Procurement Logistics is the entire process used to select suppliers and negotiate contracts for delivery of goods or services. It consists of activities such as market research, requirements planning, make or buy decisions, supplier management, ordering, and order controlling. Production Logistics concerns itself with streamlining and controlling the flow through the supply chain from point of entry to the end, which is distribution logistics.
Reverse logistics can lead to improved relationships with supply chain partners, improved profits through reduced costs, and improved efficiencies and higher recovery rates for returns 2. In both regions, the cost of land filling and increased restrictions on what can be placed into a landfill are causing companies to invest in reverse logistics processes 1.
In Europe for example, environmental regulations require tire manufactures to recover and recycle one old tire for every tire produced 4. Manufacturers must have an efficient system to recover the tires to comply with this regulation.
Companies can save 10 percent from their annual logistics bill by implementing an efficient reverse logistics system. Twenty percent of this amount is saved in labor costs and the remaining 80 percent is saved in lowered freight costs and reduced pipeline inventory 5.
The Automotive Parts Rebuilders Association APRA estimates that worldwide in the automotive industry alone,railroad cars or a train 1, miles long could be filled annually by the raw materials saved by remanufacturing 1. This is an example of the potential of utilizing reverse logistics to save money and to practice environmental sustainability.
Process to implement reverse logistics system Reverse logistics includes handling, storage, transportation, inspection, repair, repackaging, refunds, and customer service 6.
Retrieving the product is the first step in the process. The quality and quantity of products retrieved must be coordinated with other distributors and customers. Then the product must be efficiently transported to a central location, where it is inspected and sorted.
In this step, processes must be in place to determine what products can be saved, reworked, remanufactured, resold or disposed. Automated tracking and testing systems can be used for parts of the sorting process. Then, the appropriate products can be reconditioned. Design for disassembly DFD is a method of designing products, such as electrical devices, so they can be easily pulled apart, reconditioned, and reused 5.
The products that are not reconditioned are recycled, resold for parts, or disposed. The final step is distribution and sales of the reconditioned products. Companies must create a market for the refurbished products, which can be sold to the general public at cost or at a discounted price, or sold to foreign markets.
Companies with successful reverse logistics processes Bosch, an automotive and industrial technology company, builds sensors into its power tools that indicate if the motor is worth reconditioning. The sensors reduce inspection and disposition costs, allowing the company to realize profits on the remanufactured power tools 4.
Volvo, a Swedish car manufacturer, anticipated the Swedish government passing a resolution holding auto manufactures accountable for disposal of vehicles. Volvo implemented a reverse logistics process of salvaging and dismantling cars.Join Steven Brown for an in-depth discussion in this video, The growing importance of reverse logistics, part of Logistics Foundations.
The Importance of Reverse Logistics July 2, admin Leave a comment Reverse logistics is one of the most frequently overlooked elements of the complete business operations cycle, yet it presents enormous opportunity for companies skilled in it. Essay about Reverse Logistics - Reverse logistics and the return portion of the supply chain is often an overlooked and mismanaged process.
Companies tend to focus their efforts on the forward portion of supply chain management, while failing to take advantage of the many opportunities that reverse logistics presents (Benton, ). Reverse logistics (RL) is defined by Rogers as, “The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal”.
REVERSE LOGISTICS DEFINATION: Flow of surplus or unwanted material, goods, or equipment back to the firm, through its logistics chain, for reuse, recycling, or disposal. In other words, reverse logistics is the management of any type of returns from any customer with a specific purpose.
Disposal Logistics, also known as reverse logistics, stands for all operations related to the reuse of products and materials. The main function of this field is to reduce logistics cost, enhance service, and save natural resources.