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Reverse Logistics

Extracts from this document...

Introduction

Reverse Logistics 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. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Reverse logistics is a broad term referring to the logistics management skills and activities involved in reducing, managing and disposing of hazardous or non hazardous waste from packaging and products. In short, Reverse logistics is the timely and accurate movement of serviceable and unserviceable materiel from a user back through the supply pipeline to the appropriate activity. It includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls, and excess inventory. It also includes recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery. An important part of reverse logistics is reverse distribution, which causes goods and information to flow in the opposite direction of normal logistics activities. Reverse distribution is defined as "the process buy which a company collects it's used, damaged or outdates products and/or packaging from end users1". In recent years, industry has placed greater emphasis on Reverse Logistics. With the growth of direct-to-consumer channels like catalogs and Internet sales, the reverse supply chain has exploded in recent years. "Returns to U.S. retailers now [amount to] over $100 billion per year," says Jim Stock, professor of marketing and logistics at the University of South Florida in Tampa. "That's greater than the GDP of two-thirds of the world's countries." Within specific industries, reverse logistics activities can be critical for the firm. Generally, in firms where the value of the product is largest, or where the return rate is greatest, much more effort has been spent in improving return processes. There are many reasons given and discarded. ...read more.

Middle

The general aspects of E-commerce for Reverse Logistics are summarized in Table 7 E-Commerce Applications Reverse Logistics Tasks Marketing Advertisement of available used products, parts or material. Notification of used products, parts or material, currently sought Purchasing Search for suppliers/customers Making purchasing commitments Receive information of expected delivery Respond to request for sought used products, parts or materials Sales Price setting (i.e. fixed, negotiations, auction) Order processing Tracking and tracing orders Customer invoicing, collection and payment Post Sales Service Product tracking Customer support Customer / product monitoring Ecommerce relation to reverse Logistics can be shown in the following manner8: There are three prominent e-commerce models for the support of reverse logistics activities. At present, the most popular model for E-commerce for reverse logistics is Electronic Marketplaces, which are used for both new and used products. A common feature of electronic marketplaces is the fact that they are product-centered. Various used products are for sale in these sites and potential customers have a chance to get relevant information on them, declare their interest and possibly buy them. A wide variety of products that have entered the reverse logistics chain are traded, but some sectors like computer, electronics and hi-tech equipment are particularly popular. Nonetheless, some electronic marketplaces are vertically structured, that is, they are dedicated to a specific product like used cars. Then, there are sites that use the Web to offer used parts or remanufactured equipment. Finally, there is also a Web based paradigm that incorporates collection, selection, reuse and redistribution. Considerations of reverse logistics Stock, who has been researching reverse logistics since the '70s confirms the fact that before we can manage the process of reverse logistics, we need to understand the pitfalls. Here is Stock's list of seven oversights 9 committed by companies that underestimate the importance of returns: 1 Failing to recognize that reverse logistics can be a factor in creating competitive advantage A successful reverse logistics strategy starts with the right mindset, if we don't think reverse logistics is important, ...read more.

Conclusion

With two dimensional bar code systems, the bar code can contain not only a code, but also a description and other text. Because reverse logistics transactions and processes are often exception-driven, information required to update the computer may not be able to fit within the limitations of one-dimensional bar codes. This limitation of one-dimensional bar code schemes could mean that for reverse logistics applications, new technologies-such as RFID or two- dimensional bar codes-will become the rule rather than the exception. Conclusions While much of the world does not yet care much about the reverse flow of product, many firms have begun to realize that reverse logistics is an important and often strategic part of their business mission. Reverse logistics practices vary based on industry and channel position. Industries where returns are a larger portion of operational cost tend to have better reverse logistics systems and processes in place. Reverse logistics practices vary based on industry and channel position. Industries where returns are a larger portion of operational cost tend to have better reverse logistics systems and processes in place. Quick handling and disposition of returns is now recognized as a critical strategic variable. Successful retailers understand that managing reverse logistics effectively will have a positive impact on their bottom line. Industries that have not had to spend much time and energy addressing return issues are now trying to make major improvements. Now, more than ever, reverse logistics is seen as being important. 1 Reuse and Recycling- Reverse Logistics Opportunities(Oak Brook, IL: Council of Logistics Management,1993) 2 http://www.rlec.org/reverse.pdf 3 http://www.rlec.org/reverse.pdf 4 Patricia J Daugherty, Matthew B Myers, R Glenn Richey, "Information support for reverse logistics: The influence of relationship commitment" , Journal of Business Logistics; Oak Brook; 2002, Vol 23, Issue 1 5 Kerry Merritt, "Integrated reverse logistics solution allows Levi Strauss to profit off returns", Frontline Solutions, Duluth, Jul 2001, Vol 2, Issue 8, pg 41 6 http://www.uwexeced.com/supplychain/pdf/Marien3.pdf 7 www.few.eur.nl/few/people/kokkinaki/conferences/ e-commerce_paper_ecom-line00.pdf 8 www.few.eur.nl/few/people/kokkinaki/ presentations/athens-mba.ppt 9 Bob Trebilcock, "The seven deadly sins of reverse logistics", Logistics Management, Jun 2002, Vol 41, Issue 6, p. 31-34 10 http://www.rlec.org/reverse.pdf ...read more.

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