An inefficient returns process erodes profit margins and undermines customer satisfaction, while an efficient process helps attract new buyers and builds customer loyalty. On the other side, good reverse logistics network is important for firms to gain more profit. Profit generated through logistics services and leveraging relationships by helping clients manage their waste stream, emissions. Product returns are the most common aspect of reverse logistics. Reverse flow driven by motivation is an important implication for managers to. Logistics and customer service in the hospitality industry. Reverse logistics is a strategy in supply chain management in which a company collects and reuses some part of their distributed good.
Factors affecting adoption of reverse logistics in the. However, in reverse logistics, companies create a new supply chain network that works backwards, and allows consumers to reach. Logistics refers to management of flow of goods and supplies involving information, data and documentation between two entities or points. Logistics is the backbone on which supply chains are driven. Its possible to transform existing reverse logistics. Mar 23, 2020 selecting the right disposition strategies and understanding their financial impact can help you turn the reverse supply chain into a revenue generator instead of a cost center. Companies can see between 4% 30% of their products returned by customers and total uk retail returns have been valued at around. Each archetype places different demands on reverse logistics setups, and each archetype has its own set of success criteria. Managing reverse logistics is becoming an important element of supply chain management and, in some cases, a profit generating function. The ones marked may be different from the article in the profile. The impact of reverse logistics on management accounting and. In attempting to better manage the constant flow of returned goods, manufacturers have identified target areas key to streamlining the reverse logistics. Other options include donation to charity or even destruction. A strategic initiative for successful reverse logistics.
Reverse logistics a framework repub, erasmus university. In todays business context, companies can not longer afford to neglect reverse logistics as an integral part. With the proper planning and systems in place, a recall can be managed effectively to mitigate financial and legal risk, as well as prevent irreparable brand damage. Because the reverse logistics is driven by two guidelines, of profit and. In this paper, reverse logistics activities and key reverse. For this reason, attempting to manage reverse logistics through forward logistics channels can be costly and increase complexity.
Reverse logistics maturity model the ellen macarthur foundation. The us army first paid its attention to reverse logistics operations in 1998. Pdf a profit maximization for a reverse logistics dualchannel. Artificial intelligence in reverse supply chain management the state of the art bo xing 1, wenjing gao 1, kimberly battle 1, and tshilidzi marwala 1 1faculty of engineering and the built environment university of johannesburg johannesburg, south africa.
Reverse logistics is like cleaning up the morning after a big party a mess that no one really wants to face, resulting from things that are left. The strategic usage of reverse logistics among the retailers and wholesalers is to reduce the risk of buying products that may not. Reverse logistics involves reuse and recovery of products, hence reducing the negative effects. Bringing it back retailers need a synchronized reverse logistics strategy 05 bringing it back retailers need a synchronized reverse logistics strategy 04 the rise of ecommerce over the past decade has driven a 33 percent increase in the return rate of overall. The paper will examine the advantages of a properly maintained returns process and discuss important options to consider in developing a reverse logistics strategy. Ernst 2000, reverse logistics involves the return flow, considering either defective parts packages or products returned consumed that should go to a recycling. Increasingly senior management within the business is being driven by the goal of enhancing shareholder value. In recent researches results reverse logistics can. The reverse logistics process in the supply chain and.
Managing reverse logistics to improve supply chain. In our experience with numerous retailers, reverse logistics remains an overlooked area. Currently the literature has abundant reports separately addressing forward and reverse flow logistics systems. Reverse logistics studies and scientific researches. Its a very heavily it driven process, says liebel, because it is critical for our customers and for our customers customers to be able to track the status of products in the reverse. But, if properly motivated, they can become gatekeepers for the reverse. Profit maximization in reverse logistic based on optimization. Profits in reverse logistics reverse logistics talk. An increase in the reverse logistics investment scaling parameter leads to a decrease in profit. This concept has the potential to raise the environmental performance of organisations and to generate new profit opportunities and competitive advantages for supply chain participants talbot et. Mar 21, 2012 key reverse logistics management element reverse logistics information systems one of the most serious problems that the companies face in the execution of a reverse logistics is the dearth of a good information systems.
This is exactly why so many companies trust a 3pl to manage their logistics operations. Reverse logistics is an integral component of the supply chain and manufacturers have come to realize that an effective reverse logistics program is an important and strategic part of their business profitability and competitive position. Beheersing van retourlogistiek of omgekeerde beheersing van logistiek. If youre going to setup up, operate, and innovate a topnotch reverse logistics pipeline it takes skill, knowledge, and capital investments. This process of returning products back through the supply chain is the reverse logistics process and it may encompass several different logistics activities. It is a process of flow of goods or material which are unwanted or defective through the logistics chains to the manufacturer so that it can be recycled, reused, or disposed of properly the meaning of reverse logistics.
