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A Content Analysis in Reverse Logistics: A review

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A Content Analysis in Reverse Logistics:


A review
a b
Ali Haji Vahabzadeh & Rosnah Binti Mohd Yusuff
a
Department of Information Systems and Operations Management
University of Auckland Business School Auckland 1010 New Zealand.
E-mail:
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Department of Mechanical and Manufacturing Engineering
Universiti Putra Malaysia (UPM) Malaysia. E-mail:
Published online: 09 Jun 2015.
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Reverse Logistics: A review, Journal of Statistics and Management Systems, 18:4, 329-379, DOI:
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Journal of Statistics & Management Systems
Vol. 18 (2015), No. 4, pp. 329–379
DOI : 10.1080/09720510.2014.927605

A Content Analysis in Reverse Logistics: A review

Ali Haji Vahabzadeh *


Department of Information Systems and Operations Management
University of Auckland Business School
Downloaded by [University of Auckland Library] at 15:14 14 June 2015

Auckland 1010
New Zealand

Rosnah Binti Mohd Yusuff †


Department of Mechanical and Manufacturing Engineering
Universiti Putra Malaysia (UPM)
Malaysia

Abstract
The purpose of this paper is to provide a comprehensive review in the various pub-
lications on the concept of Reverse Logistics (RL) and the related areas within the period
1998-2012. The content analysis approach has been opted to collect the relevant information
from different books, journals, and conferences. A broad review of literature in RL from its
emergence until the recent discussions have been analyzed and compared in this research.
The findings show that, the theoretical construct in RL has been initiated from the conjunc-
tion features in the waste management and logistics activities. This idea had been developed
by introducing the new term as RL and its definitions and contents such as the activities; key
drivers; barriers to use; material flow, and networks in RL. Furthermore, the findings present
the various modeling in different aspects of RL, for instance, the mathematical modeling by
applying the existence methods in Multi Attribute Decision-Making Models (MADM). In
addition, the environmental concerns and governmental legislatives matters and impacts,
which have been highlighted, recently, on RL have been deliberated. Hence, this paper would
assist the researchers and practitioners to obtain a broad review of RL in the last decade and,
also provide an agenda for the future researches.

Keywords: Reverse Logistics; Review; Reverse Logistics Network; MADM.

*E-mail:  a.vahabzadeh@auckland.ac.nz
†E-mail:  Rosnah@eng.upm.edu.my

©
330 A.H. VAHABZADEH AND R.B.M.YUSUFF

1. Introduction
Over the past few years, Reverse logistics (RL) has been taken into
more account among the firms and stakeholders due to rising the envi-
ronmental concerns, resource depletion, and governmental regulations
(Abdulrahman et al., 2012, Akdoğan and Coşkun, 2012, Pokharel and
Mutha, 2009). Moreover, RL would provide companies a noticeable source
of money through recapturing the value of the returns and also an op-
portunity to enhance the visibility of various costs across the supply chain
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(Chio et al., 2012). In a broader view, economic and strategic benefits ob-
tained through running different recovery plans such as reuse or remanu-
facture have also been taken into consideration (Autry, 2005, Blanco, 2010).
It has been emphasized that implementing an operational and efficient
RL system would increase the sales revenue and decrease the operational
costs (PricewaterhouseCoopers’ report, 2008; Frota Neto et al., 2008). In
addition, environmental protection and an efficient use of all types of re-
sources have been stated as the other significant merits of applying RL
system at companies (Gunasekaran and Spalanzani, 2011; Ferna´ndez et
al., 2009; Tsai et al., 2008). Besides, In a global scale, providing and apply-
ing a systematic and efficient model which can reduce the various opera-
tional costs and employ RL processes have been proposed to companies
(Grabara and Grabara, 2008). Therefore, RL should be considered as a
valuable and potential opportunity for companies to remain competitive
in the market rather than a system which just imposes extra costs to com-
panies (Daugherty et al., 2005; Stock, 2001, Millet, 2011). The intrinsic and
potential monetary value of returns in RL has encouraged researches to
scrutinize various dimensions of RL and proposed a wide range of RL
networks to recapture the value of the returns (Fleischmann et al., 1997,
Kokkinaki et al., 2002, Pagell et al., 2007, Lee and Dong, 2007, Zuluaga,
2006, Marcotte et al., 2008, Quariguasi Frota Neto et al., 2008, Yongsheng
and Shouyang, 2008, Pokharel and Mutha, 2009, Paquette, 2009, Fathi et
al., 2009, Pishvaee et al., 2010, Govindan and Kannan, 2010, Lieckens and
Vandaele, 2010, Awan and Liu, 2011, Khajavi, et al., 2011, Chan and Jain,
2011, Zegordi et al., 2011, Jayant et al., 2011, Das and Chowdhury, 2012,
and Alumur et al., 2012). The emerge of RL and product recovery manage-
ment has also motivated authors to come up with a new concept as closed-
loop supply chain by integrating the forward and reverse logistics process
in one unit subject (Jayaraman et al., 1999, Krikke et al., 2003, Schultmann
et al., 2006, Guide and Wassenhove, 2000, Bernon and Cullen, 2007). In
this regard, an effective role of RL processes involved in a closed-loop sup-
ANALYSIS IN REVERSE LOGISTICS 331

ply chain network to address the environmental dilemmas has also been
noted (Liste and Dekker, 2005; Salema et al., 20a07; Neto et al., 2009; Cruz-
Rivera and Ertel, 2009).
In order to highlight the main contributions of this review on RL, It
is imperative to overview and compare the areas and subjects which have
been discussed and analyzed by the other authors in reviewing the RL lit-
erature. The findings showed that between the years 1195 and 2012, there
are eight journal articles which have broadly reviewed and elaborated the
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literature of RL in various areas. To get into more details, the contents in


each paper have been discussed separately as follows:

1.1 Quantitative Models in Reverse Logistics: A review, by Fleischmann et al.


(1997)
In this paper, different mathematical models which have been pro-
posed and argued by the former authors in RL have been reviewed. The
main significant feature of this review is to discuss various mathematical
models in RL from three different points of view including distribution
planning, inventory control, and production planning. In the distribution
planning part, the authors mainly focused on the distribution aspects of
recycling and reuse of materials by analyzing and comparing the RL dis-
tribution channels and networks and the flow of materials among the for-
wards and reverse logistics players (producers, distributors, recyclers, and
collectors). In the second part, inventory control, a variety of the math-
ematical models such as deterministic and stochastic, and the position of
inventory management of the materials in repair and product recovery
systems have been deliberated. And in the final section, the quantitative
models provided for the production and MRP planning of the reuse and
recovery products in RL have been argued.

1.2 Reverse Logistics: A Review of the Literature and Framework for Future
Investigation, by Carter and Ellram (1998)
Unlike the above paper, carter and Ellram mainly focused on the vari-
ous contributions on RL which have been made by different authors since
1992. In the first section, the writers have investigated the main contribu-
tions of each paper on RL and then compared them by highlighting their
critical gaps. The gap analysis of RL literature has been performed in three
parts: general literature, transportation and packaging, and purchasing.
The lack of well-grounded theories and conceptual models, and the em-
332 A.H. VAHABZADEH AND R.B.M.YUSUFF

pirical evidences have been stated as the most gaps in the previous works.
One of the most significant aspect of this review is to compare and discuss
the works which have considered the environmental aspects of RL and the
environmental forces which affect a firm’s RL. In the second section, the
authors have analyzed different internal and external factors and drivers
which influence on RL by exhibiting the role of suppliers, buyers, competi-
tors, stakeholders and government. Finally, the authors proposed a model
which suggests the important managerial implications by determining the
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external factors and limitations of RL such as regulations, customers, stake-


holder commitment, top management support, policy entrepreneurs, the
level of vertical coordination between a firm and its suppliers of environ-
mentally friendly materials, and uncertainty of the input sectors.

1.3 Reverse Logistics: A Review of Case Studies, by Brito et al. (2003)


In a completely different approach, Brito et al. argued and elaborated
over sixty case studies in RL. The main purpose of this research was to ana-
lyze how the concept of RL has worked practically among different indus-
tries. Therefore, in order to find out the diversity of different approaches
and problems examined in each case study, various categories including
RL network, the interactions of different players in RL, inventory manage-
ment, planning and control, and IT and also various subcategories such
as product varieties, recovery processes, RL agents, return reasons, and
internal and external drivers have been defined by the authors.

