Reverse Logistics Chapter 12

Reverse logistics: Companies now must develop reverse distribution systems to handle the flow of recycled and defective products , product recall is not a theory anymore. The actual value of product units, requiring a solid recycled waste and needed to be transported runs into billions of dollars. Moreover, the prediction from the evidence so far is that the trend will continue principally for the following reasons: Fast- changing technology require frequent changes in product design; New Laws being enacted worldwide, requiring the recall of defective products and the recycling of solid waste. Despite the gravity of the problem, most logisticians in both large and small companies have been lax in developing systematic plans to recall defective products and recycle solid wastes. Their reaction when faced with recall decisions or recycling decisions have been shortsighted. we need logisticians to develop plans of action to deal with this.

The concept of backward distribution: While conceptually it might sound easy ,don’t underestimate the difficulty of reversing the distribution systems. This is because distribution systems evolved over time gradually, and in most cases we don’t have a systematic forward distribution plan. In most cases we don’t keep track of the identity of the buyer. Urgency, Scope and effectiveness of the recall process: Products could be recalled by a company for a variety of reasons. They are recalled because of poor packaging, Safety and consumer needs, Some of them may be recalled because of some conscious or unconscious violation of federal regulations (Mislabeled, misbranded product come in to this category ) The urgency of a recall depends upon certain factors , there are three classes: Products recalled because they are imminently hazardous, this is the most difficult case as products should be recalled in the shortest possible time and each and every item should be recalled.

The concept of backward distribution: Products that are dangerous but not hazardous, still it should be done quickly but not like the first class Products recalled for a variety of reasons maybe violation of legislation. Products with short channels of distribution are easier to recall than ones with longer channels. Locating the product: this is the primary step in recalling the product. Three distinct levels of increasing difficulty associated with the penetration of the product in the system: Product still under control of he manufacturer in company controlled warehouses or primary distributor controlled warehouses Product would have to be located and withdrawn from the middlemen involved in the distribution of the product (wholesalers and retailers) Product is in the hand of consumers, this is the most difficult .

Mechanism for locating products: Locating durable products with direct distribution link that is manufacturer to consumer is perhaps the easiest of all, It could be done through good warranty systems. A lot of information can be coded on computerized warranty cards are like (Batch number and dates with quantities manufactured, forward order number, shipping dates, truck number, geographic areas of distribution, scheduled arrival dates, shelf life and estimated rate of use, Customer details ) The problem with warranty cards is that sometimes they are not returned because they are perceived as information gathering devices and receipts can be used instead Their return rate could be improved by : 1- designing them attractively and stressing their importance. 2- providing postage payment 3- negotiating agreements with retailers to help.

Mechanism for locating products: In the case of non durables, it is much more difficult as we might have geographically dispersed manufacturing locations, and they reach different destinations, so record keeping is vital. In this case you might reach it at the retailer or you have to go through the media to reach the end user and convince him to return the product. Retrieval of products: logisticians can coordinate the process of retrieving the product in the field either through: the company's field sales force; the retailer or other middlemen; outside collection specialists. Effective retrievals require that the customers be motivated (if the product is cheap they are lazy to return it ) and the presence of good relationships with carriers and channel members( you have to reimburse them for the costs incurred)

Reverse distribution as a part of logistics strategy The success of a firms' recall will to a large extent be contingent upon prior planning and the clear assignment of responsibilities. Accordingly, the concern of logistics managers must be to determine in advance what, if any, modifications are needed in the existing distribution system to handle recalls. Management of the logistics aspects of the reverse distribution system should be assigned to a senior coordinator, and should be treated as an integral part of the logistics system, that’s why all possible alternatives should be studied: 1- Facility network: The existing geographical distribution of manufacturing locations, warehouse, retail outlets and all other such facilities utilized by the company for the physical flow of goods should be pinpointed. 2- Communication and order processing: review of all communications should be undertaken. Invoice handling and warranty card administration should be checked with special care. In a recall they perform a vital function.

Reverse distribution as a part of logistics strategy 3- Transportation and traffic management: Reviewed with special emphasis, on pinpointing shipping dates, orders, destinations, and vehicle identifications 4- Costing: An accounting and cost review of expenditures for the performance of activities involved in recall must also be made. It is usually double or triple the costs of forward distribution due to the small quantities and the urgency. Reverse distribution model: check figure 12.2