General Characteristics Of Reverse Supply Chains

Most manufacturing enterprises are organized as networks of manufacturing and distribution sites that procure raw materials, transform them into intermediate and finished products, and distribute the finished products to customers. The simplest network consists of one site that performs both manufacturing and distribution. More complex networks, such as those required to manufacture mainframe computers, span multiple sites that may be scattered around the world.

In reverse logistics, the design, control, and operation of a recovery value system will reflect the whole life cycle of a product. This is the concept of closed-loop supply chains, in which zero-waste is achieved in the “forward flows of materials (from suppliers to end customers) and the reverse flow of products (post consumption) back to the manufacturing or distribution supply chains” (Book p.151-152). Reverse logistics supports closed-loop supply chains and coordinating the chains to achieve (or maintain) competitive advantage. A fragmented chain, where each member is only focused on its own processes, is considered a key Supply Chain Management problem. It is not wise for Sandvik to fragment, or decouple the forward and reverse supply chains.

Another important design issue of reverse supply chain concerns potential synergies between different product flows. While forward supply chains typically act as one-way channels, closed-loop supply chains encompass multiple inbound and outbound material flows crossing each other’s path. In this setting, it is intuitive to consider integration as a potential means for attaining economies of scale. Opportunities may concern transportation and reprocessing facilities. As previously discussed, integrating the collection of end-of-life products with the distribution function may help reduce empty rides. Typical examples include refillable soft-drink bottle and various ‘old for new’

Finances are one of the most crucial parts of any business. Every business has to be aware of what type of resources, especially financial resources, it has available to work with. The financial aspect of a business determines almost every other aspect of that business. Being able to utilize budgets, in order to reduce costs and make profit, is imperative.

A first of important group of reverse supply chains can be found in systems of directly reusable items such as reusable packages such as bottles, crates pallets and containers (see Chapter 1). Reusable items requiring only minor reprocessing steps such as cleaning and inspection can be expected to lead to a rather flat supply chain network structure comprising a small number of levels (i.e. depots). Moreover, a closed-loop supply chain structure seems natural in this context since there is no distinction between ‘original’ and ‘reuse’. Determining the number of items required to run the systems and prevention of loss are important issues in this closed-loop situation (Goh and Varaprasad, 1986).

Reverse logistics and the return portion of the supply chain is often an overlooked and mismanaged process. Companies tend to focus their efforts on the forward portion of supply chain management, while failing to take advantage of the many opportunities that reverse logistics presents (Benton, 2007). What these companies do not realize is that the effective management of reverse logistics has the potential to make them more profitable, and to add value to many other parts of their supply chain. In the case of Johnson Automotive, we will analyze their current supply chain processes to determine their effectiveness while answering the following questions:

4. In a service supply chain, the (explicit) cost of information is higher than in a product

Reverse logistics has attracted significant attention in the recent past with regards to enhancing the effectiveness of supply chain management. As the name suggests, reverse logistics is described as the supply chain process that flows opposite the usual procedure of order, implementation and delivery (Hawks, 2006). In light of increased attention, reverse logistics has also been characterized by increased investments in technology, particularly software development, to enhance its systems. This has contributed to numerous benefits in the supply chain management process including recapturing, enhancement of supply chain processes and overall improvement of logistics. However, the increased technological investments have generated several challenges associated with reverse logistics and the environment. These challenges have also contributed to the emergence of several ethical challenges in relation to interruption of producers’ business.

Jayaraman et al. (1999) developed a 0-1 MIP model to design the closed-loop supply chain of an electronic equipment remanufacturing company in the US. The supply chain includes collection of end-of-life products (core) from customers, remanufacturing and distribution of remanufactured products. In this setting, the optimal number and locations of remanufacturing plants and the number of cores collected are determined based on investment, transportation, processing, and storage costs. In addition, the stocking level of the remanufactured products is also optimised. Fleischmann et al. (2001) developed a MILP model for the design of a closed-loop supply chain. This model combines two models: one for a forward supply chain connecting factories to customers through warehouses, and the other for a reverse supply chain connecting customers to factories, through disassembly centres. The two chains are integrated by means of a balance constraint that assures for each factory that its total return is not greater than its total production. The authors discuss the main difference between traditional supply chains and combined forward and reverse supply chains. Two case studies (i.e. end-of-life copier and paper recovery) already published were used to explore model applications and their analysis concludes that, for some cases, the reverse supply chain must be accounted for simultaneously with the forward supply chain, but for other cases,

