F23 Week 07 OPER8340 Lecture

Week 7
Reverse Logistics
Reverse
Logistics Readings: Module 2:
Unit 2: Reverse Logistics
Pages 147 to 182
7.1 Version
© 2017 FITT All Rights Reserved

Module 2: Inventory Management, Reverse Logistics,
The Circular Economy
Readings: Units 1 – 3
Readings:
Week 6
1 Inventory Essentials
Describes inventory levels and techniques for managing them
Week 7
2 Reverse Logistics
Describes the process of recovering value from packaging and products post-consumer
Week 8 Time off to rejuvenate
Week 9
3 The Circular Economy
Describes the circular nature of doing modern business
2
Inventory Management: Maximizing Efficiency in
Global Inventory Management
UNIT 2
Reverse Logistics
• Establishing Product Return Systems

• Processing Returns
• Using Centralized Collection Centres
• Outsourcing Reverse Logistics
• Developing Recall Plans
• Managing Recalls
3
Lecture Videos
Videos
Business Information Graphics – 2.5 minutes video on returns in logistics
https://www.youtube.com/watch?v=RhSbn6-hi54
WSJ – Returns Issues

https://www.wsj.com/video/series/wsj-explains/returns-are-the-retail-industrys-quietly-mounting-logistics-
problem/E59FB473-AA3D-4C6B-95F1-E50B26C6C427?mod=djemlogistics_h
4
Why Is This
Important?
Source: Cerasis Infographics “Reverse Logistics” May 1, 2017 5

Differences Between Forward and Reverse Logistics
http://www.supplychain247.com/article/why_reverse_logistics_needs_to_become_a_core_competency 6
Reverse Logistics – Linear Supply Chain
The traditional consumption supply chain of “make”, “buy”, “throw away”

posed too many problems with landfills, and …
…has resulted in development of “reduce”, “reuse” and “recycle” programs.
FIGURE 2.1 7
Circular Supply Chain
Today’s Reverse
businesses supply chains
are obtaining close the loop
value and with forward
changing supply chains,
practices to giving rise to
control what what is now
happens to being referred to
their products as “circular
after customer / supply chains”.
consumer use.
FIGURE 2.2 8
Establishing Product Return System
Negotiating, developing and implementing the means

for repair, refurbishment, recycling or disposal.
Considerations that inform policies and procedures:

• Organizational priorities or goals
• Compliance with legislation or regulations
• Activities or strategies to address needs and minimize risks
• Current capacity or abilities, and return strategies
9
Establishing Product Return System – Secondary Marketplace
Consumers will get rid of goods

they no longer use by:
• Reselling goods on websites such as
eBay, Craigslist and Kijiji
• Donating goods to non-profit
organizations
• Taking goods to recycle depots
• Putting goods in garbage – last
recourse
Figure 2.3 – Product Flow to Secondary Markets 10

Establishing Product Return System
Policy & Procedure on Returns
• Minimize the costs associated with returns
• Ensuring that customers remain satisfied with the service received.
• Map out the processes and activities involved
• Collecting, storing, repairing, repackaging, recycling, returning or reselling and reasons.
There is a Cost of Returns Best Practices

• Financial reconciliation • IT-driven tracking procedures
• Shipping or transit for return items • Improved handling for ‘controllable returns’
• Warehousing and receiving of returned goods • Standardized returns and authorization process
• Training • Customer relations and Customer service for returns
• Asset management – (Inventory $)
11
Example of a Return Process from Amazon USA
• Policy
• Posted on website
• Within 30 days of purchase
• Process
• Order Number
• Reason
• Ship or drop-off (Kohls)
https://m.media-amazon.com/images/
G/01/wwrr/returns-landing-page/retur
ns-how-rto.mp4
What Happens to returns

https://www.youtube.com/watch?v=fFil
K2n4qFs
12
The Rise of Refurbished Products
Source: Liquidity Services “The Rise of Refurbished Products” 13

