Reverse Logistics

1
Reverse Logistics
2
Why Isnt Reverse Logistics a Priority?

• Focus on Outbound Logistics
• Desires to hide inventory mistakes
• Lack of awareness of potential benefits

3
Survey of Catalog Retailers (Electronics Firms)

• Respondents
• Computer/office equipment 58.6
• Misc. electronics 25.1
• Communications equipment 7.1
• Household appliances 4.3
• Average reverse logistics costs
• As a percentage of
• Total logistics costs 9.4
• Annual dollar sales 10.3
• Annual unit sales 9.7

4
Most Common Reasons for Merchandise Returns

• Customer return/dissatisfaction 32.16
• Defective merchandise 26.05
• Incorrect item received 10.44
• Repairs needed 8.27
• Damaged 7.10
• Unsold units 1.35
• Reconditioning 0.80
• Recycling 0.67
• Product recall 0.64
• Other 8.50

5
Most Common Methods of Product Disposition

• Returned to manufacturer/supplier 45.35
• Repackaged and sold as new 18.01
• Destroyed 11.64
• Refurbished 7.82
• Resold as is 6.82
• Recycled 3.42
• Donated 1.32

6
Strategic Implications of Effective Reverse
Logistics

• Savings in
• Inventory carrying costs
• Transportation costs
• Waste disposal costs
• Plus
• Improved customer service

7
How Trading Partners Handle Returns Influences
Buying Decisions

• Allowances or cap programs (specifying maximum
  return levels)
• Ease of obtaining returns authorization
• Length of time for credit processing
• Use of Internet in processing returns
• Quality of re-work or repair
• Timliness of re-work or repair
• Restrictions on disposition (allow sales to
  secondary markets, etc.)