Link Between Secondary Markets and Reverse Logistics Essay

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Reverse Logistics Trends and Practices

Reverse logistics is a concept that has attracted considerable attention in the recent past because of the new interest in its processes. The increased interests in reverse logistics occur regardless of the little information regarding the size and extent of reverse logistics processes and activities. As the interests on reverse logistics have grown, the concept and its processes have been characterized by the emergence of new trends and practices. The focus of this project is to describe the current state of reverse logistics and attempt to determine and evaluate trends and practices. The determination of the recent trends and practices in reverse logistics incorporates examining the degree of its activities and processes in supply chain management. The author will focus on determining existing practices and trends, assessing them, and generating information regarding the trends in today's reverse logistics practices.

Overview of Reverse Logistics Processes

In general, reverse logistics is a relatively new concept that has continued to attract considerable due to its link to inventory and supply chain management processes. According to Rogers & Tibben-Lembke (1998), reverse logistics is a relatively new and developing area or segment with only limited or minimal amount of information available. The supply management field has very little information that has been published relating to reverse logistics. The limited availability of information is partly attributed to the nature of its processes that generally differ from forward or outbound logistics.

Reverse logistics can be described as the backward or reverse procedure of logistics, which is largely viewed as the process of recycling goods. Unlike forward logistics, reverse logistics is planning, implementing and controlling effective and cost effective flow of materials from consumption point to its origin or source in order to bring back value or for effective disposal. This implies that reverse logistics basically entails events that are crucial to regain, transport, and dispose products. In this case, products are transferred backward from the customer and incorporate the flow of information linked to credit and tracking procedures. This means that a complete supply chain management system entails both forward and reverse logistics inventory management. Despite the difference from the conventional, forward or outbound logistics, reverse logistics is much wider and incorporates a series of assets, which have huge impacts on a company's bottom line (Greve & Davis, 2010).

The first process in reverse logistics is recalls or inbound returns for improvements or effective product disposal. During this stage, the organization receives these unwanted materials or defective at the returns facility. The second process in reverse logistics is accounting visibility reports or evaluation of the product and/or unwanted materials based on their merits and demerits and customer feedback. This step is carried out once the products or unwanted materials are received at the returns facility in the company or business organization.

Once the evaluation has been completed, the company or business organization embarks on repairing the product or unwanted material or preparing for the disposition of the product. The improvements are carried out depending on the feedback received from customers and the results of the evaluation. The final process in reverse logistics is product disposition or sale of the product for lower costs than the original cost in order to recapture value and increase revenue.

While it's a relatively new concept, reverse logistics is currently utilized to enhance the effectiveness of supply chain management processes. The increased utilization of reverse logistics in supply chain management initiatives is geared towards enhancing the effectiveness of inventory management. Reverse logistics basically help in maintaining a company's brand image and offers a means of control over outdated products and their final disposition. The process provides a vital opportunity for businesses to reclaim defective products and unwanted materials for resell in secondary markets or channels to enhance productivity.

Trends and Practice in Reverse Logistics: Literature Review

As previously mentioned, reverse logistics is a relatively new concept with limited information available regarding its process and use in supply chain management processes (Rogers & Tibben-Lembke, 1998). Reverse logistics systems have been incorporated in modern supply chain management processes because a complete inventory management system requires both inbound and outbound processes. In essence, the effectiveness of modern supply chain management initiatives is attributed to the efficiency and effectiveness of inbound and outbound logistics management efforts or measures.

The increased focus on inbound logistics has been brought by increased efforts towards improvement of outbound logistics. Generally, management has conventionally focused on enhancing forward logistics operations and initiatives to improve business' competitiveness.

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This focus has in turn increased reverse logistics operations, which has contributed to the significance of reverse logistics operations to business success and profitability. This success and productivity is achieved through customer satisfaction and loyalty that is brought by reverse logistics operations.

The increased focus on and use of reverse logistics is supply chain management processes is attributed to the recognition of the significance of inbound logistics in the success and profitability of a business organization. The processes basically entail events that are crucial to regain, transport, and dispose products to lessen wastes and help recapture value. Therefore, products are transferred backward from the customer and incorporate the flow of information linked to credit and tracking procedures.

Greve & Davis (2010), state that reverse logistics is characterized by increased use of technology in its activities and processes. The increased use of technology is attributed to the more efforts adopted by companies and business organizations to identify ways of increasing sales while lessening costs and risks. Hawks (2006) concurs that reverse logistics has been characterized with increased use of technology. He states that technology has been used to improve reverse logistics systems have been made in automated material handling equipment, barcodes, electronic data interchange, automated return tracking, radio frequency, and automated returns entry in many downstream segments in supply chain.

The increase use of technology in reverse logistics has contributed to one of its recent trends and practices. In this case, there have been various initiatives and programs to enhance reverse logistics systems, especially through the development of software. Reverse logistics software has revolved around development of programs with easy-to-use characteristics, use of natural languages, and the increased utilization of general-purpose application packages. These efforts are geared towards achieving flexibility for ease-of-use since users do not really need tutorials or special training in order to learn how to use software. Therefore, reverse logistics has continued to witness the development of ease-to-use applications. Modern distributors and suppliers attempt to lessen retailer returns though the utilization of just-in-time delivery. Software manufacturers have enhanced their efforts towards developing applications that can help retailers to effectively forecast demand in order to avoid wastage and returns.

The other recent trend in reverse logistics systems and processes is the increased use of secondary markets for recapturing value and product disposal. Greve & Davis (2010) argue that manufacturers and retailers are capitalizing on the opportunity to create reverse logistics programs that capitalize on secondary markets and returned materials. This trend is influenced by the significance of the programs to manufacturers since they provide them with means to decrease the overall manufacturing costs of products. As a result, the reverse logistics programs help in increasing revenue from new sources and enhancing customer service. O'Reilly (2005), states that the identification of secondary markets for refurbished or used goods help in driving further value on the reverse side, especially for manufacturers and retailers. Secondary markets help manufacturers and retailers to recover certain costs of production that would have been lost without reverse logistics and the presence of these markets.

Rogers, Lembke & Benardino (2013), state that the recent trend in the use of secondary markets in reverse logistics systems is based on the fact that these markets act as drains. Secondary markets effectively function like drains through which reverse logistics processes are carried out to regain value of defective products or ensure effective disposal. The significance of secondary markets is attributed to the fact that every system requires having a way of getting rid of unwanted or excess materials. The main role of secondary markets in relation to reverse logistics operations is that they act as drains for regaining value or disposal of defective products or unwanted materials. In the supply management processes of products, drains are similarly crucial since not all products or goods that are taken to retailers for sale are actually sold. Some of these products will be returned, which necessitates the development of a means for the system to deal with the products. The absence of the means or drains to deal with the materials or items would contribute to drowning in the unwanted material. Secondary markets act as effective drains or the system's disposal measure for unwanted goods.

The other recent trend and practice in reverse logistics that is brought by increased use of technology is the gradual development of reverse logistics information systems. While this has not been a priority for many companies and businesses, manufacturers and retailers are becoming more aware.....

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