APICS - CSCP 2020 Module 2 Section C

The key processes that supply chain managers need to be able to perform related to managing reverse logistics are

• Identifying requirements of reverse logistics

• Designing a reverse strategy and process

• Implementing a reverse strategy and process.

The following is a general overview of these processes. The information required to plan and execute these processes is presented in this sections chapters.

The process of designing a reverse strategy and process involves the following steps:

• Prioritizing requirements based on organizational and supply chain strategy

• Designing the to-be state of reverse logistics, either during product development and introduction of new products or as modifications to existing operations

• Analyzing the gaps between the as-is and to-be states

• Developing a quantitative and qualitative benefit-cost analysis to justify strategic choices and tradeoffs

• Generating a reverse logistics strategy, including how the strategy might need to change at various points in the product life cycle

• Influencing executive support to champion and lead the strategy and allocate funding

• Designing information systems and network locations for reverse supply chain activities

• Designing processes and policies for each product, subcomponent, waste item, and raw material entering the reverse logistics hierarchy (i.e., whether to reduce, reuse, recycle, recover energy during disposal, or dispose in a responsible landfill)

The process of implementing a reverse strategy and process involves the following steps:

• Gaining final executive approval and funding for specific infrastructure and process changes or contract negotiations to implement the strategy

• Planning and implementing projects to change processes and infrastructure

• Contracting with third-party participants

• Using change management to alter the culture of the organization to support the changes over the long term

• Setting up metrics and goals for monitoring and controlling operations and customer service impact

• Monitoring and controlling the processes and operations

• Gathering feedback and implementing continuous improvement

Note that project management, continuous improvement, and change management are addressed in detail elsewhere.

What happens when you throw the supply chain into reverse? You have reverse logistics, defined in the APICS Dictionary, 16th edition, as

a complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.

The Dictionary defines the reverse supply chain as

the planning and controlling of the processes of moving goods from the point of consumption back to the point of origin for repair, reclamation, recycling, or disposal.

The reverse supply chain is also simply referred to as product returns.

Whatever one calls it, the reverse supply chain is a complete chain, a mirror image of the forward chain that carried the product to the customer in the first place. As such, it gives rise to mirror images of operations in the forward chaincustomer service (marketing in reverse), warehousing and transportation going in the opposite direction, unpackaging, disassembly, and remanufacturing or recycling (a return to raw materials). The products in the reverse chain wont necessarily move through the same nodes as products in the forward chain because fewer, and different, warehouses, may be required.

Exhibit 2-128 shows the direction of material and cash flows in the reverse supply chain and lists some reverse logistics activities.

Reverse logistics can occur not only as customers are returning products that were purchased but also as retailers or distributors return products that failed to sell (e.g., if there are contractual agreements to take back unsold inventory for some amount of refund or rebate on future purchases) or were defective. Similarly, manufacturers might return defective or excess products to suppliers.