REVERSE LOGISTICS: CHALLENGES AND ISSUES FACED BY THE MAJOR RETAIL PLAYERS IN THE UK.
“In the sweat of your face you shall eat bread till you return to the ground, for out of it you were taken; For dust you are, And to dust you shall return.” Genesis 3:19.
Effective and efficient management of product returns is an intriguing practical and research question. Growing green concerns and advancement of reverse logistics (RL) concepts and practices make it all the more relevant. Three drivers (economic, regulatory and consumer pressure) drive product returns worldwide. This has also gained momentum because of fierce global competitiveness, heightened customer expectations, pressures on profitability and superior supply chain performance. Concerns about environmental issues, sustainable development and legal regulations have made organizations responsive to Reverse Logistics. Increased competition, growing markets and a large base of product users in developing countries imply that buyers are getting more power in the supply chain even in these countries. Thus, managing product returns in an effective and cost-efficient manner, is of increasing interest in business as well as in research. It leads to profits and at the same time increased customer service levels and higher customer retention.
The figure above shows the basic flow diagram of Reverse Logistic activities. The complexity of operations and the value recovered increase from bottom-left to top-right in the figure.
Though the idea of reverse logistics dates from long ago, the naming is difficult to trace with exactness. Though systematically related with recycling, terms like Reverse Channels or Reverse Flow already emerge in scientific literature of the seventies (Guiltinan and Nwokoye, 1974; Ginter and Starling, 1978). During the eighties, the definition was inspired by the movement of flows against the traditional flows in the supply chain, or as put by Lambert and Stock, 1981 “going the wrong way” (see also Murphy, 1986 and Murphy and Poist, 1989). In the early nineties, a formal definition of Reverse Logistics was put together by the Council of Logistics Management, stressing the recovery aspects of reverse logistics (Stock, 1992): “...the term often used to refer to the role of logistics in recycling, waste disposal, and management of hazardous materials; a broader perspective includes all issues relating to logistics activities to be carried out in source reduction, recycling, substitution, reuse of materials and disposal.” The above definition is rather broad, as it is manifest in the following excerpts “the role of logistics in ... all relating ... activities.” ( Kopicky et al., 1998). Besides this, it has origins in a waste management standpoint. In the same year Pohlen and Farris (1992) define Reverse Logistics, giving again notice of a direction in a distribution channel, as follows: “...the movement of goods from a consumer towards a producer in a channel of distribution.” Carter and Ellram (1998) keep the concept linked to environmental purposes, as follows: “the process whereby companies can become environmentally efficient through recycling, reusing, and reducing the amount of materials used.” At the end of the nineties, Rogers and Tibben-Lembke (1999) portrayed Reverse Logistics by stressing the goal and the intrinsic (logistics) processes: “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.” The European Working Group on Reverse Logistics, (see De Brito and Dekker, 2004), puts forward the following definition, which is used in this study: “The process of planning, implementing and controlling backward flows of raw materials, in-process inventory, packaging and finished goods, from a...
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