Dr.

Maram Venkat Ramana Reddy Desh Vikas ISSN 2394 -1782

RNI: APENG/2014/57359
Impact Factor: 2.2376
Volume: 7 Issue:2 July – Sept. 2020

An Introduction to Reverse Logistics

Dr. Maram Venkat Ramana Reddy
Assistant Professor, Dept. of Management Studies, Mahatma Gandhi
University, Nalgonda, Telangana State, India.
Email: mgu.ramanareddy@gmail.com

ABSTRACT
Reverse Logistics refers to all logistics activities about collect, skills used
to reduce, manage, disassemble, and process unwashed products,
product parts, and the materials to ensure a sustainable recovery. This
article mainly studies about reverse logistics system design, types of
reverse logistics, green marketing practices, and hazardous materials
handling for environmentally friendly.
Key words: Recycling, SCM, Reusable and Customer returns

Introduction
In Integrated Logistics system products move from manufacturer to target
customers, sometimes they must move products from customers backward
through the supply chain management. We call this process of the system as
the reverse logistics system. Reverse Logistics Systems are used for many
purposes like the return of goods for credit or refund, for short term or long
term rental or lease returns, for warranty returns, for reusable containers,
consignment agreement returns, Trade-ins when a new unit is sold to the
customers, units send to the organizations for a product upgrade, take-backs,
universal product recalls, units send to the manufacturer for inspection or
recalibration and products not meeting the manufacturer's guarantee to the
customer.

The Logistics System will take the empty package used by the customers
through a distribution network and returned it to manufacturing or the party
responsible for the recycling process. This helps the manufacturing companies
to save the materials required for packing and packaging, it also helps them to
keep away the burden of cost and benefit the economy by increasing
employability to do the reverse logistics process.

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Reverse Logistics deals with five basic questions

 What alternatives are available to recover products, product parts, and
materials?
 Who should perform the various recovery activities?
 How should various activities be performed?
 Is it possible to integrate the activities that are typical of reverse
logistics with classical production and distribution systems?
 What are the costs and benefits of reverse logistics both from an
economical as well as an environmental point of view?

Review of literature
1. Michael Feito Cespon, Roberto Cespon Castro, Jamerik Lunsquist
(2009), according to the research studies they identified three generic
strategies like recapturing value, commercial strategies, and
environmental care for growing need of correct implementation of
reverse logistic strategies.
2. Vasin Galip (2006), according to them the reverse logistics has become
an important role in the case of automobile recalls and their demand
and also the effect on marketing the products that are related to reverse
logistics.
3. V. Ravi, Ravi Shanker (2005), they expressed regarding major barriers
that hinder or prevent the application of reverse logistics in
automobiles industries. They designed the interpretive structural
modelling ((ISM) methodology. In the end, they explained the
implication for practice and future research in their studies.
4. Laura Meade, Joseph Sarkis, Adrien Presley (2007), they had
presented the research opportunities in this field due to its multi-
functional, and interdisciplinary focus. It also made the organizations more
critical to consider from both an economic and environmental perspective.
5. Sibel A. Alumur, Stefan Nickel, Francisco-da-Gama, Vedat Verter
(2012), they presented a case study on reverse logistics network design
for washing machines and tumble dryers in Germany. An extensive
parametric and scenario analysis is conducted emphasizing managerial
aspects. A multi-period facility location model is proposed by them.

Need for reverse logistics

Firms have become more and more responsible for collecting, dismantling,
and upgrading used products and packaging materials. Environmental laws

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that force firms to take back their products and take care of further treatment.
Economic benefits of using returned products in the production process
instead of paying the high disposable cost. The growing environmental
consciousness of consumers is also taken into consideration. Distribution is
one of the key elements in the reverse logistics chain.

Objectives of the study

 To study about reverse logistics system design.
 To know the common types of reverse logistics.
 To study the green marketing practices. And
 To study the handling of hazardous materials.

