A STUDY ON ISSUES IN REVERSE

LOGISTICS IN SUPPLY CHAIN

GROUP – 4
INTRODUCTION
• Definition - Reverse logistics is “The process of planning, implementing and controlling the
efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related
information from the point of consumption to the point of origin for the purpose of recapturing or
creating value or for proper disposal.”

• Reverse logistics has become an important topic within the domain of supply chain management
in the recent times. Reverse logistics basically means the reutilization of products and materials.

• Reverse logistics stands for all activities related to the reuse of products and materials which are
collected as defectives from customer place after replacing the good part. It may also refer to be
as movement of products from consumer to the manufacturer or point of origin. Since the future
support is based on defectives it should be treated equivalent to good parts.
REVERSE LOGISTICS PROCESS
REASONS FOR REVERSE LOGISTICS

• Return of goods from customer for non performance

• Short term rental returns
• Returns sent to manufacturer for repairs / re-filling
• Reusable containers / packages
• Return of inputs not used by manufacturer / goods not sold by distributors
• Exchange of new product for the old ones
• Goods sent for up- gradation / modification Recycling of product
OBJECTIVE OF THE STUDY

• To identify key elements of reverse logistics in the Supply Chain.

• To understand the reverse logistics mechanism as a whole.
• Determining the issues or challenges faced under reverse logistics of Supply Chain.
• To present a proposed system for tackling the challenges of reverse logistics in the Supply
Chain.
IMPLICATIONS AND PURPOSES OF REVERSE LOGISTICS

1. REPAIRS AND REFURBISHING

Repair is a regular feature in service based products under a warranty period and almost all
consumer durables need repairs on a regular basis.

Refurbishing is done to goods returned by damage, defects or below par performance during
the warranty period. Manufacturer 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
takes place. Collection of defective products is done, through the dealers’ network. These
collected products are sent to the nearest service centre for overhaul, repairs or refurbishing.
1. REPAIRS AND REFURBISHING

REPAIRS AND REFURBISHING

2. REFILLING

Reverse logistics is integrated to their chain because of the reusable nature of packages such
as glass bottles, tin / plastic containers & metal cylinders etc.

In case of soft drinks, the delivery van delivers filled bottles to retailers (a, b, c ) enroot 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.

REFILLING
3. PRODUCT RECALL

This is an emergency situation wherein the products distributed in the market are called back to
the factory because of any of the following reasons:
• Product not giving the guaranteed performance
• Quality complaints from many customers
• Products with defective design
• Incomplete product
• Violation of government regulations
• 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.
4. RECYCLING AND WASTE DISPOSAL

Leftover materials, used products and wrapper / packages Wastes are causing
environmental pollution & creating Problems for disposal. In many countries,
governments are devising regulations to make manufacturers responsible for minimizing
waste by way of recycling products.

Recycling process:-
• Collecting waste material & delivering them to entity responsible for recycling
• Processing recyclables to create secondary inputs
• Using secondary materials for manufacturing new products
• Returning the products to the manufacturer for recovering the inputs for re-use
5. 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.
• 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 process and be
brought back to the remanufacturing unit.
• The investment in remanufacturing & related reverse logistics supply chain can be justified
on the basis of economies of scale.
REVERSE LOGISTICS ISSUES IN SUPPLY CHAIN
• Willingness to Pay
• Cannibalization
• Competition
• Consumers’ Perception
• Handling dealers and contractors
• Unexpected fees are incurred
• Cycle times tend to be longer
• Forecasting more difficult compared to forward logistics.
• Poor Screening and Repairing Process.
• Warehousing – Allocation of resources for quick accessing is a major challenge.
OVERCOMING THE CHALLENGES OF REVERSE
LOGISTICS
• Reverse logistics framework should be designed in such a good manner for better process.
• Since the origin of the defectives are frequent tracking and follow ups should be done.
• Everything should be systemized manual data maintaining may lead to some errors in tracking
and stocking the goods.
• System should be framed in a manner which provides clear tracking of the goods right from
providing delivery report to the sender and the receiver.
• One of the major challenges in handling fragile items is the transit damages, which results in
huge loss to the logistics provider. To overcome the above, packing standards should be
improved and the transporters need to be taught how to handle fragile goods.
• Once when the transit losses/damage occurs the same should be communicated to the
respective client on urgent basis seeking some tolerance or solution.
• Transportation of the goods should be framed in a systematic manner so that the tracking of
the consignment becomes easier and legible.
• Poor servicing results in the loss of transportation costs for the logistics provider. Hence the
serviced defective parts should be equivalent to good standard.
• Efficient time management should be maintained right from collection of the defectives to
repaired parts.
• Warehousing plays an important role in maintaining the stocks. Binning each items in a locator
helps to identify the parts easily. Frequent internal audits should be performed on regular
basis in order to ensure the variance in stocks.
• Avoidance - Design its merchandise and systems in a manner that will minimize returns to
prevent customers from sending purchased products back.
CONCLUSION

• With the passage of time, the importance of reverse logistics is increasing in

various industries.
• It can be immensely beneficial for the world to focus over reverse logistics in
order to capitalize over the resources available.
• Supply chain managers must come up with appropriate strategies in order to deal
with all the challenges highlighted. In case of any loop holes found in the entire
chain the same should be eradicated without any further delay.
GROUP 4
Piyush Bachhawat 32
Khushboo Lahoti 26
Seemab Ahmad 49
Shobhit Tripathi 52
Tulika Vinod 66