1.4 Empirical research opportunities in reverse supply chain, by Prahinski and


Kocabasoglu (2006)
The aim of this paper was to review the literature in reverse sup-
ply chain (RSCs) and proposed ten hypothesizes by employing empirical
research methods. In the fist part, the authors divided the RLCs process
into five main steps (product acquisition, reverse logistics, inspection and
disposition, reconditioning, and distribution and sales) and provided dif-
ferent definitions, approaches and examples which have been discussed
as usual in the previous studies. While the main contribution of this re-
view was to recommend ten propositions which opened the avenue for
the further researches. These propositions have been defined in five areas
including manager’s concerns with performance, issues in sales and dis-
tribution, dilemmas involved in inspection, disposition and remanufac-
turing processes, research gaps on RL, and the interactions between the
business environment and RSCs.
ANALYSIS IN REVERSE LOGISTICS 333

1.5 Characteristics of the Research on Reverse Logistics (1995-2005), by Rubio et


al. (2007)
In this paper the literature on RL has been reviewed in three catego-
ries: 1) management of the recovery and distribution of EOL products,
2) production planning and inventory management, and 3) supply chain
management issues in RL. In the first part, issues such as RL network de-
sign, distribution and collection of EOL products, and the issues of RL
transportation have been considered. Providing new models on RL and
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analyzing the interaction of these models with the traditional models have
been centered on the second part. And, finally the strategic decisions, the
long-term behavior of closed-loop supply chains, the role of IT, and the
role of environmental concerns and regulations in RL have been discussed
in the third section. The most highlighted aspect of this review is provid-
ing a concise and comprehensive statistical report on the variety of the
topics published in the context of RL. While the lack of an in-depth analy-
sis and precise comparison of the ideas discussed in each paper, could be
considered as the most noticeable drawback in this review paper.

1.6. Perspectives in reverse logistics: A review, by Pokharel and Mutha (2009)


The authors provided a review on RL based on four divisions encom-
passing 1) inputs and collection, 2) RL structure, 3) RL processes, and 4)
RL outputs. In the inputs and collection, the topics such as forecasting the
returns, optimal acquisition and selling price, collection of used products,
and locations of collection centers have been noticed. Inventory control,
location and allocation problems, network design, integration of inspec-
tion and collection, integration of manufacturing and remanufacturing,
product modularity were the problems which have been investigated in
the RL structure. In the RL process part, the processes related to disassem-
bly, remanufacturing, production, capacity and MRP planning, repair and
after sales services such as the locations of warehouses have been mainly
examined. Product pricing for the RL products such as remanufactured
products and the role of OEMs in market equations were the subjects
which have been challenged in the RL outputs. The authors also recom-
mended that the researchers should provide new models which could be
able to set the price on returns based on the quality levels of returns.
334 A.H. VAHABZADEH AND R.B.M.YUSUFF

1.7 Remanufacturing for the automotive aftermarket-strategic factors: literature


review and future research needs, by Subramoniam et al. (2009)
The purpose of this review was to analyze the remanufacturing and
RL literatures on strategic decision making models and theories. The au-
thors specifically concentrated on the automotive industry aftermarket
and scrutinized the whole concepts of remanufacturing and RL in the ar-
eas like customer demands, product design and development, cost-benefit
analysis, reman competencies and skill, product life cycle, environmental
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concerns and regulations, RL network, and economic considerations. In


order to explain the varieties of the strategic decision making models, four
strategic factors have been considered by the authors as 1) product stra-
tegic planning, 2) physical distribution, 3) plant location and production
planning, and 4) stakeholder cooperation. At the end, the authors raised
some questions for the future researches which mainly focused on the
role of strategic decisions in organizations who are dealing with Original
Equipment (OE), Original Equipment Service (OES) and Independent Af-
termarket (IAM) in achieving the short and long-term goals.

1.8 Environmentally conscious manufacturing and product recovery (EC-


MPRO): A review of the state of the art, by Ilgin and Gupta (2010)
Although this paper has not fully centered on the RL literature, but
one of the main sections of this review has completely devoted to RL
and the challenges around this topic. The issues such as network design,
transportation, selection of used products, vendor evaluation and selec-
tion, marketing issues, product acquisition management, performance
measurement, and EOL products were the fields that have been argued
related to RL topic. For instance, various stochastic and deterministic
models which have been proposed for the RL network design or the opti-
mization models for goods transportations and Vehicle Routing Problem
(VRP) were the issues which have been reviewed by the authors. Finally,
It has been also suggested that in order to develop and integrated RL net-
work, more researches on marketing, competition, and technology should
be carried out in the future.
As the main contributions of each paper review on RL have been de-
scribed above, three main points could be observed which significantly
drew the author’s attention in organizing this review paper. First, the
majority of the papers have mainly pondered on how different processes
of RL could be improved rather than analyzing how to implement a RL
system and analyze the RL activities, benefits, barriers, drivers, and its
ANALYSIS IN REVERSE LOGISTICS 335

difficulties. Secondly, there is a critical gap in connecting the tactical deci-


sions made in RL with each process of RL (collection, inspection, remanu-
facturing, and recycling). And, finally, the papers have merely concentered
on one dimension of mathematical modeling in RL such as linear or inte-
ger programming, while the applications of other mathematical modeling
such as MADM methods have been totally ignored. Thus, the contribu-
tions of this paper first, is to tackle these issues and second, to provide a
comprehensive literature review on RL which covers the need of all the
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practitioners and academia in dealing with the various dilemmas in RL.


The rest of this paper is organized as follows: First, we reviewed the
RL definitions and its differences with forward logistics, waste manage-
ment, green logistics and supply chain management. Second, the RL driv-
ers, benefits, and its barriers in implementing the RL system have been
presented. Third, the material flow diagram and network design in RL
have been discussed in-depth. Fourth, different multi stage decision-mak-
ing models which have been applied in the various aspects of RL pro-
cesses have been reviewed. And, eventually the findings and a proposed
agenda for the future researches have been argued.

2.  Literature Review


The concept of returns management had been discussed by many
authors such as Beckley and Logan (1948), Terry (1869) and Giultinian
and Nwokoye (1975), but without associating them with Reverse Logis-
tics flows. Murphy and Poist (1989) have used the term “Reverse Distribu-
tion”. Barry et al., (1993), Carter and Ellram (1998) Jayaraman et al., (2003)
employed the same terminology. Murphy and Poist (1998) described re-
verse logistics as “the movement of goods from a consumer towards a
producer in a channel of distribution”. Hence, according to this definition
the direction of goods from the customer to the producer has been identi-
fied. But, the distribution channel was not clearly defined, whether it is
the same channel in forward logistics or any other. Pohlen and Farris II
(1992) discussed about the flow of recyclable goods which is not necessar-
ily in backward direction. The two questions can be asked here regarding
to their discussions: First, do just recyclable materials used the various
channels to go backward? Second, is there any difference between recy-
cling with the other possible options? Or they use recyclable materials as
a broad concept which can be applied for the other options too? Giuntini
and Andel (1995) elucidated the definition of reverse logistics as “an orga-
nization’s management of material resources obtained from customers”.
336 A.H. VAHABZADEH AND R.B.M.YUSUFF

The distinguished aspect of their views with the previous authors is that,
they had not pointed out the direction of materials from the customer side
to the producer. Also, they considered all the reverse logistics activities
as a management of material resources which come from the customer
side without elaborating them in more details. The term “Product Recov-
ery Management” (PRM) has been defined by Thierry et al. (1995) as “all
those activities that encompass the management of all used and discarded
products, components, and materials that fall under the responsibility of a
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manufacturing company. The objective of product recovery management


is to recover as much of the economic (and ecological) value as reasonably
possible, thereby reducing the ultimate quantities of waste” (Thierry et
al., 1995). According to their approaches, three main activities have been
defined: waste management which includes incineration and landfilling
activities, product recovery management which encompasses repair, re-
furbishment, remanufacturing, recycling, and cannibalization activities,
and direct use and resale. Although in their definitions they had not men-
tioned the reverse logistics term, but the similar concept could be obtained
from the combination of waste management perspective, PRM as well as
direct use and resale activities somehow. Another conclusion that can be
gained is that, they highlighted the economic and ecological aspects of
PRM which refer to recapturing the value of the returns, and environmen-
tal concerns, respectively.
“Reverse Logistics refers to the logistics management skills and ac-
tivities involved in reducing, managing and disposing of hazardous or
non-hazardous waste from packaging and products” (Kroon and Vrijens,
1995). These authors follow some parts of the definition from Thierry et
al., by focusing on the waste management, particularly. Reverse logistics is
the management of returned products (Rogers and Tibben-Lembke, 1998).
It can be defined as the reverse process of logistics (Harper & Row, 1971).
The Council of Logistics Management in United States described the re-
verse logistics as: “...the term often used to refer to the role of logistics
in recycling, waste disposal, and management of hazardous materials; a
broader perspective includes all issues relating to logistics activities to be
carried out in source reduction, recycling, substitution, reuse of materi-
als and disposal.” (Stock, 1992). Pohlen and Farris (1992) define Reverse
Logistics, by focusing on the direction of goods in the distribution chan-
nel as “...the movement of goods from a consumer towards a producer
in a channel of distribution.” Carter and Ellram (1998) follow the same
concept by adding the environmental factors as “Reverse Logistics is a
process whereby companies can become more environmentally efficient
ANALYSIS IN REVERSE LOGISTICS 337

through recycling, reusing and reducing the amount of materials used.


