LOGISTICS, THE SUPPLY CHAIN

AND COMPETITIVE STRATEGY

 What does it take to stay
competitive in an industry
LOGISTICS & that foster’s cut-throat
SCM: A competition?
SOURCE OF
COMPETITIVE How can one survive and at
ADVANTAGE least maintain its structure in
an increasing market share?
Effective operational logistics and supply
chain management can stir the business
industry and deliver a major source of
competitive advantage.

The aim of most companies is to either

have a cost advantage or a value
advantage.
Having them both can make even more
appealingly competitive.
WHAT’S THE DIFFERENCE?

COST ADVANTAGE VALUE ADVANTAGE

-Gives a lower cost profile Gives the product or offering
-

a differential ‘plus’ over

competitive offerings
➢ In actual business practice, successful
companies will often work toward
achieving a position based upon the
combination of these advantages.
 1. The importance of assortment
Five Different planning and item categorization
Logistics and 2. Effective procedures for supplier
SCM Tools that evaluation

can be used as a 3. Performance measurement and

leverage utilizing communication

both advantages 4. Building a framework for exception

over their management

competitors 5. Continuous education and

knowledge sustainability
1. THE IMPORTANCE OF
ASSORTMENT PLANNING
AND ITEM CATEGORIZATION

• A systematic inventory level

analysis is a proven and
effective way to monitor and
control product range and is
very helpful in the overall
improvement of supply chain
undertakings.
 Categorize Categorize items by importance

Analyze items by stock availability and

Here are some tips Analyze sales by identifying overstock items
and tools that can and using it as an input to discontinue.
be used by any
enterprise as it tries Set up regular & systematic process to
Set up
to improve its monitor product range.
system:
Dispose of dead stock. Make use of
Dispose promotional campaigns to purged
these items while at the same time
promoting goodwill for the company.

Carry out Carry out an ABC analysis per item.

 • An inventory categorization
method which consists in dividing
items into three categories, A, B
and C with A being the most
valuable items and C being the
ABC Analysis least valuable ones.

• This method aims to draw

managers’ attention on the critical
few and not on the trivial many.
2. EFFECTIVE PROCEDURES
FOR SUPPLIER EVALUATION

• This is the tool that can be used to

evaluate and approve potential
suppliers by quantitative assessment.

• The aim is to ensure and build a

portfolio of best-in-class suppliers that
are available when needed.
3. PERFORMANCE
MEASUREMENT AND
COMMUNICATION

• This is another tool that one can

use in his on-going business. The
types of measurements vary from
one organization to another.
4. BUILDING A FRAMEWORK FOR EXCEPTION
MANAGEMENT
• In this type of management tool, the assumption is that an
exception is a distinct, identifiable event which occurs at a
specific point in time during the execution of a process and
relates to a unique work item.

• The manner in which the exception is handled will depend

on the type of exception that has been detected.
 How the work item will be handled?
In general,
there are three How the other work items in the case
basic will be handled?
approaches: What recovery action will be taken to
resolve the effects of the exception?
5. Continuous education and
knowledge sustainability

• Today, it is important for organizations to recognize the value

of continuous education. This will help develop the skills and
knowledge necessary to be effective and efficient.
• Knowledge sustainability on the other hand, means creating
a system that provides for quality of life and renewal of the
environment.
Logistics Management Enhancing
Competitiveness and Customer
Value
Example :
Logistics can spell the difference between success and failure in business. For example, a
few years ago a young engineer-entrepreneur began to build a company from scratch. His first
product was liquid bleach. Actually, he didn’t know much about the business at the time. He knew
that liquid bleach is nearly all water, and that the U.S. market is divided among two large
manufacturers, Clorox and Purex, and a number of smaller producers that sell branded and private-
label bleach on a regional basis. He also knew that the market for private-label bleach in New
England, where he wanted to be, was dominated by a manufacturer located in New Jersey.
So, the entrepreneur decided to found a private-label bleach manufacturing company near
Boston. This location provided his company with a distinct transport cost advantage over its chief
competitor. But he didn’t stop there. He located his plant near a concentration of grocery chain
retail outlets. This enabled him to sell his bleach under an arrangement in which retailers’ trucks
were loaded with his bleach after making their retail deliveries and before returning to their
respective distribution centers. Given this double cost advantage, he was able to go one step
further. By adding other items to his product line, he was able to obtain efficient truckload orders
from his retail chain customers.
Source: https://hbr.org/1977/11/logistics-essential-to-strategy
 • This generation is said to be very fortunate
to witness the latest the technology has to
offer. Together with data analytics and other
related tools, work in progress, techniques,
and automation are immense factors in
CREATING shaping organizations in every industry
improve their supply chain management.
VALUE
• The future looks promising as these tools
allows firms to boost transparency and
obtain insight into what’s in store for
demand and shipping requirements.
 • E-commerce is the most popular online shopping of today’s
generation. No hassles, no traffic, available 24/7 and you can
Addressing browse the same item and compare its price and promotions
reverse logistics with that of other rival stores.
to create value • But e-commerce is not just for buying stuff. It’s a two-way
shopping experience as you can also do the selling via
internet. Items offered may either be brand new or “slightly”
used with marked down in price, of course.
This Photo by Unknown Author is licensed under CC BY-NC
So far so
good, right?
But…

