REVERSELOGISTICS
REVERSE LOGISTICS
Definitions/Logistics(Forward)“Processofplanning,implementingandcontrolling(1)theefficient.cost-effectiveflowofrawmaterials.in-processinventory.finishedgoodsandrelatedinformation（2)fromthepointoforigintothepointofconsumption(3)forthepurposeofconformingtocustomerreguirements(4)-Council ofLogistics,1988-ReverseLogistics-RogersandTibben-Lembke-
Definitions ✓ Logistics (Forward) “Process of planning, implementing and controlling（1） the efficient, costeffective flow of raw materials, in-process inventory, finished goods and related information（2） from the point of origin to the point of consumption（3） for the purpose of conforming to customer requirements（4）” - 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 -
Reverse Logistics ActivitiesHandling of returnedmerchandiseDamageOSeasonal inventoryOResellvia outletOSalvageof outdatedproductsOStock-balancingreturnsORecyclingandreuseMaterial reuseORemanufacturing/refurbishingOHazardousmaterials disposition
Reverse Logistics Activities ✓ Handling of returned merchandise Damage Seasonal inventory Resell via outlet Salvage of outdated products Stock–balancing returns ✓ Recycling and reuse Material reuse Remanufacturing / refurbishing ✓ Hazardous materials disposition
The Reverse Logistics ProcessThreeStep Focused ApproachValueTransportation&PositioningCustomerRedemptionInteractionFeedbackReduceTransportationCosts(e.g.Consolidation)Revenue OpportunityTrade-insRelocateforAdditionalUseAsset-basedSupplementUp-SellsTimeSensitiveDecisions(e.g.Warranties)SortRetrieveTransportDisposeMgmtReceiveInspectRe-sellRecycle印人ERScrapEtc.InformationASNCarrier Tracking NumberIntermal TrackingBusinessRules3rdPartyTrackingRMAEtcIstheinformationgatheredduringthereverselogisticsprocessbeingrationalizedutilized effectively?Source:http://www.rlmagazine.com/img/editiono4_ups.jpg
Source: http://www.rlmagazine.com/img/edition04_ups.jpg The Reverse Logistics Process
Size of Reverse Logistics“Reverse logistics costs in the United States are estimated tobeapproximately4%oftotalU.S.logisticscosts"-ROGERS,D.,ReverseLogisticsChallenges,2002-Roughly$47billionsin2006“"lt isestimatedthat reverse logistics costs accountforalmost1%ofthetotalUnitedStatesgrossdomesticproduct"-MOORE,R.,Reverselogistics:Theleast used differentiator,2006-Roughly$132billionsin2006“TheCenterforLogisticsManagementattheUniversityofNevadaconservativelyestimatesthat 6%ofallgoods maybe returned,but concedesthatthetruenumbermaybecloserto8%"-MOORE,R.,Reverselogistics:Theleast used differentiator,2006
Size of Reverse Logistics “Reverse logistics costs in the United States are estimated to be approximately 4% of total U.S. logistics costs” - ROGERS, D., Reverse Logistics Challenges, 2002 - - Roughly $47 billions in 2006 “It is estimated that reverse logistics costs account for almost 1% of the total United States gross domestic product” - MOORE, R., Reverse logistics: The least used differentiator, 2006. - Roughly $132 billions in 2006 “The Center for Logistics Management at the University of Nevada conservatively estimates that 6% of all goods may be returned, but concedes that the true number may be closer to 8%” - MOORE, R., Reverse logistics: The least used differentiator, 2006
Return Percentages1IndustryPercent50%MagazinePublishing20-30%BookPublishers10-20%BookDistributors20-30%Greeting CardsCatalogRetailers18-35%10-12%ElectronicDistributors10-20%ComputerManufacturersCD-ROMs18-25%4-8%Printers2-5%MailOrderComputerManufacturers4-15%MassMerchandisers4-6%AutoIndustry(Parts)4-5%ConsumerElectronics2-3%Household ChemicalsSource:RogersandTibben-Lembke.GoingBackwards:ReverseLogisticsTrendsandPractices.1998
Return Percentages Source: Rogers and Tibben-Lembke, Going Backwards: Reverse Logistics Trends and Practices, 1998
PublishinggIndustryDiabelesYCHIATRTHELANCETCirculationHighestrateofunsoldcopies(28%onCNSDrLsaverage)Growthof large chainstores:MoresquarefootagerequiresmorebooksTosecureaprominent displayinsuperstores,publishersmustsupplylargequantitiesofbooksSuperstoressell lessthan70%ofbooksthey orderShorter shelf life
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
1Computer/Electronic IndustryShorterlifecyclesApproximately325millionPC'sbecameobsoleteintheUSbetween1985and2005OpportunitiestoreuseandcreatevalueoutofanearlyomnipresentassetHowtorecoverandreusematerialscontainedwithinE-waste?VLead,copper,aluminumgold,plasticsandglassvE-wasteincludescomputers,televisions,cellphonesaudioequipmentandbatteriesRemanufacturing oftonercartridges:12000remanufacturers,employing 42,000workers,sellnearly$1billionannually
Computer / Electronic Industry ✓ Shorter life cycles ✓ Approximately 325 million PC’s became obsolete in the US between 1985 and 2005 ✓ Opportunities to reuse and create value out of a nearly omnipresent asset ✓ 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
AutomotiveIndustry一Primary areas:Components,suchasengines,?alternators,starters,andtransmissionsarerefurbishedbeforetheycanbesoldMaterialsarereclaimedthrough?crushing or shreddingAutomotive recyclers handlemorethan 37% of the nation's ferrousscrapRemanufactured auto parts marketis estimated at $34 billion, annually
Automotive Industry ✓ Primary areas: Components, such as engines, alternators, starters, and transmissions are refurbished before they can be sold Materials are reclaimed through crushing or shredding ✓ Automotive recyclers handle more than 37% of the nation’s ferrous scrap ✓ Remanufactured auto parts market is estimated at $34 billion, annually
Retail IndustryProfitmargins are so slim thatgood return management iscriticalReturnsreducetheprofitability of retailersmarginally more thanmanufacturersReturnsreducetheprofitabilityof retailersby4.3%The average amountthatreturnsreduceprofitabilityamongmanufacturersis 3.80%
Retail Industry ✓ Profit margins are so slim that good return management is critical ✓ Returns reduce the profitability of retailers marginally more than manufacturers ✓ Returns reduce the profitability of retailers by 4.3% ✓ The average amount that returns reduce profitability among manufacturers is 3.80%