Fundamentals of Business

Reverse logistics

Reverse logistics is the logistics process of removing new or used products from their initial point in a supply chain, such as returns from consumers, over stocked inventory, or outdated merchandise and redistributing them using disposition management rules that will result in maximized value at the end of the items' original useful life.

A reverse logistics operation is considerably different from forward logistics. It must establish convenient collection points to receive the used goods from the final customer or remove assets from the supply chain so that more efficient use of inventory/material overall can be achieved.

It requires packaging and storage systems that will ensure that most of the value still remaining in the used good is not lost due to careless handling. It often requires the development of a transportation mode that is compatible with existing forward logistic system.

Disposition can include returning assets into inventory pools or warehouses for storage, returning goods to the original manufacturer for reimbursement, selling goods on a secondary market, recycling assets, or a combination that will yield maximum value for the assets in question.

Supply ch chain management (SCM)
Supply chain management spans all movement and storage of raw materials, work in process inventory, and finished goods from point of origin to point of consumption. The term supply chain management was coined by consultant Keith Oliver, of strategy consulting firm Booz Allen Hamilton in 1982.
Supply chain management must address the following problems:

Distribution Network Configuration Configuration: Number and location of suppliers, production facilities, distribution centers, warehouses and customers.

Distribution Strategy Strategy: Centralized versus decentralized, direct shipment, Cross docking, pull or push strategies, third party logistics.

Information: Integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation etc.

Inventory Management Management: Quantity and location of inventory including raw materials, work inprocess and finished goods.