Viewed narrowly, it can be thought of as the reverse distribution of mate-
rials among channel members. A more holistic view of Reverse Logistics
includes the reduction of materials in the forward system in such a way
that fewer materials flow back, reuse of materials is possible and recycling
is facilitated”. Rogers and Tibben-Lembke, (1998) defined reverse logistics
as: “the process of planning, implementing, and controlling the efficient,
cost effective flow of raw materials, in-process inventory, finished goods
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and related information from the point of consumption to the point of ori-
gin for the purpose of recapturing value or proper disposal” pg 2.
More precisely, reverse logistics is the process of moving goods from
their typical final destination for the purpose of recapturing value, or
proper disposal (Rogers and Tibben-Lembke, 1998). In the above defini-
tion two main points were highlighted. First, covering all types of mate-
rials in accompany with their information. Second, emphasizing on the
backward movement of returns from the point of consumption to the
point of origin, this is the main difference with the forward logistics. The
European Working Group on Reverse Logistics, (REVLOG, 1998, and De
Brito and Dekker, 2003), puts forward the following definition: “The pro-
cess of planning, implementing and controlling backward flows of raw
materials, in-process inventory, packaging and finished goods, from a
manufacturing, distribution or use point, to a point of recovery or point
of proper disposal”. According to Dowlatshahi (2000) definition, reverse
logistics is: “A process in which a manufacturer systematically accepts
previously shipped products or parts from the point for consumption for
possible recycling, remanufacturing, or disposal”. He defined the strategic
and operational factors for implementing the efficient reverse logistic in
the company. Based on his approach, in the process of implementing a ho-
listic reverse logistics, the strategic factors such as cost, quality, customer
service, environmental effects, and regulations are more critical than the
operational factors like cost benefit analysis, transportation, warehousing,
supply management, remanufacturing, recycling, and packaging (Dow-
latshahi, 2000). In summary, the main definitions of reverse logistics were
illustrated in Table 3.1.

2.1 Reverse Logistics and Recapturing the Value of Returns


Most of the manufacturer’s targets are just to deliver their products
to their customers, while by ignoring the efficient return and refurbish-
ment or disposal of the product, many companies miss out on a significant
338 A.H. VAHABZADEH AND R.B.M.YUSUFF

Table 3.1
Definition of Reverse Logistics

Author(s) Definition
“ the role of logistics in recycling, waste disposal
and management of hazardous material; a broad
Stock (1992) perspective includes all issues relating to logistics
activities carried out in source reduction, recycling,
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substitution, reuse of materials and disposal”


“ a process which encompass the logistics activities
Fleischmann et al (1997) all the way from used products no longer required
by the user to products again usable in a market”
“the collection, transportation, storage and
Krikke (1998)
processing of discarded products”
“the process of planning, implementing, and
controlling the efficient, cost effective low of
Rogers & Tibben- Lembke raw materials, in- process inventory, finished
(1998) good and related information from the point of
consumption to the point of origin for the purpose
of recapturing value or proper disposal”
“a process in which a manufacturer systematically
accepts previously shipped products or parts from
Dowlatshahi (2000)
the point for consumption for possible recycling,
remanufacturing or disposal”
“a process of planning, implementing and
controlling the efficient, effective inbound flow
and storage of secondary goods and related
Fleischmann et al (2001) information opposite to the traditional supply
chain directions for the
purpose of recovering value and proper disposal”

Source: Louren and Soto (2002)

return on investment. Logisticians who treat reverse logistics as a way to


maximize the value of returned assets make a significant contribution to
their company’s bottom line (Andel, 1997; Clendenin, 1997; South, 1998).
By improving customer satisfaction, leveraging resource investment, and
reducing warehouse and transportation costs the Effective reverse logis-
tics will be achieved to direct benefits (Guintini and Andel, 1995a; An-
del, 1997 In fact). Reverse logistics also affects on customer satisfaction by
accelerating the process of returns handling when any critical repair or
remanufacturing is needed (Blumberg, 1999). Companies with the abil-
ANALYSIS IN REVERSE LOGISTICS 339

ity of making the value of the returns may stay longer in the business. If
a company implements the reverse logistics system, it will gain money
(Stock, 1998). Recapturing the value of the returns through refurbishment,
remanufacturing, repair, and recycling can bring various profits for the
company in the competitive markets (Giuntini and Andel, 1995b).

2.2 Cost Class and Cost Element in Reverse Logistics


In contrast to forward logistics and SCM in which the costing system
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and cost elements are clearly recognized, the various costs in RL require
more elaborations to identify. Rogers and Tibben-Lembke (1998) have dis-
cussed about some of the costs incurred in the RL such as, transportation,
landfills, inspection, cleaning, repair, storage, and sorting. Goldsby and
Closs (2000) analyzed the application of Activity-Based- Costing (ABC)
method in RL through a case study. A discrete-time linear analytical
model for minimizing the total operational costs for multi- typed- step and
multi-type hazardous-waste in RL has been proposed (Hu et al., 2002). In
their study different costs such as collection costs, storage costs, total treat-
ment costs, and total transportation costs have been formulated. Kovács
and Ríkharðsson (2006) Categorized different activities in RL according to
the main activities such as collection, inspection and sorting, reprocessing,
disposal, redistribution activities, and then used the activity-based cost
analysis to determine the relevant costs in RL. Shi and Li (2011) proposed
firms a Mixed-Integer Linear Programming (MILP) for the used batteries
to gain the best economic benefits. Through this study, the varieties of
costs involved in RL have been analyzed. The total expected costs have
been considered as: fixed costs, collection costs, processing costs, disposal
costs transportation costs, shortage costs, and storage costs. Jian-guol et al.
(2007) proposed an optimized cost model in RL. According to this study,
the costs in RL have been categorized as: (1) cost of retrieval, (2) cost of
inventory, (3) cost of disposal, and (4) cost of waste disposal. A cost analy-
sis in the RL network for the Waste Electrical and Electronic equipment
(WEEE) has been performed by Moussiopoulos et al. (2005). In this re-
search, various types of costs such as collection, transportation, storage,
sorting, processing and recycling, administration, promotion and adver-
tisement have been analyzed. While there are also some hidden cost such
as (1) hidden labor costs, (2) grey market items, (3) lack of visibility, (4)
inability to forecast accurately, (5) credit reconciliation, (6) poor respond
time and brand toxicity (Norman and Sumner, 2006)
340 A.H. VAHABZADEH AND R.B.M.YUSUFF

2.3 Difference between Forward and Reverse Logistics


Many manufacturers and customers may think that the only differ-
ence between forward and reverse logistics is just the movement flow of
the materials. A step-by-step comparison of the two processes showed
that reverse logistics can be considered as a separate or independent pro-
cess. Rogers and Tibben-Lembke (2002) compared the main differences
between forward and reverse logistics in a retail environment as presented
in Table 3.2.
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Table 3.2
Differences in Forward and Reverse logistics

Forward Reverse
Forecasting relatively straightforward Forecasting more difficult
One to many transportation Many to one transportation
Product quality uniform Product quality not uniform
Product packaging uniform Product packaging often
damaged
Destination/routing clear Destination/routing unclear
Standardized channel Exception driven
Disposition options clear Disposition not clear
Pricing relatively uniform Pricing dependent on many
factors
Importance of speed recognized Speed often not considered a
priority
Forward distribution costs closely Reverse costs less directly visible
monitored by accounting systems
Inventory management consistent Inventory management not
consistent
Product lifecycle manageable Product lifecycle issues more
complex
Negotiation between parties Negotiation complicated by
straightforward additional considerations
Marketing methods well-known Marketing complicated by several
factors
Real-time information readily available to Visibility of process less
track product transparent
Source: Rogers and Tibben-Lembke (2002)
ANALYSIS IN REVERSE LOGISTICS 341

2.3.1 Difficult to Forecast


In reverse logistics due to the lack of certainty in planning and sched-
uling of receiving returns, forecasting is much harder than the forecasting
in forward logistics ( e.g. Guide et al., 2000; Flapper, 1995). In reverse logis-
tics each customer returns product separately in an unrecognizable times
with different rates. These complexities and unpredictability of receiving
returns are one of the main issues in forecasting. However, some general
trend can be seen in the return rates according to customer behavior and
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some other factors such as seasonal returns or due to end of life of the
products.

