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Reverse Logistics Project

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The disposition choice is determined by the most profitable alternative: ... with the retailer as to what acceptable disposition of the product can be. ... – PowerPoint PPT presentation

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Title: Reverse Logistics Project


1
Reverse Logistics Project
  • Dr. Dale S. Rogers
  • Jessica Palmer
  • Kasia Banasiak
  • Michael White
  • Center for Logistics Management
  • University of Nevada
  • Reverse Logistics Executive Council
  • April 2002

2
(No Transcript)
3
U.S. Reverse Logistics Costs
  • Total U.S. Logistics Costs 1,006,000,000
  • Approximate RL cost 4.00
  • Estimated U.S. RL Costs 40,240,000
  • Source for U.S. total costs Bob Delaney, 12th
    Annual State of Logistics Report.

4
Outsourced Services2001 vs 2000
  • Service 2001 2000
  • Warehousing 73.7 63.3
  • Outbound Transportation 68.4 60.7
  • Freight Bill Auditing/Payment 61.4 59.8
  • Inbound Transportation 56.1 44.6
  • Freight Consolidation/Distribution 40.4 32.1
  • Cross-Docking 38.6 25.0
  • Product Marking/Labeling/Packaging 33.3 19.6
  • Manufacturing Activities 29.8 39.3
  • Product Returns Repair 22.8 17.9
  • Inventory Management 21.0 10.7
  • Traffic Management/Fleet Operations 19.3 21.4
  • Information Technology 17.5 8.9
  • Product Assembly/Installation 17.5 8.9
  • Order Fulfillment 15.8 10.7
  • Order Entry/Order Processing 5.3 2.7
  • Customer Service 3.5 4.5

Source Langley, Allen Tyndall, (2001) Third
Party Logistics Study Results and Findings of
the Sixth Annual Study. Cap Gemini Ernst Young.
5
Market Trends
  • Historic projected growth
  • Are programs similar to PG's SLOW program the
    wave of the future?

6
Total 3PL Market
  • For 2000, the total U.S. 3PL market was 56
    billion.
  • For the last several years the 3PL market in the
    U.S. has grown at a 5 compounded growth rate.
  • Source Dick Armstrong Bob Delaney

7
Closed-Loop Supply Chains
  • The disposition choice is determined by the most
    profitable alternative
  • Reconditioning when a product is cleaned and
    repaired to return it to a like new state.
  • Recycle when a product is reduced to its basic
    elements, which are reused.
  • Refurbishing similar to reconditioning, except
    with perhaps more work involved in repairing the
    product.
  • Remanufacturing similar to refurbishing, but
    requiring more extensive work often requires
    completely disassembling the product.
  • Resell when a returned product may be sold
    again as new.

8
Closed-Loop Supply Chains
  • Scope of Remanufacturing
  • Estimated to be in excess of 73,000
    remanufacturing firms in the United States
  • Direct employment 350,000
  • Total annual sales 53 billion
  • Source Robert T. Lund, The Remanufacturing
    Industry Hidden Giant, Boston University

9
Zero Returns
  • Manufacturer or distributor does not allow any
    returns to come back all of the way through the
    channel.
  • Give the retailer or other downstream entity a
    return allowance and develop an agreement with
    the retailer as to what acceptable disposition of
    the product can be.
  • A typical return allowance is 3.5-4 of sales to
    retailer.

10
Zero Returns
  • Reduces the variability of returns costs.
  • Retailer has to take responsibility for
    minimizing returns.
  • Enables the firm to avoid the problem of
    physically dealing with returns altogether.
  • Does not reduce much of the physical burden
    placed on downstream channel participants.
  • Cannibalization of A channel concerns.
  • 2/6 Problem

11
Zero Returns
  • For the most part, zero returns programs have not
    been successful.
  • Loss of control.
  • Potentially dangerous.

12
Competitive Landscape Analysis
  • Number of companies within the market space
  • Detailed information by company

13
Project
  • Identified 136 U.S. 3PL firms that said they were
    involved in reverse logistics.
  • Called all of these firms and interviewed 58
    firms (42.6 response rate).

14
Survey Questions
  • What reverse logistics services does your company
    provide?
  • Which industries does your company serve in the
    reverse logistics arena?
  • Does your firm have reverse logistics IT system
    capabilities?
  • What type of system?
  • Percentage of firm revenue derived from IT
    system?
  • Reverse logistics revenues as a percentage of
    total revenue?
  • Do you expect reverse logistics activities to
    increase?

15
What reverse logistics services does your company
provide?
  • Transportation 47
  • Reman, refurb, recycling 17
  • Full line 16
  • Warehousing 9
  • Software 7
  • Recalls 5

16
Which industries does your company serve in the
reverse logistics arena?
  • Electronics 22
  • Consumer Goods 17
  • All industries 16
  • Automotive 14
  • Food 14
  • Pharmaceutical 3
  • Forest products 3
  • Software 2

17
Does your firm have reverse logistics IT system
capabilities?
18
What type of systems?
  • Return tracking, RMA 33
  • Dispositioning 9
  • WMS 24
  • Retail 3
  • Manufacturing 2

19
Percentage of firm revenue derived from IT system?
  • 4 software firms included in study
  • Other than software companies IT revenues
    unimportant

20
Reverse logistics as percentage of total revenues
  • Only two firms said RL revenues were greater
    than 10
  • RL revenues for all other firms were less than
    10
  • Mode 5

21
Do you expect reverse logistics activities to
increase?
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