This Photo by Unknown Author is licensed under CC BY-SA-NC

EXPECTATION VS REALITY?

What if the items you ordered are

damaged, defective, or not according to
what was specified in the e-catalogue?
Example: You
bought a dress.
Unfortunately, it
turned out to be
too big
Can you return it and ask for another
size or item? What if the size or color
you need is out of stock?

• While e-commerce is very popular, no

doubt, this is also an avenue for a
significant number of unsatisfied
customers. And though they say that allow
returns, the shipping cost for such returns
should be shouldered by the customer.

• Sometimes, we just have to deal with it

either by giving the item to someone else
or just charge it to experience.
• Returns and exchange or refunds
are whopping features in client
satisfaction. Customers want a
hassle-free shopping experience
regardless of what channel they
use, which is where REVERSE
LOGISTICS comes in.
REVERSE LOGISTICS
 • Reverse logistics is a type of supply
chain management that moves goods
REVERSE from customers back to the sellers or
manufacturers. Once a customer
LOGISTICS receives a product, processes such as
returns, or recycling require reverse
logistics.
Why is there such a thing as reverse logistics?

• If the product is defective, the customer would naturally want to return

the said product and have it replaces with a similar but non-defective
item. As such, the manufacturing firm would then have to organize
shipping of the defective product, testing the product, dismantling,
repairing, recycling, or disposing the product.

• The product would travel in reverse through the supply chain network in
order to retain any use from the defective product.

• In point of fact, reverse logistics is too often viewed as a nuisance, a

costly and chronic headache.
When Is Reverse Logistics Used?

• Organizations use reverse logistics when goods move from their destination
back through the supply chain to the seller and potentially back to the
suppliers. The goal is to regain value from the product or dispose of it.
Worldwide, returns are worth almost a trillion dollars annually and have
become increasingly common with the growth of ecommerce.

• The objectives of reverse logistics are to recoup value and ensure repeat
customers. Less than 10% of in-store purchases are returned, compared to at
least 30% of items ordered online. Savvy companies use reverse logistics to
build customer loyalty and repeat business and to minimize losses related to
returns.
 RETURN & EXCHANGE POLICY OF FRESH PH
• All items sold at Fresh Philippines go through our quality control
EXAMPLE procedures. We inspect every item before it is shipped, and all goods are
shipped fully insured in case of loss or damage.
(source: • However, there are times when items are damaged, defective, or
incorrectly shipped. If this is the case for you, we will gladly replace them. If
https://www.fre you have a need to return goods to us for whatever reason please email
shop@freshphilippines.com.ph outlining the reason for return and request
your Returns Merchandise Authorization (RMA) number within 7 days of
sh.ph/content/8 order receipt, and return your unwanted items within 14 days of receiving
your RMA number for an exchange for the same item in a different size or
-returns) any product that we carry. (Based on stock availability).
• We recommend that you insure the return shipment as you are under a
duty to take reasonable care of the goods and will be liable for damage to
them until we receive them at our operations center. In case of dispute, we
also recommend you retain proof of sending.
• If the items shipped are defective or different from the ones you ordered,
we will be shouldering the cost of all shipping fees incurred. If you refuse
the order or you want to change it due to preference, you will be charged
for all shipping, delivery and storage incurred. All returned merchandise
must be unopened and in original condition.
• All merchandise must be returned in the condition they were received and
in original packaging.
 QUALITY CONTROL is the
answer.

