Monday, November 28, 2011

Even Without Two Turntables or a Microphone, Reverse Logistics are "Where It's At"

Reverse logistics appears to be all the buzz these days, as many firms look to expand their supply chain beyond the traditional one-way flow that ended when a product got to a consumer's hands.

DIESL, the logistics arm of the Tata Group we discussed in class, has announced it will begin placing a greater focus on reverse logistics across India in order to complement its current supply chain services. The effort is a part of the company's overall commitment to environmental responsibility, and executives expect that this renewed focus will help minimize overall costs for reverse logistics as well as maximizing value from returned items.

In the United States, Ryder System, Inc. (a name you may recognize from its seemingly omnipresent fleet of moving trucks) recently announced it would be expanding its reverse logistics capabilities to include co-location solutions. According to the announcement: "By co-locating the distribution management of finished goods with returns processes such as technical repair, refurbishment, and repackaging in the same facility, this solution offers companies the ability to achieve greater speed to shelf, visibility, and cost-savings." In plain English, this is actually similar to the Dell technicians (if I remember correctly) who could operate out of FedEx's distribution hubs, as mentioned in class. So the idea is not a new one, but it does appear that Ryder is opening those capabilities up to a much wider range of clients.

Specifically, co-location as a part of reverse logistics can help a company with its sustainability goals, reduce its carbon footprint, save money on fuel costs and reduce total inventory levels through a quicker turnaround of returned product. (This is especially critical in high-tech industries where product life-cycles tend to be short.) The environmental impact of reverse logistics is so pronounced, in fact, that Steve Sensing, Vice President and General Manager of Hi-Tech/Electronics for Ryder Supply Chain Solutions said: "An effective reverse logistics strategy is actually the ultimate recycling process."

Question: do you find the environmental or financial incentives from developing an effective reverse logistics program to be more compelling? Why?

The Reverse Logistics Association

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