Companies spend more time and money in fine-tuning their forward supply chains while ignoring their backward supply chains. However, in today's competitive business environment when there is both external and internal pressure, companies can no longer ignore reverse supply chains. Efficient reverse supply chains bring many benefits to the companies. However, reverse supply chains are different from forward supply chains and most of the existing forward supply chains are not designed to handle reverse supply chains.
In today's highly competitive business environment, the success of any business depends to a large extent on the efficiency of the supply chain. Competition has moved beyond firm-to-firm rivalry to rivalry between supply chains. Managers in many industries now realize that actions taken by one member of the supply chain can influence the profitability of all others in the supply chain. Companies like Wal-mart are trying to squeeze more costs out of their supply chain to offer everyday cheaper price to the customers. On the other hand, more and more companies are focusing on their core competencies while outsourcing the rest. But without efficient and effective supply chain, companies cannot benefit from outsourcing.Supply chain is defined by The Council of Logistics Management 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 origin to the point of consumption for the purpose of conforming to customer requirements." However, a company's supply chain is not limited to delivering products to the end-consumers. What about the defective products that are returned by the consumers back to the company?Though reuse of products and materials is a common phenomenon, companies have long ignored this part of the supply chain, known as reverse supply chain or backward supply chain. A common example of reverse supply chain is the soft drinks bottles pickup and delivery system, where soft drink bottles are returned and reused repeatedly. Companies were so long under the impression that returns compared to sales generate little or no money. However, with the growth of direct-to-consumer channels like catalogs and Internet, sales returns of merchandize by the consumers has increased. C Glenn Mauney, Senior VP, Manufacturing Services Genco Distribution System, says, "there is growing recognition of the value that can be recaptured from the unproductive assets resulting from return merchandize." Goods worth over $100 bn are returned to US retailers annually. According to Devangshu Dutta, Director, Creatnet Services Ltd. ( a supply chain solutions provider), "nearly 20% of everything that is sold in America is returned."The Council of Logistics Management defined reverse supply chain 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." |
