A review of reverse logistics.doc

1、A review of reverse logisticsAreviewofreverselogisticsWangBeiandSunLinyanAbstractTheimpactofeconomicsandenvironmentalstatuteshascausedanewsetofgenericissuesinreverselogistics.Theotherchallengesinthisfieldhavebeencausedbytherapiddevelopmentofe-commerce,theboomofonlineretailers,andthelike.Again,compan

2、iesbearenormouslossesfromhugereturnedprod-uctsduetoliberalreturnpolicies.Inordertoaddcustomersvalue,improvetherelationshipwithcustomersandstrengthenacompanyscompetitivead-vantages,thereisaneedforcompaniestofindwaysofhowtoreducewastesandrecoverthevaluefromusedproductsforfurtherutilities.Likewise,retu

3、rnedproductsalsoneedtobeaptlymanaged.Allthesechallengesmakereverselo-gisticsacontemporaryareaofinterestamongmanagersandresearchersofthisfield.First,itisproposedthattheemergenceofreverselogisticsemanatesfromenvironmentalconcernsandeconomicaldrives.Theconnotationofreverselo-gisticsisgiveninanarrowanda

4、broadsenses.Thedifferencesbetweenreverselogisticsandtraditionalforwardlogistics;andgreenlogisticsandclosed-loopsupplychainareanalyzed.Moreover,reverselogisticsdistinctcharacteristicssuchas:highuncertaintiesofsupplyontime,quantityandquality;complexi-tiesofrecoveryoptionsandimplementingbarriersarepoin

5、tedoutinthispaper.Next,usingthequalitativeandthequantitativecasestudyanalyses,thebasictenetsofmanagerialandoperationalpracticesofreverselogisticsarediscussedindetailinthispaper.Mathematicalmodelshavealsobeenintroducedtoagreatextent.Finally,thepaperconcludesbystatingpossibledirectionsforfurtherinvest

6、igationsonthissubject.M.S.C.2000:90B06Keywords:reverselogistics,recoveryoptions,reuse,remanufacturing,recycling.1IntroductionReverselogisticsdealswiththeprocessesassociatedwiththereversestreamfromownerstore-users.Itencompassesallthelogisticactivitiesfromusedproductsnolongerrequiredbytheuserstoproduc

7、tsagainusableinamarket.Thenotionreversedenotesthatthedirectionofphysicalflowinreverselogisticsisoppositetotheconventionalforwardsupplychain.Thispaperprovidesareviewandcontentanalysisofscientificliteratureofreverselogisticscasestudiesandmathematicsmodels.Alargenumberofreferencesarequoted.Itisbelieved

8、thatprospectivereadersofthispaperwillobtainacomparativelypanoramicanddeepunderstandingofreverselogistics.AppliedSciences,Vol.7,2005,pp.16-29.?cBalkanSocietyofGeometers,GeometryBalkanPress2005.Areviewofreverselogistics172BackgroundofReverseLogistics2.1EnvironmentalConcernsInthepastdecades,duetodwindl

9、inglandfillandincinerationcapacitiesandgrowingenvironmentalconcerntothelimitednaturalresources,wastereductionhasbecomesaprimarychallengeforindustrializedcountries.Moreandmoreenvironmentallegisla-tionsareimposedontheOEM(originalequipmentmanufacturer)totakecorrespond-ingresponsibilityforthewholelifecy

10、cleoftheirproducts18.InmanyEuropeancountries,producersarerequiredtotakebackpackagingfromtheircustomers.IntheU.S.,localandstategovernmentsareoftenresponsiblefortherecyclingpackaging48.IntheEU,theWEEE(wastefromelectricalandelectronicequipment)directiverequiresendoflifeequipmenttobecollectedforrecovery

11、,recyclingandreusebyend200344.2.2EconomicalDrivesNowadays,thegreenimagehasbeenincreasinglyrecognizedasanimportantmar-ketingelement.Similarly,properrecoveryoptionssuchasdirectreuseorremanu-facturingmayheeconomicallyattractivebecausetheybringrealbenefitsinsomeoccasions18.Coupledwiththerapiddevelopment

12、ofe-commerceandtheboomofonlineretailersandthemailingbusiness.Andinordertoattractmorepotentialcustomers,liberalreturnpolicieshavebeenwidelyadoptedpanieshavetobearenormouslossesfromhugereturnedproductsofcustomers.Accordingtoestimates,reverselogisticscostsintheU.S.exceeded37billiondollarsin1999,whichon

