Asset-utilization rates. Asset-utilization rates rise when
the reverse supply chain is efficient in shifting assets like
containers, cases, and pallets in usable condition to the forward supply chain.
Fraudulent warranty claims percentage. Since the reverse
supply chain processes warranties, this functional area can
play a crucial role in identifying and reducing fraudulent
warranty claims.
Year-on-year percent growth/decline of returns. The reverse
supply chain can indirectly contribute to a reduction in the
volume of avoidable returns like damaged goods, failed
products, excess delivery, and so forth. That is because the
reverse supply chain has the information and intelligence
about the root causes of such returns. By collaborating with
product design, manufacturing, and the forward supply
chain, the root cause of such avoidable returns can be
addressed and the volume of returns can therefore be
reduced.
Number of “B” channel products in the “A” channel. Due to
the rise of secondary markets and increasing regulation of
returns handling, companies need to take care that a “B”
channel product does not land on the shelves of an “A”
channel outlet. This can not only lead to legal issues but
also impact brand equity.
Recall cycle time. Recall cycle time is the time from “a targeted recall is declared” to “the replacements are on shelves
or in customers’ hands.” The responsibility of executing a
recall lies with the reverse supply chain. If not handled
properly, recalls can spiral into a major embarrassment for
a company.
Percentage (by weight) of returns disposed of in landfills.
Landfill disposal is the least desirable option and comes
with regulatory hurdles. The reverse supply chain must
ensure that landfill disposal is kept to a minimum or eliminated altogether.
A COMPETITIVE ADVANTAGE
This paper identifies the key impact areas of the reverse
supply chain for supply chain executives to focus upon, a
brief guide to choosing the right disposition strategy, and a
“profit center” framework for effectively monitoring the
reverse supply chain’s performance and communicating the
benefits delivered. It should also help convince organizations that the reverse supply chain is indeed a profit center
that can provide a competitive edge and hence deserves
close attention.
Indeed, with the Extended Producer Responsibility princi-
ple swiftly gaining ground worldwide, growing competition,
and evolving business conditions, ignoring the reverse supply
chain will no longer be an option in the near future.
Companies that address the reverse supply chain in a holistic
way will not only gain business efficiencies but also compet-
itive advantages. ●
Notes:
1. Dale S. Rogers and Ronald S. Tibben-Lembke, Going
Backwards: Reverse Logistics Trends and Practices. Reverse
Logistics Executive Council, (1998) page 115,
http://www.rlec.org/reverse.pdf.
2. C. Dwight Klappich, “Technology Support for Reverse
Logistics is Minimal,” Supply Chain Digest (June 5, 2008)
http://www.scdigest.com/assets/
Experts/Supply_Chain_Technology_Insights_
Klappich_08-06-05.php.
3. Aberdeen Group Inc., Revisiting Reverse Logistics in the
Customer-Centric Service Chain (2006).
4. Shibesh Banerji, “Revisiting Returns,” American
Executive (March 1, 2011) http://www.americanexec
utive.com/departments/best-practices/7666-revisit
ing-returns.
5. Lydia Saad, “Seven in Ten Americans Reacted to a Food
Scare in the Past Year,” Gallup Inc. (August 1, 2007)
http://www.gallup.com/poll/28264/seven-ten-ameri
cans-reacted-food-scare-past-year.aspx.
6. Rogers and Tibben-Lembke, Going Backwards: Reverse
Logistics Trends and Practices.
7. National Retail Federation, “Return Fraud Survey
Results 2011” (2011)
8. Ibid.
9. Automotive Parts Remanufacturers Association,
“What is Remanufacturing?” http://www.apra.org/
About/ Reman.asp.
10. Steve Elliot, “Environmentally Sustainable ICT: A
Critical Topic for IS Research?” Pacific Asia Conference on
Information Systems (2007) http://www.pacis-net.org/
file/2007/1302.pdf.
11. Rogers and Tibben-Lembke, Going Backwards:
Reverse Logistics Trends and Practices.
12. Food, Beverage & Agribusiness 2011 Special Issue. GE
Capital Insights (2011). http://www.gecapital.com/en/
pdf/GE_Capital_Industry_Monitor_Food_Beverage_and_
Agribusiness.pdf.
13. Rogers and Tibben-Lembke, Going Backwards:
Reverse Logistics Trends and Practices.
14. Ken Hoefling, “The Global Remanufacturing
Industry: Benefiting Consumers, Industry, and the
Environment,” The Associated Chambers of Commerce
and Industry of India (September 29, 2009)
http://www.assocham.org/events/recent/event_368/ken.pdf.
15. April Terreri, “Reverse Logistics Moves Forward,” Food
Logistics (February 27, 2010) http://www.foodlogistics.
com/article/10255988/reverse-logistics-moves-forward.