How do we Also, make sure that items delivered

are in accordance with what was

avoid it? ordered in the first place- size, color,

quantity, and others.

Do it right to avoid returns and

exchange, not to mention unsatisfied
customers.
5 Steps to Good Reverse Logistics
1. Process the Return
The return process starts when the consumer signals they want to return a product. This step
should include return authorization and identify the product’s condition. This process also
involves scheduling return shipments, approving refunds and replacing faulty goods.
2. Deal with Returns
Once a returned product arrives at your location or centralized processing center, inspect it and
determine its return category. (Note: If you have optimized reverse logistics, you should know
where the product should go before it arrives.) Sort products into the disposition options: fix,
resell as new, resell as a return, recycle, scrap or refurbish.
3. Keep Returns Moving
Reduce your daily waste by sending repairable items to the repair department.
4. Repair
After reviewing the returned item/equipment and determining whether it can be repaired, move
it to the repair area. If not possible, sell any sellable parts.
5. Recycle
Any parts or products that you cannot fix, reuse or resell should be sent to the area for recycling.
 • The different types of reverse
logistics are also known as reverse
logistics components. They focus on
Types of returns management and return
policies and procedures (RPP) and
Reverse account for remanufacturing,
Logistics packaging, unsold goods and delivery
issues. Other types of reverse
logistics account for leases, repairs
and product retirement.
Returns management:
• This process deals with product returns from customers
or avoiding returns in the first place. These activities
should be fast, controllable, visible and straightforward.
Customers judge a company on its return flow and re-
return policies.
• A re-return is the return of an item a second time. Often,
these returns trigger the extended return policies, such
as offering store credit. For example, a customer buys a
returned product on clearance, takes it home and
discovers it broken. The store policy would not normally
accept the return, but it does allow for a store credit for
the faulty product. A re-return can also occur when a
vendor rejects the return and gives it back to the
purchaser without a refund. This scenario could happen
with custom-made items.
• Return policy and procedure (RPP): The policies
about returns that a company shares with
customers is its RPP. These policies should be
visible and consistent. Employees should also
adhere to them.
• Remanufacturing or refurbishment: Another
type of reverse logistics management includes
remanufacturing, refurbishing and
reconditioning. These activities repair, rebuild
and rework products. Companies recover
interchangeable, reusable parts or materials
from other products, also known as the
cannibalization of parts. Reconditioning involves
taking apart, cleaning and reassembling
products.
• Packaging management: This type of reverse logistics
focuses on reuse of packing materials to reduce waste
and the disposal.
• Unsold goods: Reverse logistics for unsold goods
handles returns from retailers to manufacturers or
distributors. These types of returns can be due to
poor sales, inventory obsolescence or a delivery
refusal.
• End-of-life (EOL): When a product is EOL, it is no
longer useful or does not work. The product may no
longer meet a customer's needs or be replaced by a
newer, better version. Manufacturers often recycle or
dispose of products that are end-of-life. These goods
can create environmental challenges for
manufacturers and countries.
• Delivery failure: With failed deliveries, drivers
return products to sorting centers. From
there, the sorting centers return the products
to their point of origin. While rare, some
sorting centers may have the staff available to
identify why a delivery failed, correct the
problem and resend.

• Rentals and leasing: When a piece of

equipment comes to the end of its lease or
rental contract, the company that owns the
product can remarket, recycle or redeploy it.

• Repairs and maintenance: In some product

agreements, customers and companies
maintain equipment or repair it if issues arise.
In some cases, the company sells damaged
returned products to another consumer after
repair.
Five Rs of Reverse Logistics
REFERENCES:

• N. (2021, January 14). A Guide to Reverse Logistics. Oracle NetSuite.

https://www.netsuite.com/portal/resource/articles/inventory-management/reverse-
logistics.shtml
• Logistics—Essential to Strategy. (1977, November 1). Harvard Business Review.
https://hbr.org/1977/11/logistics-essential-to-strategy
• Mendoza, H., & Garcia, S. P. (2020). Supply Chain and Logistics Management. Unlimited
Books Library Services & Publishing Inc.
• https://www.youtube.com/watch?v=tfSxGyofADM