Scope of the study

Reverse Logistics acts as a channel to attain profits to the company. In this
competitive world, most of the companies are planning to incorporate these
Reverse logistics systems in their supply chain process. It can be used for
many purposes like Refilling, Repairs, Re-furnishing, Re-manufacturing, etc.
It is confined to government regulations on product recycling and waste disposal

Recycling
Supply chain members usually participate in the recycling system. Recycling
supply chain uses a four-stage process:
i. It collects waste materials from the recycling bin and delivering them
to the entity responsible for recycling.
ii. Processing recyclables to create secondary raw materials,
iii. Using the secondary materials to produce new products, and
iv. Returning the products to the marketplace.
Recycling programs to reduce demands on local landfills and practice
environmentally conservative techniques. The most common recyclable
materials like aluminium, paper, glass, and plastic. One common
organizational structure for your logistics system involves four participants are
collectors, sorters, processors, and remanufacturers. The collectors pick off the
material and gather the recyclable material and deliver it to a recovery center,
the sorter separate materials into homogeneous groups. Once sorted, these
products must be sent to the appropriate processor. Processors typically
contract with different institutions to purchase one type of recyclable item and
transform it into a secondary raw material. The secondary raw material is then
sent to remanufacturers. Remanufacturers take fresh raw materials and

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combine them with secondary raw materials. Once remanufacturing is

complete, the result is a product that contains recycled materials.

Repairs and refurbishing

Repair is a regular feature in service-based products under a warranty period
and almost all consumer durables need repairs regularly. Refurbishing is done
to goods returned by damage, defects, or bellow par performance during the
warranty period. Manufacturers establish the reverse logistics system, not only
for offering free service during the warranty period but also for extending the
services beyond the warranty period on a chargeable basis. The system
operates through the company's service centers where repair and refurbishing
take place. The collection of defective products is done, through the dealers'
network. These collected products are sent to the nearest service center for
overhaul, repairs, or refurbishing.

Re-filling
Reverse logistics is integrated into their chain because of the reusable nature
of packages such as glass bottles, tin/plastic containers & metal cylinders, etc.
In the case of soft drinks, the delivery van delivers filled bottles to retailers en
route and collects the same number of empty bottles from them for delivery to
the factory. No extra transportation costs are involved in the process as the
same delivery van originates and terminates its journey at the factory where
these reusable bottles are refilled for re-delivery to customers. The
arrangement is done through a hub and spoke distribution system.

Products recall
This is an emergency wherein the products distributed in the market are called
back to the factory because of any of the following reasons like a product not
giving the guaranteed performance, quality compliance from the many
customers, defecting products causing harm to many human lives, products
beyond the expiry date, products with a defective design, incomplete product,
violation of government regulations, ethical considerations, save the company
image. Product recall puts a huge financial burden on the company but in the
competitive scenario, the companies consider "re-call" as an opportunity to
increase customer satisfaction.

Re-manufacturing
Manufacturers in developed countries are putting in practice a new concept of
re-manufacturing. During the usage of the product, it undergoes wear & tear.

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Worn out parts are replaced with new ones and the performance of the product
is upgraded to the level of a new one. Similarly, equipment sold can be
checked after use to the remanufacturing unit. The investment in
remanufacturing & related reverse logistics supply chain can be justified
based on economies of scale.
Effective design of reverse logistics system
Reverse logistics systems are necessary for a complete environmental
program. But, many companies hesitate to spend money on an environmental
program without a financial benefit. Recent estimates suggest an enormous
financial incentive for firms to offer environmentally friendly products. The
market for these types of products is quickly expanding in different countries.
Several environmental factors can affect the reverse logistics activities of a
firm. Four primary activity groups that are influencing the environmental
factors are government agencies, suppliers, buyers, and competitors.
Government agencies can influence the various environmental practices of a
firm through their regulatory power and often pas regulations or laws in
response to pressure from consumer groups on environmental lobbyists.
Government agencies can require compliance with an environmental standard
or provide an incentive to comply with more strict environmental standards.
Suppliers and buyers also frequently influence the reverse logistics system of a
company. Both participate in the supply chain so their concern must be
addressed. Firms with environmental programs must rely on other supply
chain participants to assist in reverse logistics. Firms failing to support reverse
logistic activities may find themselves losing valuable business opportunities.
Competitors are also affected by the reverse logistic practices of a company. If
a firm wishes to remain competitive, its management should thoroughly
understand the competitive environment. Failure to understand the operating
environment may result in lost business. Many products are reused for
alternative purposes like lubricants such as oil and grease can be reused
alternative lubricant purposes. For example, a two-wheeler or a four-wheeler
consumer brings vehicles to the maintenance shed, where they remove the
engine oil from the vehicles and stores in a drum, later they supply for
recycling or used for construction purpose.
Return of new products by customer
Reverse logistics systems help consumers to return unwanted products. The
customer often buys an item, only to return it later, for example, like we may

