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7/29/2019 LSCM - Reverse Supply Chain-1
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REVERSE SUPPLY CHAIN MANAGEMENT
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Definition
Planning
Implementing
Flow of rawmaterials
In-process
inventory
Finished
goods
FromP
ointof
consumption
Tothepointof
origin
Goal:
To move returned, overstocked, end of-
life, or obsolete assets from the
normal stream of commerce to an
alternative destination to maximizetheir value and reduce risks.
Advantages:
Increase profits
Improve customer relations Comply with government regulations
Support sustainability initiatives
Purpose:
Recapturing value or proper disposal
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Forward Vs Reverse Logistics
Forward Logistics
Straightforward forecasting
One to many distribution point
Destination / Routing clear
Uniform pricing
Consistent inventory management
Negotiation between parties
straightforward
Reverse Logistics
Forecasting more difficult
Many to one distribution point
Destination routing unclear
Pricing depends on many factors
Inventory management notconsistent
Negotiation complicated by
additional consideration
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Centralized and Decentralized RL
Centralized model:
A single planner is acquaintedwith all of the systeminformation and has theauthority to determinedecision variables for the
entire system
One may overestimate thesystem material flows andprofit if the system plannerutilizes a centralized view topredict behaviors of
independent entities in thesystem
Decentralized model:
The entities coordinatebetween tiers of the systemusing a parameterized flowfunction and competewithin tiers based on
reaching a price equilibrium
Decentralized contractmechanisms will requirecareful design to avoidlosses in the efficiency andscope of these systems.
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* evaluation ofproducts at retaileror reseller
Centralized and Decentralized RL
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Environmentallegislations
Economic valuefrom returns
Remanufacturingoptions
Material Resourceconstraints,. Ex.
Lead
Green Image
Impact on thebottom line
Reverse Logistics
as a StrategicWeapon
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Reasons for increase in the importance of Reverse logistics
Tangible benefits from the value that can be recaptured fromunproductive/returned assets
Increased competitive pressure to provide an effective and efficientreturned goods process
Need to clear the distribution channel more frequently due toproduct lifecycle compression and emphasis on new product launch
Increased regulatory requirements regarding recycling & productdisposition, especially around products having environmental hazards
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Important managerial issues in RSCM-
Network DesignCollection Recovery channels and its roles
Reverse Supply Chain Network Design Options
Role of Forward Supply Chains
Integration of FSC and RSC
Role of 3PL
Inspection of returned products-location of facilities
Most of the reverse supply chain activities takes place in downstream forward supply chain of leadorganization.
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Future of Reverse Logistics
Transportation costs will likelyincrease by 50% or more
Internet and catalog sales willcontinue to grow which will drive
up return rates and transportationcost
Government regulations willcontinue to increase
Sustainability initiatives will
increase driving more volume
Many existing reverse logistics networks will costtoo much
Networks must change from a centralized modelto a
decentralized model in order to provide affordablevalue
Limit legal exposure from product liability andlegislation
Increased number of recall events
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Companies going the reverse wayNOKIA
Nokia recently started a Reverse Logistics Campaign.
They asked people to give their old unused mobile handsets to Nokia
through special drop boxes put across different places in various cities.
They claimed to dispose them off or reuse them for new handsets as raw
materials.
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GENCO
Genco, a privately held company in Pittsburgh,
has lately seen brisk reverse-logistics business.
It helps retailers such as Best Buy (BBY), Sears
(SHLD), and Target (TGT) find buyers for
products that are returned as defective or
broken and would otherwise be landfill fodder
Genco has even spun out a reject-pile
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Thank You