2.3.2 Many to one Transportation


One of the main differences between forward and reverse logistics
is the number of origin (source) and destination points (Fleischmann et
al., 1997). In forward logistics in order to deliver the product to the cus-
tomers, the truck should pick the product up from the manufacturer site
and drop the products off to the customer sites. While, in reverse logistics
the returns should be collected from different customers and delivered
to the retailers, or any other Third- Party Logistics (3PL). The question
which can be raised here is the capability of combining forward and re-
verse transportation. There are two major issues which needed to focus
on; First scheduling for collecting and delivering both types of products
by the same transportation equipment. Second, it is physically difficult
to load and unload the new products to the customers while the returns
need to be unloaded or moved first. The same problem can happen in the
case of collecting returns from the customer with the existence of the new
products in the truck.

2.3.3 Product and Packaging Quality


The new products will be sent to their customers according to their
agreement on packaging and quality standards. Ignoring the customer re-
quirements in these areas may cause to return product itself. While dur-
ing the collection of returns from the customer or any Centralized Return
Centers (CRCs), there is no guarantee to observe the returns with the orig-
inal packaging or the same quality. Any damages may happen during the
collection of the returns or transportation (Rogers and Tibben-Lembke,
1998, 2002, de Brito et al., 2002).
342 A.H. VAHABZADEH AND R.B.M.YUSUFF

Table 3.3
Reverse Logistics Costs

Cost Comparison with Forward Logistics


Transportation Greater
Inventory holding cost Lower
Shrinkage (theft) Much lower
Obsolescence May be higher
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Collection Much higher ± less standardized


Sorting, quality diagnosis Much greater
Handling Much higher
Refurbishment/repackaging Significant for RL, non-existent for forward
Change from book value Significant for RL, non-existent for forward
Source: Rogers and Tibben-Lembke (2002)

2.3.4 Destination/Routing not Clear


In forward logistics the paths of the products have already been iden-
tified based on the customer orders and locations. In contrast, in reverse
logistics, after sending the returns to any CRC, the destinations would be
identified after the decision has been made for each type of returns (Rog-
ers and Tibben-Lembke, 1998, 2002, de Brito et al., 2002).

2.3.5 Differences in Nature and Visibility of Costs


Costs in reverse logistics are not exactly the same as costs in forward
logistics in terms of their measures. Various categories of costs in forward
logistics have been discussed by many researchers such as transportation,
storage, and packing costs (Naula et al., 2006, Toyli et al., 2008, Heskett
et al., 1973, Gunasekaran et al., 2001). Also, the costs in reverse logistics
will be obtained by studying and recognizing various types of activities in
each process. But as discussed before, the cost elements in reverse logistics
may differ due to some differences between forward and reverse logistics
(Table 3.3).

2.4  Difference between Waste Management and Reverse Logistics


According to Harpreet (2012) definition, waste management is “the
term that refers to the assortment, processing, recycling, transport, and
monitoring of waste products. There are different definitions of waste also
ANALYSIS IN REVERSE LOGISTICS 343

exist as: “Waste shall mean any substance or object in the categories set out
in Annex I which the holder discards or intends or is required to discard.”
(European Union 1975).
“Wastes are substances or objects which are disposed of or are in-
tended to be disposed of or are required to be disposed of by the provi-
sions of national law.” (The Secretariat of the Basel Convention 1989)
“Waste includes all items that people no longer have any use for,
which they either intend to get rid of or have already discarded. Addi-
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tionally, wastes are such items which people are require to discard, for
example by law because of their hazardous properties. Many items can
be considered as waste e.g., household rubbish, sewage sludge, wastes
from manufacturing activities, packaging items, discarded cars, old tele-
visions, garden waste, old paint containers etc. Thus all our daily activities
can give rise to a large variety of different wastes arising from different
sources.” (European Topic Centre on Sustainable Consumption and Pro-
duction 2010).
The common concepts which can be seen in all the above definitions
is, the substance will be disposed or discarded. By analyzing the above
definitions and comparing with the definitions and the concepts in re-
verse logistics, the main difference is lack of the concept of recapturing the
value of returns in waste management. While in reverse logistics, regain-
ing the value of returns has been recognized as one of the main purposes
(Rogers & Tibben-Lembke, 1998).

2.5 Difference between Green Logistics and Reverse Logistics


“Green Logistics (GL) is a form of logistics which is calculated to be
environmentally and often socially friendly in addition to economically
functional (Smith, 2012)”. MGC Institute of Logistics in Vietnam (2010)
described green logistics as “The management of the Logistics and sup-
ply chain process including the incorporation of environmentally sustain-
able strategies that assist in minimizing the effects of pollution, particulate
emissions and the management of processes to overcome climate change”.
Carter & Rogers (2008) defined as “Green logistics consists of all activities
related to the eco-efficient management of the forward and reverse flows
of products and information between the point of origin and the point of
consumption whose purpose is to meet or exceed customer demand”.
Besides to the green logistics definitions, the definitions of Green
Supply Chain Management (GSCM) need to be discussed. “Green sup-
ply refers to the way in which innovations in supply chain management
344 A.H. VAHABZADEH AND R.B.M.YUSUFF

and industrial purchasing may be considered in the context of the envi-


ronment” (Green et al., 1998). Godfrey (1998) described GSCM as “The
practice of monitoring and improving environmental performance in the
supply chain…” Narasimhan et al., (1998) defined as “Environmental sup-
ply chain management consists of the purchasing function’s involvement
in activities that include reduction, recycling, reuse and the substitution
of materials.”
Srivastava (2007) stated as “Integrating environmental thinking into
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a supply chain management, including product design, material resourc-


ing and selection, manufacturing processes, delivery of the final product
to the consumer as well as end-of-life management of the product after its
useful life”. Rogers & Tibben-Lembke (1998) described as “Green logis-
tics, or ecological logistics, refers to understanding and minimizing the
ecological impact of logistics. Green logistics activities include measuring
the environmental impact of particular modes of transport, ISO 14000 cer-
tification, reducing energy usage of logistics activities, and reducing usage
of materials”. From the above definitions we see that the main purpose of
GSCM is to reduce the ecological and environmental impacts of all logis-
tics activities. While reverse logistics “refers to all efforts to move goods
from their typical place of disposal in order to recapture value” (Rogers &
Tibben-Lembke, 1998).

2.6 Key Drivers for Reverse Logistics


Companies have different reasons or drivers in engaging with the re-
verse logistics. Reverse logistics management should be considered as an
important factor in attaining economic, environmental and strategic ad-
vantages for businesses (James, Thomas & Herbert 2002; Mitsumori, 1999;
Mukhopadhyay and Setaputra 2006; Roy 2003). Ranade (2004) pointed out
that, economic, marketing, legislative motives such as environmental reg-
ulations and asset protection are considered as the main drivers. De Brito
and Dekker (2004) indicated that the Economic, legislation, and corporate
citizenships are the main determinant factors in reverse logistics. Rogers
& Tibben-Lembke (1998) discussed about the green and environmental
aspects of reverse logistics, economic and supply chain issues related to
reverse logistics, and corporate citizenship as one of the competitive rea-
sons among companies in the reverse logistics area. Revenue growth, cost
reduction, sustainability and change & control together are the key drivers
which directly impact stakeholder value (PricewaterhouseCooper, 2008).
Akdoğan and Coşkun (2012) surveyed the drivers involved in RL activities
ANALYSIS IN REVERSE LOGISTICS 345

in the house appliance industry (dishwasher, refrigerator and oven manu-


facturers) in Turkey. The three main drivers including economic, legislation
and corporate social citizenship criteria in accordance with their subcrite-
ria have been ranked by applying the AHP method. Their results demon-
strated significant discrepancies in prioritizing of the main drivers among
theses industries. In some manufacturers economic factors have been con-
sidered as the main priorities while the corporate citizenship criteria has
been accounted as the most important driver in other factories. According
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to the research which has been performed by Zhu, Sarkis and Geng (2005)
on the drivers in green supply chain management, which could somehow
be accounted for RL also, firms have been influenced by the governmen-
tal regulations, competitors and market pressures. Verstrepen et al. (2007)
also stated that the main reason for implementing a returns management
system is to achieve marketing and economic goals. In another view, Envi-
ronmental laws, customer priorities for green products, corporate image
and increasing waste disposal have been considered as the major drivers
for recycling the electronic products (Kumar and Putnam, 2008). In the
same industry in China, regulation, corporate image, economic and mar-
keting goals have also been identified as the most important drivers in RL
(Lau and Wang, 2009). Hernandez, Marins and Rocha (2009) also explored
the critical drivers in RL in the automotive industry. According to their
results, economic, corporate citizenship and marketing objectives are the
most important drivers which have been taken into account by the manag-
ers. The same drivers could also be seen in the research which has been
conducted by Frankel and Russo (2011) in the returns management area.
In order to more recognition of each driver, the following explanation will
be provided.

