Term Paper Report

(Reverse Logistics in Supply Chain)

Submitted By
KHURRAM RIAZ 01028

Submitted To
SIR MUHAMMAD UMER

ON 25 July, 2011

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF COURSE

Supply Chain Management

DEPARTMENT OF MANAGEMENT SCIENCES IQRA UNIVERSITY ISLAMABAD, CAMPUS

1

Brief History of Reverse Logistics

According to Walden (2005), reverse logistics history starts from the American Civil War. During World War II there was material shortage so for that they rebuild the automobiles parts and starts trend. Johnson & Johnson along with McNeil Laboratories quickly responded as America watched on the evening news about the tainted lot of Tylenol. The rapid response by McNeil Laboratories to get the tainted products off the shelves and quickly replaced by new lots with tamper proof bottles instilled great faith in the American public and set the new standard for reverse logistics. In 1991, The Federal Republic of Germany passed recycling ordinances in the environmental reverse flow and deployed mandatory recycling programs. Included in these ordinances were provisions for fines and prosecution for violators of the ordinances, and stricter guidelines for the handling and transporting of hazardous materials and responsibilities for recovering hazardous wastes (RevLog, 1998)

What is Reverse Logistics

Reverse logistics is concerned with all those operations which are used in products and materials. There are many definitions about the reverse logistics but according to Rogers and Tibben-Lembke reverse logistic is Process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, inprocess 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.

Another definition of "reverse logistics" could be as all those activities which are related to product/service after the sale, the final goal to optimize or make more efficient aftermarket activity, thus saving money and environmental resources. All activities which take place in reverse logistics operate in reverse action. Reverse logistics is the process of moving goods from their typical final destination for to the remanufacturer. If any good or material is not reverse then it is not a reverse logistics. For most of us in retail, reverse logistics includes processing returned merchandise as a result of damage, seasonal inventory, restock, salvage, recalls, and excess inventory. However, it also includes recycling programs, hazardous material programs and obsolete equipment disposition. Companies dont have balance sheet of garbage so mostly they dont concern about it. But some oil and other companies considered trash .They feel it they can add value to it by a process of reverse logistics.

Reverse Logistics Challenges

Besides from the benefits of the reverse logistics there are some challenges also. A sometimes problem occurs due to conflicts between the retailer and the manufacturer because of the inefficiencies from both sides which effects on the value and condition of the products. So both sides have to develop a good working partnership for mutual benefit. Some time challenges been faced due to poor data collection because they dont have a good database. Government has a very key role here some time rules from government or pressure group urges to make this process.

Examples of Reverse Logistics

Sometimes companies are been forced by the governments to set up reverse logistics because of the environmental regulations or consumer pressures. For example, European Union legislation will require tire manufacturers operating in Europe to arrange for the recycling of one used tire for every new tire they sell. Some companies do it because by doing this they can reduce their operating cost. Kodak remanufactures its cameras and in the past decade recycled more than 310 million cameras in more than 20 countries. Carpet makers Interface and Shaw Industries they use the used stuff/material for the production. There are some hurdles but still they have cost advantage from competitors which make products from scratch. Outdoor gear maker Patagonia has one of the best reverse-logistics. Its Synchilla Vests consist of fiber recaptured from old fleeces and T-shirts. Customers drop old stuff at a Patagonia store or mail them to a distribution center. A subcontractor turns them into new fibers. More than 90% of the fabric is spun into new clothing, says Patagonia; the rest becomes a cement additive. In companies like Pepsi and Coca Cola they use the concept of reverse logistics because it is requirement for them because they have to maintain their quality. If they dont use this then someone else fill their bottles then they will get negative effects which will give huge lose to the company.

References
http://arno.unimaas.nl/show.cgi?fid=11285 http://log.logcluster.org/exit/reverse-logistics/index.html http://www.reverselogisticstrends.com/reverse-logistics.php http://www.businessweek.com/magazine/content/08_31/b4094046657076.ht m http://www.easts.info/2003proceedings/papers/1319.pdf