Apple iPhone Suppliers & Assembly
UPDATE iPhone suppliers: UPDATE
1. Australia 15. Malaysia iPhone main assembly
2. Belgium 16. Philippines migration from
3. Brazil 17. Poland
Shenzen China to:
4. China 18. Singapore
19. South Africa
1. India
5. Czech Republic
6. England 20. South Korea 2. Viet Nam
7. Finland 21. Spain 3. Thailand
8. France 22. Switzerland 4. Malaysia
9. Germany 23. Taiwan 5. Czech Republic
10. Hungary 24. Thailand 6. South Korea
11. India 25. The Netherlands 7. Singapore
12. Indonesia 26. Turkiye
8. Philippines
13. Italy 27. Unite Arab Emirates
14. Japan 28. USA
29. Viet Nam
14
Reasons for Product Returns
Type of Return Description
Buy-outs Competitor’s product purchased to make space for own product.
Clerical Errors
Product received that is incorrect due to clerical errors, e.g. the product type or quantity may be incorrect, or
the delivery of the product may be too late for consumption or intended use.
Close-outs Product that retailers decide to discontinue selling. Return arrangements may be part of sales agreement.
Damaged or Products that are broken, cracked, scratched, or otherwise flawed and cannot be sold. A product may have
Deteriorated been damaged during shipping, misplaced or past use date.
Defective or Inferior Defective products are unfit for intended use. The product may be dangerous or harmful for normal use, or
Quality may have inadequate instructions for use.
Job-outs Seasonal products that have not been sold at the end of a specified sales period.
Non-defective Returned products thought to be defective even though they are not. Product may have been incorrectly
Defectives used.
Product removed from the market by the manufacturer after an issue with product is discovered. Products
Recalls & Safety
Issue may have a perceived or actual safety issue, such as lead paint in toys, contaminated food products or faulty
parts that cause safety hazard.
Salvage Product that has been damaged, e.g. by fire, by flood, in transit, and cannot be sold as new.
Overstock/ Surplus Excess supply, or when a product is not selling as quickly as anticipated and becomes dated and devalued.
Warranty Claims & Returned by customer for repair, replacement or possibly compensation, for an under or non-performing
Repairs product.
Adapted from TABLE 2.1 15

Processing Stages
1. Authorization of returns
2. Transportation of returned product
3. Inspection and sorting of returned product
4. Financial compensation for returns
5. Selection of appropriate action for returns
• Repair and return
• Return to retailer’s inventory
• Return to supplier’s inventory
• Reuse actions
Image: https://www.evry.com/in/what-we-do/industries
16
Using Centralized Collection Centres
Centralized return centers enhance efficiencies by:

1. Return procedures are simplified
2. Returned products managed from one location for greater control
3. Inventory control is more efficient
4. Quality issues are easier to detect
5. Management of returned goods is easier
6. Training one location versus many
7. Testing equipment – less cost
17