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buy mixi jars, and when they come for replacing we replace with new jars. If
the retail stores compete more and more on service, including liberal return
policies, then reverse logistics systems must quickly restock returned items.
Such reverse logistics systems may be short since the product only travels
from the customer back to the retail outlet. Sometimes customers return
defective products, all the participants of the supply chain may safeguard the
product in the system, but defective or damaged products may still be
delivered to customers. If it occurs, a reverse logistic system must handle
defective or damaged products. It requires a longer reverse channel then the
return of usable products. Customers also return damaged or defective
products to the retail outlet and obtain an exchange or credit. In this case, the
retailer outlets must send back to the factory through the supply chain and
receive financial credit. If damage occurs during the transit, the carrier, the
distribution center, or other members of the supply chain may take
responsibility for damage and bear financial responsibilities. If the party
responsible for the damage cannot reliably determine the retail outlet is likely
to bear the loss.
Returns of used products by customer
Occasionally customers are encouraged to return used products to the retail
outlets and obtain financial benefits or credit. Customers are given financial
credit if they return the core of the used product, especially in the automotive
industry. The starters, automotive alternators, and water pumps can all be
remanufactured from used parts this automotive retail outlet designs and
operate these reverse logistics systems. When the retailer receives the used
products, it is packaged for shipment and returned to an automotive
distributor. The distributer credits the retailer and ships the used automotive
parts to a remanufacturer. Once remanufacture, the parts are marketed as an
inexpensive alternative to new automotive replacement parts. The logistics
systems start with incentives to return the used products to the retail outlets.
Sometimes they provide incentives in the form of a discount on a
remanufactured replacement part. To get the discount the customer must
return the core part at the time of purchase. If they fail to provide the used part
then they charge that will increase the cost of the manufacturing part.

Returns on reused products by customers

Most of the time returned products undergo some sort of remanufacturing or
alternative process. Some products can be reused with minimal effort. The

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glass bottles which are sterilized and cleaned are reused several times. Many
of the grocery stores charge 5-10% for each glass bottle. If these glass bottles
are returned, the store credits the customer. The grocery store may take the
possession of the glass bottles and uses a reverse logistic system to return the
empty bottles, refills them with soft drinks, caps each bottle, and returns it to
the market.

Reverse logistics outsourcing requirements

Environmental concerns prompt many firms to outsource some or all of their
reverse logistics functions. Logistics outsourcing, also known as the use of
third-party providers, is the decision to use independent, external
organizations as the means of accomplishing some, or all, of the logistics
related functions within the firm. Businesses have used outsourcing to achieve
a variety of logistics needs including materials handling for just in time
production, transportation, and warehousing. Recently many businesses have
asked third party providers to augment traditional service offerings to include
reverse logistics functions. As demand for reverse logistics increases, more
third-party providers expand their service offerings. Many now offer
specialized services to help their customers practice environmentally
conscious logistics. The third-party providers also customized services like
garbage pickup/disposal and pickup and sorting of recyclable materials to fit
the needs of corporate clients.

Many specialized moves like hazardous materials and other products requiring
unique transportation equipment were not otherwise available. Now firms
specializing in such operations will most likely move hazardous waste or other
unique products requiring reverse logistics services. Many external
transportation providers will customize services to meet the needs of any
customer. As more customers demand both traditional and reverse logistic
functions, some third-party providers recognize that they cannot offer their
customers every possible service. They have started building relationships or
strategic alliances with other logistics providers to offer a more attractive and
all-inclusive package to potential customers.

Making relationships and pooling resources with other logistic providers not
only builds a better resource base but also allows for risk reduction through
diversification. Risk reduction can be a major concern for third party providers
that offer reverse logistic systems.

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Conclusions
The paper has examined reverse logistics system design effectiveness and also
to implement a system that can handle the growth in the volume that recycling
programs generate. It also examined the common types of reverse logistics,
customer return, and package return systems. The evidence presented here
further suggested that outsourcing reverse logistics gave a way to develop a
new type of reverse Logistics operations in different fields. It can remove
unemployment by increase serviceability in the reverse logistics system. It
reduces the manufacturing cost by the remanufacturing process. Development
of reverse logistics enterprises needs to be given priority for raising income
levels, saving levels, reducing wastages, and providing green marketing
products to the society by reducing the environmental problems.

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