2.6.1 Economics
Recently reverse logistics activities have been considered as part of
business activities for the purpose of obtaining extra opportunities to earn
a profit and reduce various costs (Felix and Chan et al., 2011). As dis-
cussed before, one of the main goals of reverse logistics is recapturing the
value of the returns and making profit for the firm. For example, some
activities like asset recovery, reusable transport packaging and contain-
ers, reclaim the usable materials from returns can be considered as the
economic aspect of reverse logistics which bring profit for the company
(Rogers and Tibben-Lembke, 1998). Economic factors can be seen as a
driving force in reverse logistics, when the companies choose the recovery
346 A.H. VAHABZADEH AND R.B.M.YUSUFF

option to gain profit (Ravi, 2005). Companies will gain profit in their busi-
ness, if they choose recovery policy for the remanufacturing, recycling,
repair, and reconfiguration (Andel, 1997). Saccomano (1997) indicated
that reverse logistics had been recognized as an ‘investment recovery’ un-
like to simply reducing the cost of waste management till to the minimum
point. By implementing the recovery plan, reducing company resources,
and minimizing disposal costs, companies can make profit in their reverse
logistics program (Ravi, 2005).
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2.6.2. Marketing
In relation to marketing, reverse logistics should be considered as a
critical factor in strategic marketing and effective customer relationship
management (Autry, Daugherty and Richey 2001; Krumwiede and Sheu
2002; Mukhopadhyay and Setaputra 2006). Successful companies by im-
plementing the concept of customer services through customer oriented
marketing can have more satisfied customers (Rogers and Tibben-Lembke,
1998). Using liberal return policy, improving customer loyalty by doing
various transactions as quickly as possible, and negotiation with the cus-
tomers in order to market the products are the ways that can improve the
marketing aspects of reverse logistics (Rogers and Tibben-Lembke, 1998).
Due to the competitive situation in the market, and the necessity of having
‘green’ image among the customers, companies are being forced to take
back their returns and extra products from their customers’ sites (Ranade,
2004).

2.6.3 Environmental and green concerns


The environmental aspect of reverse logistics has become more
important due to some regulations and destructive effects on the
environment (Ranade, 2004). In order to reduce the impacts of pollution
on the environment, reverse logistics has been analyzed [(Byrne and Deeb,
1993), (Carter and Ellram, 1998), and (Wu and Dunn, 1995)]. In relation
to environmental matters, the role of reverse logistics and its impacts on
developing the concept of sustainability and environmental protection
has been discussed (Brito, Flapper and Dekker, 2003, Fernández, 2003,
Krikke et al. 2001, and Mitsumori, 1999. Environment uses the advantage
of reverse logistics program (Byrne and Deeb, 1993; Carter and Ellram,
1998; Wu and Dunn, 1995). The negative impacts of disposing, landfilling,
and incinerating of the returns as well as forcing firms by governments to
take back their packaging materials have been discussed on this matter
ANALYSIS IN REVERSE LOGISTICS 347

(Rogers and Tibben-Lembke, 1998, Ranade, 2004). Nowadays, people as


end consumer tend to use green branding and labeling (Fleischmann et
al., 2001). According to the survey by DHL in 2010, 84% of consumers in
China, India, Malaysia and Singapore say they would accept a higher price
for green products compared to only 50 % in Western countries. (Green
Trends Survey, 2010, p. 78). The concept of ‘cradle to cradle’ has been
emerged by Kumar and Putnam in 2008 to suggest that, used products may
not necessarily need to be disposed in the land, while, reused or recycled
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options may consider as other tools in order to protect the environment


(Felix and Chang et al., 2011). In most developed countries, some new
regulations on different waste categories have been defined (Kumar and
Putnam, 2008). For instance, the European Union (EU) specified some
regulations in this matter such as End-of-Life Vehicle (ELV) Directive,
Waste Electrical and Electronic Equipment (WEEE) Directive, Restriction
of use of certain Hazardous Substance (RoHS) Directive, and the packaging
and Packaging Waste Directive (Kumar and Putnam, 2008). By increasing
the concerns due to non-environmentally activities in RL operations, it is
vital to make an environmental strategy in RL processes. In fact, there is
a significant need to combine the concepts of green with RL activities to
enhance green performance and reduce the negative impacts of RL on the
environment. In addition, the governmental regulations forces enterprises
to design and implement the processes with the minimum impacts on
the environment. Although, the knowledge and practices in this area
among the companies have been increasing, but pursuing environmental
leadership in RL processes is still considered as a complex task.

2.6.4 Corporate citizenship


Some companies use their reverse logistics potentials for altruistic
purposes such as philanthropy, charities, homeless shelters, or giving
discounts to their customers for buying new products instead of returning
the old products (Rogers and Tibben-Lembke, 1998). For example, a
shoe manufacturer and retailer, Kenneth Cole Productions, encourages
consumers to return old shoes to Kenneth Cole stores during the month
of February. In return for bringing in an old pair of shoes, the customer
receives a 20 percent discount on a new pair of Kenneth Cole shoes (Rogers
and Tibben-Lembke, 1998). Reverse logistics can also be considered as a
tool for companies to retain their brand reputation in the market in order
to obtain the competitive advantages (Marien, 1998). In the matter of
corporate citizenship, there are a few companies which help to this special
348 A.H. VAHABZADEH AND R.B.M.YUSUFF

category of people who do not have enough affordability like the ordinary
people.

2.7 Reverse Logistics Activities


Apart from the above definitions, various activities also may be defined
in the reverse logistics. Refurbishment, remanufacturing, and redesigning
packaging for the purpose of reducing the energy consumption and toxic
gases from transportation are the activities which may included in the
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reverse logistics definition (Rogers and Tibben-Lembke, 1998). Goods may


be returned from the customer side due to several reasons such as goods
damage, seasonal inventory, restock, salvage, recalls, and excess inventory
(Rogers and Tibben-Lembke, 1998, Brito, Flapper & Dekker 2003). It
also entails recycling programs, hazardous material programs, obsolete
equipment disposition, and asset recovery (Rogers and Tibben-Lembke,
1998, Fernández 2003). Fleischmann (2000) pointed out that the secondary
goods which are rejected or refused by the customer are included in the
reverse logistics. Rogers and Tibben-Lembke (1998) defined the common
activities in reverse logistics as shown in Table 3.3.

Table 3.3
Common Reverse Logistics Activities

Material Reverse Logistics Activities


Return to Supplier
Resell
Sell via Outlet
Salvage
Recondition
Products
Refurbish
Remanufacture
Reclaim Materials
Recycle
Landfill
Reuse
Refurbish
Packaging Reclaim Materials
Recycle
Salvage
Source: Rogers and Tibben-Lembke (1998)
ANALYSIS IN REVERSE LOGISTICS 349

2.8 Benefit of Reverse Logistics


The advantages of reverse logistics are twofold. First, firms are able to
reduce their material and energy resource consumptions and thus reduce
operating costs. Second, firms are able to generate revenue from returned,
reconditioned or recycled products and materials that were previously
discarded (Stock et al., 2002). According to Autry (2005), reverse logistics is
not optional but obligatory for successful companies, insofar as it can lead
to both economic and strategic advantages through the reuse and recovery
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of materials, analyzing the whole productive process of a particular


product (Blanco, 2010). Along these lines, the reduction in costs resulting
from used product returns and their processing and subsequent sale in
secondary markets is a determining factor in many enterprises (Gonza´lez
and Gonza´ lez, 2001; Mitra, 2007). Globalized companies also must look
for the capability to systematically reduce costs and be able to introduce
reverse logistics operations to achieve a more efficient global model
(Grabara and Grabara, 2008). Therefore, reverse logistics should be seen
as a potential source of competitive advantages and not just as a system
that only generates additional costs (Daugherty et al., 2005; Stock, 2001RL
has been viewed as an effective way to improve resource productivity,
reduce the negative impact to environment, and improve both business
performance and environmental performance enabling firms to achieve
competitive advantage (Marien, 1998; Meyer, 1999; Stock et al., 2002; El
korchi and Millet, 2011).