These entities can offer flexible capacity, expertise in the regulatory environment, and the technology support to take on the complexity of. During the same year, the first commercial study of reverse logistics was made by dr. Managing reverse logistics to improve supply chain efficiency. An economic order quantity model with reverse logistics. Artificial intelligence in reverse supply chain management. Reverse logistics strategies as a means to improve profitability article pdf available in international journal of logistics economics and globalisation 31. An examination of reverse logistics practices rogers. Reverse logistics in the age of entitlement logistics. Recapture revenue the following paperprovides a contextual overview of u.
Logistics and customer service in the hospitality industry angelo nicolaides. Reverse logistics rl is the efficient, cost effective flow of materials, inprocess inventory, byproducts, finished goods and related information from the point of use to the point of origin in order to recapture value refurbishing and remanufacturing activities may also be included in the scope of reverse logistics. Turn your reverse supply chain into a profit center. Is the layout of my current logistics facility the right one for me.
Reverse flow driven by motivation is an important implication for managers to manage logistics. Typically, a supply chain network creates a path for companies to reach consumers. Increasing efficiency in reverse logistics processes such as the recovery of the returned products or disposal of endoflife products is. A conceptual framework of reverse logistics impact on firm performance abstract this study aims to examine the reverse logistics factors that impact upon firm performance. Measuring logistics costs and performance logistics and the bottom line 83. However, it is rare in academic journals to find studies of the synergy effects of integrating the two flows, even though many logistics companies practice both flows in. With estimates and zeros and all the possibilities of room for unexpected costs, pricing your logistics can be overwhelming. Reverse logistics the management of returned and recyclable goodsis a pervasive and important business activity. To work well, a flexible reverse logistics information system is required.
In this paper, reverse logistics activities and key reverse logistics management methodologies are discussed, as well as their benefits and the barriers to successful implementation. The hidden value in reverse logistics point of view. Analysis of barriers for reverse logistics international journal of. Research executive summaries series tools to manage reverse logistics overview of project reverse logistics has become an area that retailers and manufacturers cannot ignore. Reverse logistics transformation case study at cisco. Reverse logistics programs are typically complicated by a number of factors. In the united states, for instance, roughly 20 percent of everything that is sold is returned to the manufacturer. Product returns exact a toll not only on a companys financial performance but also on its image and sales. The reverse logistics process is illustrated in figure 1. The study also tries to look at the environmental aspects of reverse logistics. An examination of reverse logistics practices request pdf. Therefore, they just focus on trying to reduce the cost of returns processing. This is exacerbated by the multiple entities customer, manufacturer, reseller and disposer that need to partner to develop a smooth reverse logistics. Top 3 benefits of a reverse logistics management program.
Reverse logistics maturity model rlmm homing in on reverse logistics needs and key success drivers there is no one way when it comes to going and staying circular. Most commonly today, companies are using thirdparty service providers 3pls to partner with in their reverse logistics supply chain. Abstractthis research proposal encompasses an attempt to investigate the impact of reverse logistics practices in managerial accounting and customer satisfaction in saudi arabian ecommerce. Businesses face many challenges in the current economy trying to find new and innovative methods to derive additional revenue or profit within their organization. Economic gain, reduction of disposal costs, compliance with environmental legislations, and pressure from customers and competition are among various. Recovering lost profits by improving reverse logistics. Soon you may need to give just as much thought to your reverse supply chain. Pdf reverse logistics strategies as a means to improve. The impact of reverse logistics has become a major operational challenge for ecommerce businesses of all sizes. Because the reverse logistics is driven by two guidelines, of profit and legal regulation, it becomes more complex than the forward distribution system, in terms of managing, controlling and processing. Integration and optimization of reverse logistics network has.
Schematic representation of the direct and reverse logistics processes. Reverse logistics can represent a significant chunk of supply chain cost, and its typically not very well managed, its time to manage reverse as an integral part of supply chain management. Reverse logistics an overview sciencedirect topics. But in todays era of the fickle ecommerce customer, the reverse loop represents an untapped opportunity for hardworking, imaginative logistics managers and their thirdparty logistics partners. An excellent tool to help you perform this analysis and identify your profit opportunities is the reverse logistics cost equation. Factors affecting adoption of reverse logistics in the kenya manufacturing sector. Bringing it back retailers need a synchronized reverse.
