational decisions about the structure of a reverse supply chain, it’s best to divide the chain into its five key components and analyze options, costs, and benefits for each:
Product Acquisition
Our research suggests that this task—retrieving the used product—is key to creating a profitable chain. The quality, quantity, and timing of product returns need to be carefully managed. Otherwise, companies may find themselves flooded with returned products of such variable quality that efficient remanufacturing is impossible.
Reverse Logistics
Products need to be transported to facilities...

... middle of paper ...

...ich parts were to be sent for the remanufacturing, do not put the nine parts in the right core bins. The effects are on company E is that warehouse space is allocated, both to store the unsorted goods as well as to store the unwanted goods before being transported away for scrapping. It is also time-consuming to perform the delivering. However, there is identification issue is not considered as severe and can sometimes even provide useful information about new part numbers currently not in the remanufacturing process.
A important challenge acknowledged by company F is the decreasing number of scrap yards, which are core suppliers to company F. One plausible explanation for the decrease is that insurance companies certify less scrap yards now than before. The consequence is fewer suppliers result in less competition among those remaining and hence higher core prices.

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