13、averageaccountforapproximately4percentoftotallogisticscosts.ThisalsomeansthecostsofreverselogisticsareestimatedtobeonehalfofthepercentageofthetotalU.S.GDP.Thesize,scope,andimpactofreverselogisticsvarybyindustryandchannelpositionaswellasbythetypeofdistributionchannel.However,itisclearthattheoverallam

14、ountofreverselogisticsactivitiesandcostsarelargeandstillgrowing.Andproductreturnshavealargeproportionofreverseactivitieswithanaverageof6percentofthesales,althoughthisvariesfromindustrytoindustryandfromseasontoseason.Forexample,duringthe1999holidayseason,approximately25percentofallon-linepurchaseswer

15、ereturned54,47.Thechallengesofhowtoreducewastesandrecoverthevaluefromusedprod-uctsforfurtherutilityandhowtomanagereturnedproducts,addcustomersvalue,improvetherelationshipwithcustomersandstrengthenacompanyscompetitiveadvantages,makereverselogisticsbecomeacontemporaryareaoffocusamongman-agersandresear

16、chersofthisfield.3ConnotationsofReverseLogisticsConnotationsofreverselogisticsdatesbackto1992.TheconceptionofreverselogisticswasdefinedbyCLM(CouncilofLogisticsManagement)as:Theroleoflogisticsinrecycling,wastedisposal,andmanagementofhazardousmaterials;abroaderperspectiveincludedallrelatingtologistics

17、activitiescarriedoutinsourcereduction,recycling,substitution,reuseofmaterialsanddisposal8.18WangBeiandSunLinyanReferringtotheCouncilofLogisticsManagementsdefinitionoflogistics,RogersandTibben-Lembke(1999)gavethedefinitionofreverselogisticsas:Theprocessofplanning,implementing,andcontrollingtheefficie

18、nt,costeffectiveflowofrawmaterials,in-processinventory,finishedgoods,andrelatedinformationfromthepointofconsumptiontothepointoforiginforthepurposeofrecapturingorcreatingvalueorproperdisposal47.In2003,RevLog(theEuropeanworkinggrouponreverselogistics)describedreverselogisticsas:Theprocessofplanning,im

19、plementingandcontrollingflowsofrawmaterials,inprocessinventory,andfinishedgoods,fromamanufacturing,distributionorusepoint,toapointofrecoveryorpointofproperdisposal8.Theexplanationofreverselogisticsinanarrowsenseemphasizestherecoveryprocessesofreuse,remanufacturingandrecyclingforausedproduct.Thedefin

20、itionofreverselogisticsinabroadsensealsoincludesresourcereductionandefficienthandlingofreturnedorrejectedproductsfromconsumers6.Efficientandeffectivereverselogisticsisbelievednotonlytobringdirectbenefitsforacompany,suchasdecreasedresourceinvestmentlevels,reductionsinstorageanddistributioncostandreca

21、pturedvalueofrecoveredproducts,butalsotoresultindirectlyprofitablebusinessopportunities,includingimprovedcustomersatisfaction,closedcustomerrelationshipandcoincidenceofenvironmentallegislation2.4ComparingReverseLogisticswithForwardLo-gistics,Closed-loopSupplyChainandGreenLo-gistics4.1AComparisonwith

22、ForwardLogisticsFigure1:ReverseandforwardlogisticschainFig.1illustratesatypicalrecoverychainintegratedreverselogisticsandtraditionalforwardsupplychain18.Inthediagram,thegeneralactivitiesinthereverseandforwardlogisticschainaregiven.ThedirectionofreverselogisticsisdrawnintheAreviewofreverselogistics19

23、figurewithsolidlineswhiletheforwarddirectiondelineatedwithdashedlines.Itisshowedinthefigurethatthedirectionoftheforwardphysicalflowisfromrawmaterialtoenduserandthemainactivitiescomprisesmaterialsupply,componentsmanufacturingorassemblingandproductsdistribution,whilethedirectionofreverselogisticsisopp

24、ositeandtheactivitiesinvolvedarealsocomplex.Theprocessesofreverselogisticsconsistofcollection,inspection/separation,reprocessing/disassembly,redistributionanddisposalstages.4.2AComparisonwithClosed-loopSupplyChainFigure2:Closed-loopsupplychainFig.2showsthestructureofatypicalclosed-loopsupplychain,in

