Consideration for Developing a Well Designed Reverse Logistics System
Embry Riddle Aeronautical University
Table of Contents
Reverse Logistics Variables6
Questions to Answer7
Answers and Considerations for Facility Locations7
Considerations for Specific Motivations9
Considerations for Product Recovery Options12
Reuse and Repair: Profits13
Third Party Involvement15
Conclusion and Further Research16
Reverse logistics, if implemented correctly, aids in damage control, liability avoidance, and brand survival. It can also provide an extra source of income for a company. The purpose of this paper is to act as a mechanism for considerations related to various uncertainties and variables that companies involved in logistics will face. Having a plan to standardize the reverse logistics process will simplify transportation problems if and when they arise. Motivations, initial product design, and third party logistics providers are all portions of a RL model that need to be standardized in order for product return to run smoothly. Most importantly, when faced with reverse logistics decisions, companies should understand the importance of keeping the forward flow separate from the reverse flow to the maximum extent. This way, companies can focus the bulk of their attention on their primary objective, all while implementing a RL model to produce extra income.
Considerations for Developing a Well Designed Reverse Logistics System
Reverse Logistics (RL) has the potential to increase overall supply chain efficiency, improve customer satisfaction, and realize better profits if designed and executed properly. As of now, few organizations realize that they are missing opportunities by continually accepting a marginally designed system with regard to RL. Simply, the problem is that very little literature and guidance exists as to how to design a RL system that works symbiotically with the rest of a company’s processes. Reverse logistics should not interfere with other organizational departments, nor should it consume the attention of the entire logistics department. It should, however, provide another source of income.
The purpose of this paper is to act as a mechanism to encourage companies to consider all of the variables involved with a RL system. Companies need to have a standardized and well-developed system in place before the threat of a poorly constructed and executed RL system becomes a reality. This leads us to our first assumption. In general, this paper will assume that the organization is designing a system during the early phases of company development. Second, it will be implemented on the same date the company is starting up and designed to work in concert with a standard ‘forward’ logistics system.
Fleischmann, Bloemhof-Ruwaard, Dekker, van der Laan, van Nuen & Van Wassenhove (1997) consider that the emerging field of reverse logistics has started to receive needed attention. The authors divide the reverse logistics process into three main areas: distribution planning, inventory control, and production planning. Fleischmann et al.’s (1997) definition of reverse logistics states, “Reverse logistics encompasses the logistics activities all the way from used products no longer required by the user to products again usable in a market” (p. 2). Genchev, Richey & Gabler (2011) discuss the development of a standardized process for reverse logistics. Though the idea seems valuable, since substantial variations exist amongst organizations with regard to RL, a single process (across every supply chain) is difficult to implement. We will discuss the variables and unpredictable nature of RL later. Genchev et al. (2011) admit that there are common practices that address these unknowns. Gooley (2002) discusses the important...
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