2.9 Barriers to the Use of Reverse Logistics


Implementing an efficient reverse logistics system encompasses
various internal and external barriers which need to be considered by senior
managers. Rogers and Tibben-Lembke (1998) have asked the 300 research
respondents about the main issues in achieving their goals in reverse
logistics. According to the results, the main issues have been categorized
as: importance of reverse logistics relative to other issues, company
policies, and lack of systems, competitive issues, management inattention,
financial resources, personnel resources, and legal issues. Ravi et al., (2005)
analyzed the interactions among the critical issues in reverse logistics in
Indian automotive industries. He employed the Interpretive Structural
Modeling (ISM) to interpret the mutual influences and dependency among
all these barriers. Lee (2002) cited that, reverse logistics has not been paid
attention as well as forward logistics due to lack of understanding about
its benefit for the company. PricewaterhouseCoopers Nederland (2008)
350 A.H. VAHABZADEH AND R.B.M.YUSUFF

published their first reverse logistics report in order to help companies to


understand the role of reverse logistics in their strategic goals. According to
this survey which has been done in electronic industries, the main barriers
have been identified as: Limited forecasting and planning of returns,
Lack of clear returns policies, Little recognition of Reverse Logistics as
a factor in creating competitive advantage, and Lack of appropriate
performance management system. Lau et al., (2009) analyzed the main
barriers in electronic industries in China. In their case studies among 4
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companies, the important issues have been recognized as: high costs
and lack of supportive economic policies, unpredictability of supply and
demand for recycled products, lack of publicity and knowledge of reverse
logistics, lack of laws and legislation, and underdevelopment of recycling
technology. Customer demand, globalization, the abridged life cycle of
products, corporate social responsibility and environmental concerns
could be counted as the main obstacles that have strong influences on
enterprise’s strategies and policies during the implementation of the
RL system (Rogić et al., 2011). What’s more, the detailed analysis of the
literature illustrated that, the barriers involved in RL implementation
could be also divided into four main categories: management (Rogers and
Tibben-Lembke, 1999; Ravi and Shankar, 2005; Xiaoming and Olorunniwo,
2008; Lau and Wang, 2009), financial (Ravi and Shankar, 2005; Zhou et al.,
2007; Lau and Wang 2009; Zhao et al., 2010), policy (Ravi and Shankar,
2005; Lambert et al., 2011; Zhang et al., 2011) and infrastructure (Xiaoming
and Olorunniwo, 2008; Jack et al., 2010; Lau and Wang, 2009; Rahman and
Wu, 2011). Abdulrahman et al. (2012) also considered these categories
and investigated the main barriers involved in implementing RL in
Chinese industries. According to their studies which have been carried
out through a survey among various Chinese industries, the scarcity of
RL specialists and the low level of management commitment, the lack of
primary budget for implementing a monitoring system on returns, the
lack of executable regulations enacted by the government, and finally
the paucity of a monitoring system on returns identified as the main
barriers in management, financial, policy, and infrastructure sections
respectively. In another survey which has been carried out in the mobile
phone industry in Hong Kong, the analyses demonstrated that the most
barrier in implementing the RL system is the importance of RL relative
to other issues such as the conservative approaches of phone industries
to RL (32.4%), followed by company policies (23.5%), and lack of system
(20.6%). While only 20.6% of the remain barriers belonged to financial
and personal resources and legal issues (Chan and Chan, 2008). Felix and
ANALYSIS IN REVERSE LOGISTICS 351

Chan et al. (2011) divided the major barriers in automotive industries into
3 categories:

1. Management barriers, which refer to manage the issues related to


reverse logistics activities and closed loop supply chain.
2. Technical barriers, which consider the technological and physical
limitations on the recovery of various returns such as the difficulties
in recycling of different parts and components in automobile.
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3.Perspective barriers, which relate to different customer’s perceptions


when reused or remanufactured parts or components are used again in
the new products.

2.10  Material Flow and Operational Functions in Reverse Logistics


According to the above definitions, one of the main goals in reverse
logistics is recapturing the value of returns within several constraints and
governmental regulations. In order to accomplish to this goal the flow of
the returns as well as the different steps in the reverse logistics network
should be clearly defined and categorized. Rogers and Tibben-Lembke
(1998) and Schwartz (2000), defined various steps in reverse logistics as
follows:
1. Gatekeeping: deciding which products to allow into the reverse lo-
gistics system.
2. Collection: accumulating and assembling the products for the re-
verse logistics system.
3. Sortation: deciding what to do with each product, and
4. Disposition: sending the products to their desired destinations.

Pohlen and Farris (1992) categorized the following operations in re-


verse logistics for the plastics industry:
1) Collection, 2) Sorting, 3) Storage, 4) Transport, 5) Compacting, 6)
shredding or densification, 7) Communication with buyers. 8) Processing
or filtration, and 9) Retromanufacturing
Dowlatshahi (2000) identified some operational factors in developing
a theory of reverse logistics as follows:
1) Cost-benefit analysis, 2) Transportation, 3) Warehousing, 4) Supply
management Remanufacturing and recycling, and 5) Packaging
Dushantha (2007) categorized the steps in product return process
as: notify about return goods, return authorization, gate keeping of
352 A.H. VAHABZADEH AND R.B.M.YUSUFF

returning goods, collection and transportation of returns, inspection of


return goods, selection of a recovery method, sorting of return goods, and
refund or refurbishment. Felix and Chan et al. (2011) defined the activi-
ties in reverse logistics as disassembly of products, inspection, recycling,
repair, refurbishment, remanufacturing or final disposal. Reverse logistics
activities also can be defined as: collection, inspection, recycling, refur-
bishing, and remanufacturing of used or returned products, including
leased equipment and machines (Alumur et al., 2012).
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As seen in the above steps and in the definitions, some of the activi-
ties can be removed due to the flexibility of operations and processes in
various industries. Decision makers based on the operational goal of the
organization in reverse logistics decide what activities and operations are
appropriate for their reverse logistics flow (Meade et al., 2002). For in-
stance, if the environmental concerns are taken into more consideration
for the firm, there may be a need of more focus on sorting step.

2.11 Reverse Logistics Network and Flow Diagram


“The reverse logistics network collects used products from end users;
consolidates, inspects, and sorts them as needed; and transports them for
various recovery options.” (Ferguson and Souza, 2010). In designing the
structure of the reverse logistics network two main factors are considered:
the nature of used product and type of recovery (Ferguson and Souza,
2010). If the economic value of the product is high and the product can be
refurbished or remanufactured, the Original Equipment Manufacturers
(OEMs) are actively engaged in product recovery operation. While in the
case of low economic value recovery is often obliged by legislation.
Designing an appropriate and efficient network in reverse logistics
has been taken more into account due to growing environmental concerns
and governmental regulations (Yongsheng et al., 2008). In designing a re-
verse logistics network various strategies need to be designed at first. For
example, the right reverse channel structure, collection strategy, and ana-
lyzing the different influences of financial incentive on the reverse logis-
tics network are the critical decisions that need to be taken before design-
ing any reverse logistics network (Ferguson & Souza, 2010).
Another factor which seems to be the first issue in designing a re-
verse logistics network is to define who should participate in reverse lo-
gistics activities. The responsibility of collecting and recovery of returns
may be taken by producer, retailers, Third- Party Logistics (3PL), or any
other group. For instance, end-of-use products were collected by retailers
ANALYSIS IN REVERSE LOGISTICS 353

in Japan (Dempsey et al. 2008), unlike Xerox which collect end-of-lease


photocopy machines directly from the customers as they install new ones
(Savaskan et al. 2004).
As it has been discussed about different reverse logistics activities in,
illustrating the schematic network of reverse logistics is necessary to be
discussed too. For this reason, the main general reverse logistics network
which has been studied by many authors was depicted in Figure 3.1.
With regards to activities and flows in this network, one critical sub-
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ject should be considered by all industries. As we have mentioned, this


network is a general network which has been discussed by many authors,
while the reverse logistics network would be customized according to the
nature of product and the type of product recovery. Hence, it may differ
from case to case. According to Marcotte et al. (2008), although, there are
big differences in size and capability of the facilities in various industries,
while “they all focus on activities such as receiving products, testing and
sorting products, parts and materials, disassembling products and parts,

Figure 3.1
Revere Logistics Network
Source: Fleischmann et al., 1997, Kokkinaki et al., 2002, Pagell et al., 2007, Lee and Dong,
2007, Soto Zuluaga, 2006, PricewaterhouseCoopers, 2008, Marcotte et al., 2008, Pokharel
and Mutha, 2009.
354 A.H. VAHABZADEH AND R.B.M.YUSUFF

cleaning and repairing products and parts, storing and shipping items,
matching offer and demand, managing flow and operations” (Marcotte
et al., 2008). In summary, the works which have been done in designing
reverse logistics network have shown in Table 3.4.
3.12. Multi Attribute Decision Making Models in Reverse Logistics
Recently, solving social and economical problems by using multicri-
tria quantitative decision making model has been widely increased
(Figueira et al., 2005; Ginevičius 2008; Ginevičius et al., 2008b; Ginevičius,
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Podvezko 2007a, 2008a, 2008b; Kaklauskas et al., 2006, 2007a; Podvezko