25、whichthema-terialflowsinaclosedway33,63.Theflowofreverselogisticsisdrawninthefigurewithsolidlineswhiletheforwardflowdelineatedwithdashedlines.Italsodepictsthemainprocessingoptionsinreverselogistics,whicharereuse,repair,remanufacturing,recyclinganddisposal.Theconceptionofclosed-loopsupplychainisderiv

26、edfromthecombinationofbothforwardandreverselogisticsbecauseitconsiderssupplychaininaholisticviewpoint.Closed-loopsupplychainmanagementencompassesallthecon-tentsofreverselogistics,involvingallbusinessfunctionsanddecisionswithrespectstotheadaptationofbusinessstrategy,marketing,qualitymanagement,inform

27、ationsystems,logisticsandthelikewithintheclosedmaterialflows.Theprimarytargetsforclosed-loopsupplychainmanagementarelimitingemissionandresidualwaste.Whileaimingatprovidingcustomerserviceatlowcost.Moreover,thetermofclosed-loopsupplychainemphasizestheimportanceofcoordinationofforwardlogisticsflowsandr

28、everselogisticsflowssincethereisastronginteractionbetweenthetwo33.4.3AComparisonwithGreenLogistics20WangBeiandSunLinyanFigure3:ComparisonofreverselogisticandgreenlogisticsFig.3givesacomparisonbetweenreverselogisticsandgreenlogistics.Atthesametime,thedifferencesandtheoverlapbetweenthetwoconceptionsar

29、epresentedinthefigure.Theoverlapmeanstherearesomeactivitiesappliedbothtoreverselogis-ticsandtogreenlogistics,suchasrecycling,remanufacturingandreusablepackaging47.Reverselogisticsdiffersfromgreensupplychainasthelatterconcentratesonenvironmentalimpactofalllogisticsactivitiesespeciallytheactivitiesinv

30、olvedintra-ditionalforwardlogistics8.Theenvironmentalissuesingreenlogisticsarereducedconsumptionofnaturalresources,airemissions,congestionandroadusage,noisepollution,andbothhazardousandnon-hazardouswastedisposal.Sogreenlogisticsinvestigatesupplychainwithrespectstoenvironmentalandecologicalactivities

31、whilereverselogisticsemphasizesmoreontheprofitabilityofstrategicrecoveryoptions.4.4AComparisonwithWastemanagementThereisadifferencebetweenreverselogisticsandwastemanagement.Theprimarypurposeofwastemanagementistocollectandprocesswasteortheproductswithoutvalueforrecovery.Inshort,wastemanagementconcern

32、smanagingwasteefficientlyandeffectively.Reverselogisticsfocusesmainlyonthereturnedphysicalflowthatcontainssomevaluefromproperrecoveryoptions.4.5AComparisonwithSustainableconceptionTheconceptionofreverselogisticsalsodiffersfromsustainabledevelopment.However,reverselogisticscanbeviewedasapartofit.Arep

33、ortbytheEuropeanUniondefinedsustainabledevelopmentas:meetingtheneedsofthepresentwithoutcompromisingtheabilityoffuturegenerationstomeettheirownneeds.Therefore,reverselogisticscanbeviewedastheimplementingofsustainabledevelopmentatthecompanylevelsinceproperreuseorremanufacturingorrecyclingactivitiesinr

34、everselogisticsrightlymeetstherequirementofsustainabledevelopment8.Areviewofreverselogistics215DistinctCharacteristicsofReverseLogistics5.1HighUncertaintyInreverselogisticssystem,supplyistypicallyconsideredasanexogenousvariablesincethetiming,quantity,qualityofthereturnedproductsmaybedifficulttocontr

35、ol.Therefore,supplyuncertaintyinawidesenseappearstobeamajordistinguishingfactorbetweenproductrecoveryandtraditionalproduction-distributionnetworks.Onthecontrary,supplyintheforwardsupplychainusuallycanbecontrolledaccord-ingtothesystemsneeds18.Thedemandforproductsiscompletelydecidedbythecustomers.So,o

36、necaneasilyforecastthedemandandthebalancebetweensupplyanddemandcouldalsoeasilybecontrolledinatraditionalsupplychain.5.2ComplexityinOperationThereismoreuncertaintyandcomplexityinreverselogisticssystemthaninforwardsupplychainbecausetherecoveryprocessesandoptionsofreverselogisticssystemarecomplicatedan

