23-02-2013, 04:36 PM
Going Backwards: Reverse Logistics Trends and Practices
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Importance of Reverse Logistics
Research Scope
This project intends to define the state of the art in reverse
logistics, and to determine trends and best reverse logistics
practices. Part of the research charter was to determine the
extent of reverse logistics activity in the United States. Most
of the literature examined in preparation for this research
emphasized the “green” or environmental aspects of reverse
logistics. In this project, green issues are discussed, but the
primary focus is on economic and supply chain issues
relating to reverse logistics. The objective was to determine
current practices, examine those practices, and develop
information surrounding trends in reverse logistics
practices.
To accomplish this task, the research team interviewed over
150 managers that have responsibility for reverse logistics.
Visits were made to firms to examine, firsthand, reverse
logistics processes. Also, a questionnaire was developed
and mailed to 1,200 reverse logistics managers. There were
147 undeliverable questionnaires. From among the 1,053
that reached their destinations, 311 usable questionnaires
were returned for a 29.53 percent response rate. A copy of
the questionnaire is included in Appendix A.
Respondent Base
Companies included in this research are manufacturers,
wholesalers, retailers, and service firms. In some cases, a
firm may occupy more than one supply chain position. For
example, many of the manufacturers are also retailers and
wholesalers. The supply chain position of the research
respondents is depicted in Table 1.1.
Interest in Reverse Logistics
Awareness of the art and science of logistics continues to
increase. Additionally, great interest in reverse logistics has
been piqued. Many companies that previously did not
devote much time or energy to the management and
understanding of reverse logistics, have begun to pay
attention. These firms are benchmarking return operations
with best-in-class operators.
Size of Reverse Logistics
A conservative estimate is that reverse logistics accounts for
a significant portion of U.S. logistics costs. Logistics costs
are estimated to account for approximately 10.7 percent of
the U.S. economy.1 However, the exact amount of reverse
logistics activity is difficult to determine because most
companies do not know how large these are. Of the firms
included in this research, reverse logistics costs accounted
for approximately four percent of their total logistics costs.
Applying this mean percentage to Gross Domestic Product
(GDP), reverse logistics costs are estimated to be
approximately a half percent of the total U.S. GDP. Delaney
estimates that logistics costs accounted for $862 billion in
1997. The estimate of this research, based on the respondent
sample, is that reverse logistics costs amounted to
approximately $35 billion in 1997. The magnitude and
impact of reverse logistics varies by industry and channel
position. It also varies depending on the firm’s channel
choice.