2006, 2008; Ustinovichius et al., 2007; Zavadskas and Vilutiene 2006; Za-
vadskas et al., 2008a,b; Turskis et al., 2009). Reviewed literature shows that
the MCDM methods have been employed in different fields of reverse lo-
gistics such as evaluating and selecting the Third-Party Reverse Logistics
Providers (3PRLPs), modeling product recovery (e.g., recycling and re-
manufacturing), waste management, evaluation of various alternatives for
End-of- Life (EOL). Efendigil, Onut, and Kongar (2008) proposed an inte-
grated approach, combining FAHP and ANN, to select the best 3PRLPs.
The twelve factors have been analyzed, Including on-time delivery, fill
rate, service quality, unit operation cost, capacity usage, total order cycle
time, system flexibility index, integration level, increment in market share,
research and development, environmental expenditures, and customer
satisfaction. Divahar and Sudhahar (2012) also studied the application of
the AHP method in selecting and evaluating of RL providers by consider-
ing the quality of service, cost of RL, service delivery and the technical
capability as the main criteria. Zhang and Feng (2007) employed Fuzzy
Analytical Hierarchy method (FAHP) to study the selection process of re-
verse logistics provider through a case study. Kannan (2009) developed a
structural model in selection of 3PRLPs for battery industries by using
AHP and FAHP methods. In this model various factors such as tangible,
intangible, quantitative, and qualitative factors have been considered for
decision makers to make a strategic decision in choosing the 3PRLPs. Go-
vindan and Murugesan (2011) developed fuzzy extent analysis to select
the 3PRLPs in the same industry sector. According to their approaches,
uncertainty in determination of the relative weights given to the different
attributes have been reduced, moreover, the impact of each alternative
with respect to the attributes and sub-attributes which are involved in the
selection process can be found more effectively. Sasikumar and Noorul
(2011) used the VIKOR method in a fuzzy multi-criteria decision- making
(FMCDM) model for the selection of the best 3PRLP. Azadi and Farzipoor
Saen (2011) proposed a new Chance-Constrained Data Envelopment
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Table 3.4
Studies on Reverse Logistics Network

Depth of the Network Solution


Paper Tactical Decision Stochasticity Case Study
Algorithm
CC IC RmF RcF

Exact, Constr. Waste,


Spengler et al.
X Process selection - commercial steel by-
(1997)
solver products
Barros et al. (1998) X X - - LP relaxation Sand
ANALYSIS IN REVERSE LOGISTICS

Jayaraman et al. Commercial


X - - -
(1999) solver
Commercial Copier
Krikke et al. (1999) X Inventory -
provider
Louwers et al.
X - - Exact Carpet
(1999)
Commercial Appliances
Shih (2001) X X - -
solver and PCs
Heuristic
Jayaraman et al.
X X - - concentration -
(1999)

Schultmann et al. Commercial


X - - Battery
(2003) solver
355

Contd...
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Commercial 356
Realff et al. (2004) X Process selection Return, price Carpet
solver
Listes and Dekker Demand,
X X - Exact Sand
(2005) return, cost
Genetic
Min et al. (2006) X X Inventory - -
algorithm
Lieckens and Return, reman. Genetic
X Congestion level -
Vandaele (2007) time algorithm
- Exact
Uster et al. (2007) X X - -

Holistic
conceptual
framework,
hierarchical
Srivastava (2007) X X Value recovery - optimization -
Model, bi-level
Program, Mixed
Integer Linear
Program (MILP)
Aras and Aksen
X X Acquisition price - Tabu search -
(2008)
Acquisition Tabu search
Aras et al. (2008) X - -
price, fleet size
Commercial
Pati et al. (2008) X X - - Paper
solver
A.H. VAHABZADEH AND R.B.M.YUSUFF

Contd...
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Commercial Appliances
Srivastava (2008) X X - -
solver and PCs
Du and Evans
X - - Scatter search -
(2008)
De Figueiredo and Teitz and Bart
X Acquisition price - Tire
Mayerle (2008) heuristics
Z.Yongsheng and
W. Shouyang (2008) Process selection
Mixed integer
X for product - -
programming
recovery

Cruz- Rivera and


X - - Solver Vehicle
Ertel (2009)
ANALYSIS IN REVERSE LOGISTICS

Facility location, Uncapacitated


R. Cruz-Rivera and
ELV (End-of- Facility Location
J. Ertel (2009) X - Vehicle
Live) collection Problem (UFLP)

Acquisition
Aksen et al. (2009) X price, fleet size, - Tabu search -
subsidy
Tabu search,
Facility and non-linear
X. Q. Ge et al. (2009) X optimal location - programming, -
Genetic
algorithm (GA)
357

Contd...
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Eco-efficiency, 358
Minimizing Bi- objective
M.Fathi et al.(2009) X cost and - linear Paper
environmental programming
effects
Bi-objective
model Real time case
Minimize cost using mixed study such as
K. Govindan and D.
X X and energy - integer linear tyre, battery,
Kannan (2010)
consumption programming and bottle
and weighting industries
method
Bi- objective
Optimize cost integer
Bo He (2010) X - -
and service level programming

Two –stage
Stochastic
programming
S. Soner Kara and S.
X X Optimize cost cost based on Paper
Onut (2010)
mixed integer
programming
method

Contd...
A.H. VAHABZADEH AND R.B.M.YUSUFF
Downloaded by [University of Auckland Library] at 15:14 14 June 2015

advanced
strategic
planning model
with integrated
queuing
Leadtime,
relationships,
K. Lieckens and N. process time,
X Inventory cost differential -
Vandaele (2010) unknown
evolution
quality
algorithm with
an enhanced
constraint
handling
method
ANALYSIS IN REVERSE LOGISTICS

Television
covering
location model
and mix-integer
Yu-qiang SRI et.al Process selection linear
X X -
(2010) programming,
and DEDS
simulation
method

Felix T.S. Chan et. al Commercial Automobile


X X X X Process selection -
(2011) solver industry

Contd...
359
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Simulation 360
modeling by
Arvind Jayant et.al Collection of
X X - Arena 11.0 acid batteries
(2011) EOL products
simulation
package
minimize the
total costs and
maximize the bi-objective
L. Tafaghodi responsiveness mixed-integer
X X X X - -
Khajavi et.al (2011) of the closed- programming
loop supply model (MIP)
chain network
simultaneously
Process selection Mixed
Y.Awan and Q. Liu
X X X X for product cost integer linear -
(2011)
recovery programming
hybrid genetic
algorithms
G. Tuzkaya et.al
X X X X Process selection - and simulated -
(2011)
annealing
(HGASA)
costs as well Bi-objective
as minimizing mixed integer
S. Zegordi et.al
X total weighted - linear -
(2011) tardiness of programming
returns model
Contd...
A.H. VAHABZADEH AND R.B.M.YUSUFF
Downloaded by [University of Auckland Library] at 15:14 14 June 2015

K. Das and A. Mixed integer


X Planning process - -
Chawdhury (2012) programming
Mixed washing
S. Alumur et.al Profit
X X X X - integer linear machines and
(2012) maximization
programming tumble dryer
Minimize
Mixed
D. Kannan et al. climate change
X X - integer linear Plastic sector
(2012) (especially the
programming
CO2 footprint)
K. Das and A. Profit Mixed integer
X X - -
Chawdhury (2012) maximization programming
parallel multi-
ANALYSIS IN REVERSE LOGISTICS

objective
Cost, delay,
M. Eskandarpour et heuristic based
X X and pollution
al. (2012) on variable
minimization,
neighborhood
search (VNS)
Cost Mathematical
L. Dat et al. (2012) X X X - -
minimization modeling
Cost,
production
Bi-objective
rate, storage
mathematical
B. Vahdani et al. Cost capacity,
X X X programming, a -
(2012) minimaztion manufacturing
robust M/M/C
facility, and
queing model
distrubition
center
361

Contd...
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B. Zhenqiang et al. Cost Gray Model 362


X X -
(2012) optimization (GM)
Mixed Integer
S.H. Amin and Profit Linear
X X X - -
Zhang (2012) maximization programming
(MILP)
Multi-objective
mixed –integer
Cost, nonlinear
M. Mehrbod et al. delivery time, programming,
X X - -
(2012) collection time Interactive
minimization Fuzzy Goal
Programming
(IFGP)
Fuzzy mixed
B. Vahdani et al. Cost nonlinear
X X -
(2012) minimization programming
model
Cost and A mixed
encironmental integer linear Household
X. Bing et al. (2012) X X X
impacts programming plastic waste
minimization (MILP)
Adapted and revised from Mark E. Fergusen and Gilvan C. Souza.