Ammons et al. (1997) developed a mixed integer linear programming (MILP) model for the reverse supply chain design of used carpets. The model considers a two-level network that includes collection of used carpets from carpet dealerships, as well as separation of nylon and other reusable materials while landfilling the remainder. Although the delivery sites for recovered materials are assumed to be known, the optimal number and location of both collection sites and recycling plants for alternative configurations are to be determined. In addition, the amount of carpets collected from each site is to be determined. A sensitivity analysis is performed in order to evaluate the impact of several

The basic reason for negotiating a contract is to reduce risk, and establish who bears the cost of the risk incurred. Identifying the responsibility of the parties and avoiding finger pointing when a business operation goes bad. Perkins (2008), in studying risk and reward contracts states that risk and reward contracts are highly specialized, and require careful and creative management to create. In constructing a risk and reward contract they take extra time and effort, but if designed and written properly, a risk and reward contract can provide benefits that can more than compensate for the additional effort. A well-designed risk and reward contract can be a motivating factor to suppliers, using a system of incentives and penalties to achieve desired results. During this paper we will briefly analyses the risk and reward factors involved when creating a contract.

When supply chain managers are brought together it is the common goal to focus on the process of getting the consumers product though the forward supply chain as quick and efficiently as possible. However, there is a need to focus on the scope of the returns process too. “Companies can no longer afford to treat reverse logistics management as an afterthought. It needs to be a core capability within the supply chain organization. For years, most shippers paid little attention to returns” (Dowlatshahi, 2005). It has cost companies billions of dollars over the years and even harmed some of their brands. Though this may be apparent, the improvement of managing the returns of those goods has become the capstone of completing the full cycle of the supply chain from both forward and revers. In saying that, the attributed on managing the returns process is somewhat similar to that of the forward supply chain. This process is not always easy and convenient. Many known companies have failed because of an overload on return that were mishandled, causing a dilemma when making the attempts to reach expectations. To avoid failure the best practices, in reverse logistics have been proven to give those in leadership positions the functional ability to consider the overall establishment of clearly defining what profits and loss are being made. Technological advancements have too given the use of applications and inventory control analytical procedures to govern the increasing disposition of

The results show that while increasing the number of remanufacturing batches, a mixed strategy is more economical than a pure (production or remanufacturing) strategy. The results also show that while increasing production associated costs pure production (remanufactured) is more expensive than a mixed strategy. El Saadany et al. (2013) mentioned that a pure remanufacturing strategy is not possible and it is very difficult to recover a product indefinitely. In that sense, the model of this paper helps a firm in determining the actual benefits of disassembling returned items for reuse (recycle, repair and recover), which other models in the literature make the simplistic assumption of remanufacturing a returned item as a whole unit.

Reverse logistics (RL) is defined by Rogers as, “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”. (1) This reverse flow of materials has proven to be worthy of its own field of research. Logistics firms have failed to be able to efficiently and cost effectively move this material through existing networks. Third party logistics firms (3PL) have even been created to specialize in this emerging multi-billon dollar market. A question that arises is why it has taken so long for companies to develop this logistics setup? David Poitevint, manager of marketing research and analysis at GATX Logistics, asserts that, "Reverse logistics has been overlooked because everyone was so concerned with the inbound movement of material, inbound management, and controlling their suppliers from the front end of the supply chain.” (2)

Most of us think of logistics as a one-way street. Products are manufactured, packaged, stored in a warehouse, sold, and then shipped off to the customer ... end of story. Yet for many logistics managers today, that's not the end of the story. In addition to managing outbound goods, they also are responsible for reverse logistics--the flow of returned goods and packaging, including customer service and final disposition of returned items.