reverse logistics presentation scm

8/13/2019 Reverse Logistics Presentation SCM

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REVERSE LOGISTICS

By.

Prashant M.P.

Rohit C.Shetty.Rosh Rejendran.

Sagar K.

Sannidhi Purushotham.


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Definitions

Logistics (Forward)

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 origin to the point of consumption for the purpose

of conforming to customer requirements

- Council of Logistics, 1988 -

Reverse Logistics

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

- Rogers and Tibben-Lembke -


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Reverse Logistics Activities

Handling of returnedmerchandise Damage

Seasonal inventory

Resell via outlet

Salvage of outdated products

Stockbalancing returns

Recycling and reuse Material reuse Remanufacturing / refurbishing

Hazardous materials disposition


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Source: http://www.rlmagazine.com/img/edition04_ups.jpg

The Reverse Logistics Process
http://www.rlmagazine.com/img/edition04_ups.jpghttp://www.rlmagazine.com/img/edition04_ups.jpghttp://www.rlmagazine.com/img/edition04_ups.jpg


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Return Percentages

Source: Rogers and Tibben-Lembke, Going Backwards: Reverse Logistics Trends and Practices, 1998


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Publishing Industry

Highest rate of unsold copies (28% on

average)

Growth of large chain stores: More square

footage requires more books

To secure a prominent display in

superstores, publishers must supply large

quantities of books

Superstores sell less than 70% of books

they order

Shorter shelf life


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Computer / Electronic Industry

Shorter life cycles

How to recover and reuse materials contained within

E-waste?

Lead, copper, aluminum gold, plastics and glass

E-waste includes computers, televisions, cell phones,

audio equipment and batteries

Remanufacturing of toner cartridges: 12,000

remanufacturers, employing 42,000 workers, sell

nearly $1 billion annually


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Automotive Industry

Three primary areas:

Components in working order sold as is

Other components, such as engines,

alternators, starters, and transmissionsare refurbished before they can be sold

Materials are reclaimed through

crushing or shredding

Automotive recyclers handle morethan 37% (on an average) of the

nations ferrous scrap


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Retail Industry

Profit margins are so slim thatgood return management iscritical

Returns reduce theprofitability of retailersmarginally more thanmanufacturers


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Forward vs. Reverse Logistics


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STRATEGIC USE OF REVERSE LOGISTICS

Reverse Logistics as a Strategic Weapon

Many firms have not yet decided to emphasize reverse logisticsas a strategic variable.

The handling of reverse logistics challenges is a strategiccapability.

Reverse logistics is strategically used to:

Reduce the risk of buying products thatmay not be hotsellingitems.

Increase the switching costs ofchanging suppliers.



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STRATEGIC USE OF REVERSE LOGISTICS

Competitive Reasons

Liberal return policies over the last fewyears due of competitive pressures.

Taking back unwanted products or productscustomers believe do not meet needs.

Good Corporate Citizenship

o Use reverse logistics capabilities for altruistic reasons,

such as philanthropy.

o These activities enhance the value of the brand and are

a marketing incentive to purchase their products.



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REVERSE LOGISTICS CHALLENGES

Retailer Manufacturer Conflict

Inefficiencies that lengthen the time for processing returns:

Condition of the item Value of the item Timeliness of response

They have to develop a working partnership to derive mutual benefit.

Problem Return Symptoms

o Lack of information about

the process.o If you arent measuring it,

you arentmanaging it.



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REVERSE LOGISTICS CHALLENGES

Cause and Effect

Poor data collection leads to uncertainty

about return causes.

Improving the return process decreases

costs.

Being able to see defective products and

to track return issues.


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BARRIERS TO GOOD REVERSE LOGISTICS

Numerous barriers to good reverse logistics exist

Management inattention and the lack of importance of reverse logistics.

Corporate strategy for handling returns and non-salable items.

Legal issues do not appear to be a major problem.

Companies can not

continue to overlook thenecessity of good reverselogistics management.