Note: Collection Center (CC), Inspection Center (IC), Remanufacturing Facilities (RmF), and Recycling Facilities (RcF).
A.H. VAHABZADEH AND R.B.M.YUSUFF
ANALYSIS IN REVERSE LOGISTICS 363

Analysis (CCDEA) by applying both dual- factors and stochastic data in


selecting 3PRLPs. They have suggested that by using their results, similar
researches can be repeated in the presence of deterministic and fuzzy
date; undesirable factors and stochastic data; and stochastic and non- ho-
mogeneous Decision Making Units (DMUs) in the process of selecting
3PRLPs. Kannan et al. (2009) studied the application of hybrid approach
by employing Interpretive Structural Modeling (ISM) and fuzzy TOPSIS
methods for the selection of 3PRLPs. In another study which has been car-
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ried out by Kannan et al. (2012) the ISM model has been used again for
selection of 3RPRLP. The difference of this work with the previous one
was to analyze the complexity of the relationships among the attributes of
3PRLP. The finding showed that, the main attributes which have been con-
sidered in the ISM model were: organizational role, impact of use of third
party logistics, third party logistics service, user satisfaction, RL function,
IT, and organizational performance criteria. Kumar et al. (2008) proposed
a Mixed Integer Goal Programming (MIGP) to manage the paper recycling
in logistics system. In this model, the inter-relationship between multiple
objectives (with changing priorities) of a recycled paper distribution net-
work has been studied. Reducing cost in reverse logistics; improving the
quality of the product through increased segregation at the source; and
environmental benefits through the increased wastepaper recovery have
been defined as the main objectives. In addition, determining the facility
location, route and flow of different varieties of recyclable wastepaper in
the multi-item, multi-echelon and multi-facility decision making frame-
work have been considered as the other objects. Jiang et al. (2011) dis-
cussed about the model for selecting remanufacturing technology by us-
ing the AHP method. In this model, the economic and environmental
criteria such as time, cost, quality, service, resource consumption, and pro-
cess emission have been considered as the main criteria. In the field of
waste management, Jo et al. (2010) analyzed the reverse logistics obstacles
with respect to e-waste, which has been considered as the highest priority
in the solid waste area due to the short life cycle, by applying AHP and
Analytic Network Process (ANP). Barker and Zabinsky (2011) discussed
about designing the reverse logistics network, including cost and business
relations, by applying the AHP method. Wadhwa et al (2009) proposed a
FAHP model which can be used in designing effective and efficient flexi-
ble return policy based on various factors such as cost/time, environmen-
tal factor, market factor, quality, and legislative factors. Hernandez et al.
(2010) analyzed the effect of reverse logistics practice on automotive cor-
porate performance by using AHP and ANP methods. In this model,
364 A.H. VAHABZADEH AND R.B.M.YUSUFF

financial, customer, internal processes, and learning and growth perspec-


tives have been chosen as the main indicators to study. Geethan et al.
(2010) used the AHP and TOPSIS methods for selection of collecting cen-
ter location in the reverse logistics network. Zhang and Feng (2007) em-
ployed FAHP to study the selection process of reverse logistics provider
through a case study. A hybrid methodology based on AHP-TOPSIS un-
der fuzzy environment has been proposed for the selection and evaluation
of RL channels by Senthil et al. (2012). Various criteria such as economic,
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management, time, flexibility, IT application and RL functions have been


considered in this study. Kannan (2009) developed a structural model in
selection of 3PRLPs for battery industries by using AHP and FAHP meth-
ods. In this model various factors such as tangible, intangible, quantita-
tive, and qualitative factors have been considered for decision makers to
make strategic decisions in choosing the 3PRLPs. The AHP decision- mak-
ing model for product recovery of shoes has been developed by Staikos
and Rahimifard (2007). In their study, environmental factors based on Life
Cycle Analysis (LCA), economic factor from cost- benefit analysis, and
qualitative technical factors from a secondary AHP analysis have been
considered as criteria. Also, a conceptual decision- making model under
multiple conflicting criteria by using AHP and Delphi methods has been
proposed by Fernandez et al. (2008). Barker and Zabinsky (2011) discussed
about designing the reverse logistics network, including cost and business
relations, by applying the AHP method. In a completely new mixed
MADM method, Hsu et al. (2102) applied a combined DEMATEL-ANP
(DANP) model to select the vendors for the recycled material for the Alu-
minum composite Panel (ACP) in Taiwan. The main purpose of this study
was to improve the efficiency of using resources in the manufacturing pro-
cesses via recycled components. Unlike the majority of the researches on
supplier evaluation and selection in RL in which the FAHP model has
been opted, in a recent study which has been done by Amin and Zhang
(2012), a method based on linguistic variables and triangular fuzzy num-
bers (TFNs) has been proposed for the supplier evaluations. According to
the authors, the new model would take lesser time than FAHP method
and It is more appropriate when there are a large number of assessment
criteria. With regards to RL implementation and the important factors,
Chiou et al. (2012) performed a survey among electronics industries in
Taiwan and applied FAHP method to analyze the important criteria and
subcriteria in RL implementation. Their analyses and final ranking showed
that the economic requirements including recycled volumes, recycling
costs, total manufacturing costs, and increase of sales volume for new
ANALYSIS IN REVERSE LOGISTICS 365

products, followed by the environmental requirements consist of environ-


mental regulations & directives, consumers environmental awareness,
pressures with stakeholders, and reverse logistics management informa-
tion system, and the social requirements comprising corporate social Re-
sponsibility, competitive pressures, advertising promotion of image, and
good recycling management system and recycling service are the most
notable factors in implementing RL system. Akdoğan and Coşkun (2012)
surveyed the drivers involved in RL activities in the house appliance in-
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dustry in Turkey and ranked them by applying the AHP method. The
three main drivers including economic, legislation and corporate social
citizenship criteria in accordance with their subcriteria have been ranked
by applying the AHP method. Their results demonstrated significant dis-
crepancies in prioritizing of the main drivers among theses industries. In
some manufacturers economic factors have been considered as the main
priorities while the corporate citizenship criteria has been accounted as
the most important driver in other factories

4.  Conclusions and Discussion


This paper presented a comprehensive literature on RL from the
emerging points until the recent researches. In order to highlight the major
contribution of this review, a number of literatures with their viewpoints
and emphases have been explained and compared. It has been discussed
that the concept of RL had been, mainly, originated from the consolidation
of waste management and logistics areas, but by considering the opposite
direction of materials movement. Besides, the review argued the various
aspects of RL in terms of involved activities, barriers and benefits of imple-
mentation, key drivers, and its different processes. Also, the efforts for
proposing and developing different mathematical and conceptual models
in RL network and flow diagram have been demonstrated. In this matter,
a broad range of works which have been performed collected in a table to
exhibit the crucial tactical decisions, applied mathematical models, and
the application of RL network in the various case studies. Furthermore,
the main feature of this review was to excavate the utilization of various
MADM methods in different fields of RL.
Overall, the current study would provide an opportunity for the fu-
ture investigations in the RL area as follows:

• I ncreasing the environmental concerns and governmental legis-


lations enforce all the players in RL such as manufacturers, OEM,
366 A.H. VAHABZADEH AND R.B.M.YUSUFF

3RPRLP, and recyclers to embed these concerns into their RL policies


and strategies to achieve a Green Reverse Logistics model.
• F
 rom the sustainability point of view, the social aspect of RL needs
to be taken into account. Over the recent years, the economic aspect
of RL processes through different cost-benefit analyses have been
modelled and argued, while the social impacts of RL and its deter-
minant factors and essential criteria have never been analyzed in-
depth.
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• T
 he studies demonstrated that, a broad variety of the mathematical
modeling used in the different RL area, especially in the RL network
design. Most of the researchers modeled their problems by merely
considering or assuming the deterministic variables, while some of
the effective variables in RL such as the quantity and time of returns,
and demand are basically uncertain and they need to be defined
as the stochastic variables. Also, the new heuristics and simulation
models would provide an exclusive opportunity for all the practitio-
ners and academia to address these issues and to be familiar with
the hidden aspects of RL behavior.
• D
 ue to numerous roles of players in RL, a high level of coordina-
tion and collaboration among them seems to be imperative. Hence,
a clear and effective cooperation mechanism and contractual agree-
ment on different terms and conditions between the involved enti-
ties should be defined.

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