Reverse Logistics

LogisticsLogistics

Refers to the movement of materials, services, cash, and information in a supply chainMovements within a facilityIncoming shipmentsOutgoing shipments

Managing Returns Reverse Logistics

The process of transporting returned items Products are returned to companies or third party handlers for

a variety of reasons and in a variety of conditionsElements of return management

GatekeepingScreening returned goods to prevent incorrect

acceptance of goodsAvoidance

Finding ways to minimize the number of items that are returned

Costs - Above the Cost of the ItemMerchandise credits to the customersThe transportation costs of moving the items

from the retail stores to the central returns distribution center

The repackaging of the serviceable items for resale

The cost of warehousing the items awaiting disposition

The cost of disposing of items that are unserviceable, damaged, or obsolete

Reverse Logistics Challenges Retailer – Manufacturer Conflict

Inefficiencies that lengthen the time for processing returns: Condition of the itemValue of the itemTimeliness of response

They have to develop a working partnership to derive mutual benefit.

Problem Return Symptomso Lack of information about the processo If you aren’t measuring it, you aren’t managing it

Barriers to Good Reverse LogisticsNumerous barriers to good reverse logistics

exist Management inattention and the lack of

importance of reverse logisticsCorporate strategy for handling returns and

non-salable itemsLegal issues do not appear to be a major

problem

Green Logistics and Reverse Logistics• Reverse Logistics refers to all efforts to

move goods from their typical place disposal in order to recapture value

• Green Logistics refers to minimizing the ecological impact of logistics, for example, reducing energy usage of logistics activities and reducing usage of materials

Quality Quality ManagementManagement

FedEx and QualityDigitally Assisted Dispatch System –

communicate with 30K couriers

1-10-100 rule

1 – if caught and fixed as soon as it occurs, it costs a certain amount of time and money to fix

10 – if caught later in different department or location = as much as 10X cost

100 – if mistake is caught by the customer =

as much as 100X to fix

1-10-100 Rule

Product Quality DimensionsProduct Based – found in the product

attributesUser Based – if customer satisfiedManufacturing Based – conform to specsValue Based – perceived as providing good

value for the price

Dimensions of Quality (Garvin)1. Performance

Basic operating characteristics2. Features

“Extra” items added to basic features3. Reliability

Probability product will operate over time

Dimensions of Quality (Garvin)4. Conformance

Meeting pre-established standards5. Durability

Life span before replacement 6. Serviceability

Ease of getting repairs, speed & competence of repairs

Dimensions of Quality (Garvin)7. Aesthetics

Look, feel, sound, smell or taste8. Safety

Freedom from injury or harm9. Other perceptions

Subjective perceptions based on brand name, advertising, etc

Quality of Conformance Ensuring product or service produced

according to design Depends on

Design of production processPerformance of machineryMaterialsTraining

The Deming Wheel (or PDCA Cycle)

1. PlanIdentify the problem and develop the plan for improvement.

2. DoImplement the plan on a test basis.

3. Study/CheckAssess the plan; is it working?

4. ActInstitutionalize improvement; continue the cycle.

Also known as the Shewart Cycle

Six SigmaQuality management program that measures

and improves the operational performance of a company by identifying and correcting defects in the company’s processes and products

Six Sigma-Started By MotorolaDefineMeasureAnalyzeImprove Control

Made Famous by General Electric40% of GE executives’bonuses tied to 6 sigmaimplementation

Cost of Quality Cost of achieving good quality

Prevention Planning, Product design, Process,

Training, InformationAppraisal

Inspection and testing, Test equipment, Operator

Cost of Quality Cost of poor quality

Internal failure costs Scrap, Rework, Process failure, Process

downtime, Price-downgradingExternal failure costs

Customer complaints, Product return, Warranty, Product liability, Lost sales

Employees & Quality Improvement Employee involvement Quality circles Process improvement teams Employee suggestions

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