37、dvariesinviewoflifecyclesandcharacteristicsofproducts,resourcesrequiredandcapacityoffacilitiesandsothelike.Accordingtoasurvey47intheU.Spanies,theprimaryactivitiesandfunctionsinreverselogisticsinclude:remanufacturing,refurbishing,recycling,landfill,repackaging,returnsprocessingandsalvage.Literatureal

38、soindicatesthatafirmsreverselogisticsactivitiesaredirectlyaffectedbyatleastfourenvironmentalforces:customers,suppliers,competitorsandgovernmentagencies6.So,itishardforcompaniestomakeastrategicdecisiononrecoveryoptionsandtooperatereverselogisticssystemefficientlyandeffectively.5.3Implementingbarriers

39、Althoughinsomeindustries,reverselogisticshasbecomeacriticalfactortomakeadifferenceinfiercecompetition,quiteanumberofmanagersstillregardreverselogisticssystemaslessimportantthanforwardproduction-distributionsupplychainintermsofcosts,assetvaluationandpotentialrevenues54.Therefore,financeandhumanresour

40、ceallocatedtoimplementingreverselogisticsisoftenverylimited.Inaddition,thesupportfromcorrespondingreverselogisticsnetworkandpowerfulmanagementinformationsystemisscarce.Allthesefactorsmakereverselogisticsdifficulttoimplementandmanage.6PreviousStudiesonReverseLogistics6.1QualitativeAnalysisFromthelite

41、ratureavailable,quiteafewauthorsinvestigatedreverselogisticsusingqualitativeanalysis.Thecommonareasofinterestamongscholarsaddressedthefollowingquestions:Whydocompaniespursuereverselogistics?Thefirstdrivingfactoriseconomicsandthatisalsothemostimportantreasonthatcompaniesarewillingtodevotetoreverselog

42、istics.Thebenefitsmaycomefromreduceduseofrawmaterialsorproductcomponents,addedvaluefromproductrecovery,decreaseddisposalcosts,22WangBeiandSunLinyanimprovedcustomersatisfaction,greenimageandthelike8.Anotherdrivenforceisvariousenvironmentallegislationsimposedonmanufacturers.Forinstance,inEurope,packag

43、ingregulationandWEEEdirectiveforceOEMtotakethewholelifecycleresponsibilityoftheirproducts.Whoassumesreverselogisticsactivities?Thatisastrategicdecisiononconsid-eringwhetherornotacompanyshouldoutsourcetheirtasksinreverselogisticstoaprofessionalserviceproviderinordertoachievecorecompetitiveadvantages.

44、Actorsexecutingreverselogisticsactivitiesmaybesuppliers,manufacturers,andretailersinforwardsupplychainorprofessionalthirdpartyproviders.Whatactivitiesareinvolvedinreverselogistics?Generally,thecommonactivi-tiesarecollection,inspection,separation,re-processing,disposalandre-distribution.Amongthemre-p

45、rocessingistheactualtransformationofatake-backproductintoausableproductagain18.Therearedifferenttransformationformssuchasre-packaging,cleaning,repair,remanufacturingandrecycling.Figure4:ThereverselogisticshierarchyWhatrecoveryoptionswillatake-backproductface?Recoveryoptionsmaybeclassifiedastwokinds:

46、directrecoveryandprocessrecovery.Ifthetake-backprod-uctsconditionisas-good-as-new,thentheycanbedirectlyrecoveredthroughre-use,re-saleandproceedtore-distribution.Forprocessrecovery,therearemorecomplexprocessesinvolvedsuchasrepairatproductlevel,refurbishingatmodulelevel,reman-ufacturingatcomponentleve

47、l,retrievalatselectivepartlevel,recyclingatmateriallevel,andincinerationatenergylevel56.ThecommonrecoveryoptionsmaybeAreviewofreverselogistics23summarizedfromvariouspublicationsas:reuse,repair,remanufacturing,recyclinganddisposal.Disposalusuallyencompassesincinerationandlandfill.Fig.4presentsatypica

48、lhierarchyofrecoveryoptions6.Itpointsoutthatproductdesignforresourcereductionandfacilitateddisassemblyisthepriorityamongotherrecoveryoptionssinceresourcereductionshouldbetheultimategoalinthereverselogisticsprocesses.Oncetheresourcereductionoptionhasbeenexhausted,thefirmshouldattempttomaximizedirectr

