Reverse Logistics: Overview and Challenges for Supply Chain Management

NOTE

This research paper is correlated to my 5th semester subject named International Supply
Chain Management – ISM 5350

What is the aim of this Paper?

The aim of this paper which is co-authored by Sergio Rubio and Beatriz Jimenez-Parra is to
introduce the concept of Reverse Logistics and the implications Reverse Logistics will have on
Supply Chain Management and finally to also analyze the various challenges and opportunities
that Reverse Logistics will present for Supply Chain Management as a whole.

What is Reverse Logistics?

RL is a research area focused on the management of the recovery of products once they are no
longer desired (end-of use products, EoU) or can no longer be used (end-of-life products) by the
consumers, in order to obtain an economic value from the recovered products.

Why is it important and an up and coming practice in the Supply Chain

Management World?

Reverse Logistics has grown to become a matter of strategic importance, an element that
companies are now considering in their decision-making processes related to the design and
development of their supply chains.
SUMMARY OF THE RESEARCH PAPER

1. INTRODUCTION

In the past 15-20 years Reverse Logistics as a practice has gained attention of majority of
companies and professionals all over the world and this statement is justified by the notified
increase in the level activities related to reverse logistics in leading sectors of the economy such
as transport, consumer electronics etc.

REASONS FOR OPERATION A REVERSE LOGISTICS SYSTEM

a. Economic

 Decreasing the use of raw materials,

 Reduction of disposal costs,
 Creation of added value for end-of-use products
 Demonstration of environmentally responsible behavior,
 Improved customer relations

b. Legal

 To reduce the amount of waste generated by the production of goods and to implement
the correct disposal system of the waste generated.

c. Social

 Environmentally responsible behavior by companies, particularly in terms of carbon

emissions and waste generation.

SOURCES OF INFORMATION

The sources of information employed in the present study consisted of a group of papers in the
RL area published in top journals within the last 20 years. The papers were identified through a
searching procedure carried out by using keywords such as ‘closed-loop supply chain’, ‘reverse
supply chain’, ‘reverse logistics’, ‘product recovery management’, ‘remanufacturing’, and
‘marketing’.
2. BACKGROUND

The concept of RL has evolved over the years, passing through various stages before
consolidation.

The proposal of the European Working Group on RL, REVLOG, appears to us to be the most
complete, and will hence be the definition that we shall use in this current work. This research
group defined RL as ‘the process 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’

3 crucial issues for RL are distribution planning, inventory management and production
planning.

Timeline of RL

 During the 1980s, the definition was inspired by the movement of flows against
traditional flows in the supply chain (reverse distribution, reverse channel)
 During the 1990s, RL was characterized by recovery of the value of EoU products and
the processes involved
 Now, a holistic view of the supply chain is proposed by considering forward and reverse
flow from a business perspective, the so-called CLSC (Closed-loop supply chain)

3. IMPLICATIONS ON SCM

That Reverse Logistics network configuration is a complex problem that requires the
determination of the optimal locations and capacities of the collection centers, sorting centers,
remanufacturing facilities and/or recycling plants.
DESIGN OF A REVERSE LOGISTICS NETWORK

The design structure is based on three activities –

1. Collection of EoU products

This is the starting point of the system, and multiple collection options can be observed
depending on whether the collection is made directly by the manufacturer, through a network
of distributors and retailers, or through third-party logistics providers.

2. Inspection and Classification

These activities (inspection and classification) will determine the condition of the returned
products, so an analysis of the locations and capacities of sorting centers is required.

3. Recovery Process

In this phase, the economic value of the returned product is being recovered through one of the
following options:

a. Reuse

b. Remanufacturing

c. Recycling

4. CONCLUSION

RL is a research topic that has evolved during the last two decades but at the present time can be
considered a consolidated topic of research.

Also in terms of industrial applications, RL is forecasted to be the practice of the future.

5. WHAT DID I INFER FROM THIS RESEARCH PAPER?

RL isn't just a fascinating issue for specialists, yet in addition for organizations and experts who
are thinking about the recuperation of EoU items as a business opportunity, who are bringing
these exercises into account in their vital procedures of dynamic decision making

Reverse Logistics has a few ramifications for SCM, yet most likely the most testing is identified
with the structure of the Reverse Logistics arrange.