Reverse Supply Chain Management

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Reverse Supply Chain Management

• Dr. Peeyush Mehta
• Vipul Mathur

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Definition of RSCM

• A set of approaches utilized to efficiently
  integrate suppliers, manufacturers, warehouses,
  and stores, so that merchandise is produced and
  distributed at the right quantities, to the right
  locations, and at the right time, in order to
  minimize system-wide costs while satisfying
  service level requirements

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Relevance of RSCM

• The amount of product returns can be very high,
  with some industries experiencing returns at over
  50 of sales.
• Sales opportunities in secondary and global
  markets have increased revenue generation from
  previously discarded products.
• End-of-life take-back laws proliferated in
  foreign countries requires businesses to
  effectively manage the entire life-cycle of the
  product.
• Consumers have successfully pressured businesses
  to take responsibility for the disposal of their
  products that contain hazardous waste

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Process steps in RSCM

• Acquisition of products from customers
• Reverse logistics Process of retrieving the
  product from consumer for the purposes of
  capturing value or proper disposal
• Inspection disposition
• Reconditioning
• Distribution sales

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Process
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Examples

• Printing industry Repurchase of old edition,
  un-sold books.
• Computer industry Resale due to fast moving
  technology
• Automobiles Resale due to new models
  availability e.g. Maruti True Value scheme
• Electronic industry Mobile phones, televisions
  etc. repurchased to recover electronic parts

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Time value of product returns

• Marginal Value of Time (MVT)
• The loss in value per unit of time spent awaiting
  completion of the recovery process
• MVT () Decrease in value of product
• Time
• Example Time sensitive consumer electronics
  products such as PCs can lose value at rates in
  excess of 1 per week, and the rate increases as
  the product nears the end of its life cycle

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Shrinking pipeline for product returns
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RSCM decisions

• Efficient RSCM A supply chain designed to
  deliver product at low cost
• Best for Functional products
• Suitable for products with High MVT
• Responsive RSCM A supply chain designed for
  speed of response
• Best for Innovative products
• Suitable for products with Low MVT

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Efficient RSCM Centralized model
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Responsive RSCM Decentralized model
evaluation of products at retailer or reseller
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Trade offs

• Efficient RSCM
• Designed for economies of scaleboth in
  processing and transport of product at the
  expense of long delays
• Suitable for low MVT
• Responsive RSCM
• Improve asset recovery by reducing time-
  Preponement
• Issues Technical feasibility cooperation
  between manufactures and resellers.
• Suitable for high MVT