Reverse Supply Chain Analysis

The competitive advantage of any company depends on the effectiveness of its supply chain which comprises of two functions- the traditional and well known forward supply chain and the poorly understood reverse supply chain. Reverse supply chain is the opposite of forward supply chain, in simpler terms it is the return of products from the final destination i.e. consumer to the point of origin i.e. the manufacturer, for reuse, disposal or refurbish. In case of most of the companies, irrespective of the nature or magnitude of their business, return is considered to be an inevitable evil event. The success of any company largely depends on how well it manages the return flow and how effectively their existing supplies chain mechanism accommodates reverse supply chain. It reduces operating costs by reusing products or components and thus can impact the overall business. It is often seen that company spend more time, money and attention on forward logistics while ignoring the reverse chain which doesn’t justifies to business acumen. It is still considered to be an afterthought process instead of a proactive

The problem with gate-keeping is to decide on the products which are to be allowed in reverse supply chain, otherwise the channel will be flooded with products which can’t be reused or recycled, thereby increasing the overhead. Critical approach with gate keeping is compulsory for manageable reverse supply chain. In lieu of it, Companies like Philips are strengthening their return management by targeting at the product development phase only and ultimately coming up with products that are easy to resale, recycle or repair. One major obstacle in such logistic is predicting the nature and time frame of returned products. One needs to be precise at forecasting the cost, location and timing of the products being returned. Once collected it may so happen that the returned product is kept in the warehouse for periods and the value keeps depreciating. Such scenario demands for an alignment of primary and secondary markets so that such products can be resold at a desired price. Disposition of returned products is also one of the challenge. The supply chain mechanism should have a system in place to decide where the collected item will go. Based on the attribute and configuration of product, the choice for subsequent action and related disposition process is determined. Recently Brighstar Corp. was selected by Best Buy for handling the disposition of entire set of returned mobiles. Brightstar Corp. has implemented multi-channel disposition which turned out to be cost effective and the cycle time was also