The first by stock 1992 recognized the field of reverse logistics as being relevant for business and society in general. The way forward part i of ii although reverse logistics is often overlooked, retailers that master this discipline can gain competitive differentiation and turn the. Return management systems, and by the same token, reverse logistics requirements, vary based on product and business model attributes. This cited by count includes citations to the following articles in scholar. Pdf in the last few decades, the rapid development of ecommerce. When a company focuses more attention on the returned merchandise to figure out what the original problem was, customers will have a better experience. Managing reverse logistics to improve supply chain efficiency and reduce cost reverse logistics can represent a significant chunk of supply chain cost, and its typically not very well managed, its time to manage reverse as an integral part of supply chain management. Reverse logistics is the process of moving goods back through the supply chain for refund, repair, replacement or recycling. The first one making a thorough exam of reverse logistics.
Reverse logitstics white papers ups supply chain solutions. Jun 28, 2017 together with the other profitable reverse logistics streams and management of costs, are there potentials for reverse logistics to be developed as an integral part of your organisations supply chains. A decisionmaking framework that captures real life scenarios and provides near optimal solutions related to various aspects of reverse logistics for making various decisions in a profit motivated context has been suggested. Increased competition caused by globalization and rapid technological advances has driven organizations to address and make efforts to improve efficiency in their supply chain.
Why pursue an area of business management that has often been underestimated, overlooked, and often not understood. When a machine or piece of equipment reaches the end of its useful life, business owners can achieve a second. If so, it is a first step towards sustainable supply chains but that is for another blog. Learn how it can increase efficiency, improve customer service and more.
Abstractreverse logistics rl stands for all the operations related to the reuse of. We contemplate a trifold driving force for reverse logistics. Reverse supply chain coordination and design for profitable returns. Reverse logistics magazine increase profits using the. Benefits of an efficient reverse logistics process arcbest.
It is very important to note that a reduction in any one of these reverse logistics cost equation components goes straight to your corporate bottom line profit. The reverse logistics cost equation is an assembly of the key cost components or categories related to the creation, handling, processing and final disposition of a return item. Properly managed reverse logistics can also deliver greater brand loyalty and stronger regulatory compliance, while keeping used electronics out of waste streams. Jul 10, 2017 reverse logistics is a strategy in supply chain management in which a company collects and reuses some part of their distributed good. Logistics can drive the circular flow of goods, link markets and provide. A conceptual framework of reverse logistics impact on firm. A dedicated reverse logistics channel is a practical alternative that can contribute to both revenues and margins.
The first step of a best practice implementing a reverse logistics solution would be to supply the customer with a return label when the item is shipped that includes the customers order number in barcode form so that you can inform the customer as. The lack of awareness of benefits of reverse logistics is a major barrier for its implementation. The hidden value in reverse logistics point of view deloitte. Managing reverse logistics or reversing logistics management. Reverse logistics is a branch of asset recovery also by increasing customer loyalty. Thus reverse logistics does not cause any effect in product supply chain thus marketing invest is low and thereby increase in profit.
Reverse logistics is the process of handling return of products from a consumer or a retailer to a manufacturer through the use of the supply chain. Decoupling is the point of differentiation between order driven and forecast driven. Indeed, for many logistics and supply chain professionals, reverse logistics for years has been regarded as pejorative expression. Reverse logistics consists of all activities which are performed after the sale of a product. In addition, the paper analyse and identifies the drivers of reverse logistics. Today, the customers have the benefits of greater product variety.
Thus, as s increases, management needs to order less quantity, reduce cycle length and slightly increase price to cushion the affects of reverse logistics cost. Segmentation and customer driven marketing topic 2. Pdf a strategic initiative for successful reverse logistics. Meeting the reverse logistics challenge supply and. The impact of reverse logistics on management accounting and customer satisfaction on saudis ecommerce. The objective of reverse logistics is improve profit by decreasing production cost on new product. Apr 30, 20 to utilize an existing customer pipeline to offer new income producing waste stream management services, an organization must be able to show the financial benefit and added value of the reverse logistics program. In recent years, your company has probably spent a lot of time and money finetuning its supply chain. It has resulted in an increase in unsold products, rate of returns, packing. The rising impact of reverse logistics on ecommerce. Reverse logistics also encompasses recycling of packaging and containers, reconditioning or refurbishing of products and disposition of obsolete goods. Reverse logistics is a new notion in the history of logistics and supply chain management. Customers on average return about 6% of everything they buy.
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