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Key Reverse Logistics Management Element

GATEKEEPING

The screening of defective and unwarranted returned merchandise

at the entry point into the reverse logistics process

Rogers, Dale, and Don Tibben-Lembke


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Compacting Disposition Cycle Time

Important to know beforehand what to do with returned goods

When material often comes back in to a distribution center, it isnot clear whether the items are: defective, can be reused, or

refurbished, or need to be sent to a landfill

The challenge of running a distribution system in forward isdifficult employees have difficulty making decisions when thedecision rules are not clearly stated and exceptions are oftenmade

Goal: to reduce the amount of time to figure out what to do withreturned products once they arrive


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Reverse Logistics Information Systems

One of the most serious problems that the companies face in theexecution of a reverse logistics is the dearth of a good informationsystems. 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 begintracking returned product and follow it all the way back through the supply chain

Information system should also include detailed information programs about

important reverse logistics measurements, such as returns rates, recovery rates, andreturns inventory turnover

Useful tools such as radio frequency (RF) are helpful. New innovations such astwo-dimensional bar code and radio frequency identification license plates (RFID)may soon be in use extensively


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Centralized Return Centers (CRC)

Consistency in disposition decisions andminimizations of errors

Space saving advantage for retailers whowant to dedicate as much of the shop floor tosalable merchandise as possible

Labor cost reductiondue to specialization,CRC employees can typically handle returnsmore efficiently than retail clerks can

Transportation cost reductionempty

truckloads used to pick up return merchandise

A selling toolthe easy disposition of returneditems represent can be an appealing serviceto retailers, and may be a deal-maker forobtaining or retaining customers

Faster disposition timesit allows thecompany to obtain higher credits and refundsstay idle for smaller periods of time, thus

losing less value

Easier to identify trends in returnsanadvantage to manufacturer who can detectand fix quality problems sooner than if thesereturns were handled entirely by customerservice personnel


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Zero Returns

A program where the company in question does not accept returns from itscustomers. Rather, it gives the retailer an allowable return rate, and proposesguidelines as to the proper disposition of the items. Such policies are usually

accompanied by discounts for the retailer

It passes the returns responsibility onto the retailer, while reducing costs for themanufacturer or distributor

The drawback: the manufacturer losses control over its merchandise


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Remanufacture and Refurbishment

Five categories of remanufacture and refurbishment:

The advantage to using reworked parts is felt through cost saving

1) Repair2) Refurbishing3) Remanufacturing

Make the product reusable for

its intended purpose

Retrieving reusable parts from

old or broken products

4) Cannibalization

Reusing parts of products for

different purpose

5) Recycling


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Reverse Logistics and the

Environment

Environmental considerations have agreater impact on many logistics decisions.

For example: Many products can no longer be placed

in landfills

Firms forced to take back their productsat the end of their useful lifetime.

Decrease of landfill availability andincrease in Landfill costs.


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Green Logistics and Reverse

Logistics

Reverse Logistics refers to all efforts to movegoods from their typical place disposal in

order to recapture value. Green Logistics refers to minimizing the

ecological impact of logistics, for example,reducing energy usage of logistics activities

and reducing usage of materials.


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A number of societal changes regarding theenvironment are having a profound impact

on reverse logistics. Firms are forced to take their products back

when they are banned; this benefits the firmsin two ways. They reuse the products and

recapture their value. The firm is exposed asan environmentally friendly company.

Product Take-Back
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Product Take-Back

Many companies such as Compaq, Hewlett-

Packard, and Xerox have adopted theExtended Product Responsibility (EPR)program. EPR focuses on the total life of theproduct, looking for ways to prevent pollution

and reduce resource and energy usagethrough the products life cycle.
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CONCLUSIONS

More firms will give considerable attention on reverse logistics

Efficient handling and disposition of returned product can make a

competitive difference.

Excellent reverse logistics practices add to the companysbottom line.

Aspects to reduce the cost of reverselogistics:

Improved Gatekeeping technology Partial returns credit

Earlier disposition decisions

Faster processing / shorter cycle times

Better data management


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CONCLUSIONS

Within reverse logistics, maintaining the environment and making

profits are complementary.

Fewer disposed products can benefit companies and the environment.

Alternate uses of resources by extending productsnormal life cycles.

Cost effective and ecologically friendly solutions.

Reverse logistics is not simply a matter ofdriving the truck the opposite way.

reverse logistics presentation scm

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