49、ecovery,thenfollowedbyprocessingrecovery.Fortheproperdisposaloptions,incinerationshouldbepreferredtolandfillbecausetheformerisalsoakindofmethodforenergyrecapturing.Table5:ClassificationofreverseoflogisticsHowcanoneclassifytake-backorreturnedproductsinreverselogistics?Thereareallkindsofproductcategor

50、iesrelatedtoreverselogisticssystem,suchasconsumerorindustrialgoods,constructionwastes,householdwastes,packaging,distributionitems,productionby-product,electronicalequipment,electronicapplianceandsoon.Table.1givesageneralclassificationfortake-backorreturnedproductsthatoccurfrequentlyinviewofreasonsfo

51、rreturnandproductvarieties.6.2CaseStudyItissummarizedfromrelatedliterature.Casestudiesonreverselogisticsusuallyfocusonfollowingdecision-makingcontents:reverselogisticsnetworkstructure,relation-ship,inventorymanagement,planningandcontrolandinformationandtechnology(IT)forreverselogistics17.Thefollowin

52、gstatementsgiveafurtherexplanationtotheseaspects:Casestudiesonreverselogisticsnetwork(e.g.3,7,11,34,41,52)concentrateonthenetworkcharacteristicsandestablishmentunderconditionsofdifferentrecoveryoptions;Casestudiesonrelationship(e.g.24,59,60)surveysapplicationsofvarious24WangBeiandSunLinyanincentivet

53、oolsincludingrefundoptions,buybackoptions,leaseorrentcontracts,bring-pickupsystems,socialresponsibility,acquisitionpriceandsoon;inventorymanagement(e.g.10,20,58)dealswithvariedeffortstohandlereturnedorusedproductsfacingdifferentrecoveryoptions;Casestudiesonplanningandcontrolofrecoveryactivities22,35

54、,51discusscoordinationofreturnedorusedproductsplanningandcontrollingwithnewproductsdistributionandproduction;Casestudiesoninformationtechnology15,39,43focusonITsupportingfunctionsforreverselogisticsduringdifferentstages(productdevelopment,distributionandmarketing)ofthelifecycleofaproduct9;Theentryan

55、ddevelopmentpotentialofthird-partyreverselogisticsproviderswasdiscussedbyKrumwiede37andSpicer53.6.3QuantitativeStudyOnemethodappliedtoquantitativestudyissimulation.Inviewofcomplexitiesofreverselogisticssystem,adaptingthemethodofsystemsimulationcanrapidlyandconvenientlyappraisevariouscomprehensiverev

56、erselogisticsnetworksunderdiffer-entscenarios.Thus,theoptimizednetworkstructuremaybedecided.Furthermore,parametersandvariablesimpactonthestructureofreverselogisticssystem,robust-nessandsensitivityofthenetworkstructurecanalsobeanalyzedthroughsimulatingthesystem.Somepragmaticsimulationsoftwaresupporti

57、ngreverselogisticsnetworkdesignhasbeendevelopedinafewdevelopedcountriesrecently.Forexample,in1998BerndE.HirschintroducedasystemsimulationsoftwarenamelyLOCOMO-TIVElogisticplanningtool25.Basedonlifecycleapproach,thetoolcanbeusedtoevaluatetheenvironmentalimpactsonreverselogisticsandestimatethecostofdif

58、ferentproductionschemes.AnotherexampleistheDisassemblyModelAnalyzer(DMA),whichwasdevelopedinordertoassesstheeconomicsofdisassemblyforcom-plexproducts.Itiscapableofproducingoptimizeddemanufacturingplansforverycomplexproductsascomplicatedasaphotocopiermodeledwithwellover1000parts53.Quiteafewofmathemat

59、icalmodelsareproposedinvariousliteraturestooptimizereverselogisticssystem.Fromanoperationalpointofview,variousdecisionproblemsofreverselogisticsareconcentratedmainlyonnetworkdesign,inventorymanagementandproductionplanning.Determiningthenumberandlocationofrecoveryfacilitiesisacentraltaskinthenetworkdesignproblems.Exceptfewstochasticmodels(see40),mostauthorspro-poseamixedintegerlinearprogram(MILP)modelthatdifferslittlefromtraditionalMILPfacilitylocationmodels.The