Outsourcing Reverse Logistics to a 3PL
Reverse logistics include a wide variety of services Single entity overseeing reverse logistics provides
• • Faster returns processing
Return centre operations
• • Fewer hand-offs and touches
Return-to-vendor management
• • Greater ease of communication
Product recall management
• • Improved product visibility
Product inspection
• • Greater control
Product sorting
• • Expertise
Credit Reconciliation
• Repackaging/restocking
• Repair/refurbishment Organizations benefit
• • Access to secondary market
Product recycling
• • Reduced inventory
Website portal for customer return initiation
• Increased asset recovery
• Improved retailer-vendor relations
3PLs -Third party logistics providers • Managed policy and vendor agreement compliance
3PSP - Third party service providers • Improved customer experience
4PLs - Fourth party logistics providers • Tracking of reasons for product returns
• Lower infrastructure costs
18
Developing Recall Plans – Purpose of a Recall
A product recall is the removal from distribution, sale or consumer use that does
not comply with legislation or poses an unacceptable risk to the health and
safety of consumers or users of the product.
Recalls can involve multiple markets, products, producers and suppliers, both
domestic and foreign.
The purpose of recall of a consumer product is to:
1. Minimize risk of injury or death to consumers
2. Retrieve as many defective products from marketplace as possible
3. Minimize cost and inconvenience to consumers
4. Minimize impact to brand and corporate image
19
Recall Plans
• Based on a comprehensive analysis of risks and • Must describe system for tracking recalled products.
require a comprehensive communications plan.
• Distribution records must contain complete information
• Must contain explicit information on the on the client.
requirements for tracking products, even
• Identify authorities responsible for regulating recalls.
between countries.
• Identify regulations and requirements associated with:
• Organizations must be compliant with
inventory traceability policies and procedures, 1. Communications
for example: 2. Collection, disposal, reimbursement
• Items in containers require labels with specified 3. Recall evaluation
information
4. Documentation
• Livestock must be tagged and may require radio
frequency identifiers or tattoos
Designated Recall Management Team
• Raw materials require detailed tracking systems
Select, qualified personnel to handle the recall,
dissemination information and implement plans for
corrective and preventive measures.
20
Managing
Recalls
Process Flow
21
Manage Recall Actions
Essential activities of a product recall
1. Isolating defective products
2. Tracking distributed products
3. Identifying source of problem and action to be taken
4. Implementing communications plan
5. Implementing action for compensation
6. Treatment of recalled products
7. Following up and monitoring results of recall action
22
Coca-Cola Deutschland recalls iced tea due to “quality issue”
• Coca-Cola Deutschland had recalled certain bottles of
one of its ready-to-drink iced tea brands due to a
product quality issue.
• The peach-flavored tea can be exchanged or refunded
at the place of purchase.
• It added although no health risk is expected, further
delivery of the product was stopped.
• Coca-Cola Deutschland told
Food Safety News that “foreign
matter” in the product
prompted the recall.
https://www.foodsafetynews.com/2018/10/coca-cola-recalls-iced-tea-due-to-quality-issue/ 23
Recall Notice
From
Canadian Food
Inspection
Agency (CFIA)
Can subscribe to get notices by clicking this link:
https://recalls-rappels.canada.ca/en/subscribe
COSORI-BRANDED AIR FRYERS

https://recalls-rappels.canada.ca/en/alert-recall/certain-m
odels-cosori-branded-air-fryers-recalled-due-potential-fire-
hazard
24
Recall Notice
From
U.S. Food & Drug
Administration
(FDA)
25
E-commerce Product Return Rate
Before Covid
Shoes
This number has increased to 87%
26
https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/
E-commerce Product Return Rate
27
https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/
Individual Quiz #2
• REMINDER: Term project is due Oct 21 at 11:59PM – Any Final Questions ???
• REMINDER: Any missed quizzes – Follow the make up process in announcements
• Week 7 Individual Quiz #2 using “Lockdown Browser”
•30 minutes timed. Must complete in that time once you start- it will shut you down!!!
• 10 True / False Questions – Make your choice then move to the next, there is no going
back to change your selection
Before you start:
•Close / quit all applications, maybe even reboot your machine to clear cache.
•Password is: _______. Note: IP verification
•Have a good week off
•Next Class Reading: The Circular Economy Pages 183 to 221
28

F23 Week 07 OPER8340 Lecture

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Week 7

Pages 147 to 182

© 2017 FITT All Rights Reserved

Week 8 Time off to rejuvenate

• Establishing Product Return Systems

WSJ – Returns Issues

Source: Cerasis Infographics “Reverse Logistics” May 1, 2017 5

The traditional consumption supply chain of “make”, “buy”, “throw away”

…has resulted in development of “reduce”, “reuse” and “recycle” programs.

Negotiating, developing and implementing the means

Considerations that inform policies and procedures:

Consumers will get rid of goods

Figure 2.3 – Product Flow to Secondary Markets 10

There is a Cost of Returns Best Practices

What Happens to returns

Source: Liquidity Services “The Rise of Refurbished Products” 13

Adapted from TABLE 2.1 15

Centralized return centers enhance efficiencies by:

© 2017 FITT All Rights Reserved

Can subscribe to get notices by clicking this link:

COSORI-BRANDED AIR FRYERS

This number has increased to 87%

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