Summary: Reverse Logistics Outsourcing

The factors considered for outsourcing strategy are explained in figure no. 2.5 Figure No.2.5 Reverse Logistics Outsourcing

Adapted from Marco Serrato and et. al47.

The policy to go for outsourcing is additionally influenced by other two critical factors. The first been the length of product life cycle which affects the variability of the product returns over a span of time. The second factor has been the uncertainty of the quantum of returns over a period of time. RL processes are mostly considered non – core by many organisations. Hence they are not always eager to do these in house by themselves. They consider RL as distraction of attention from their core processes. The choice to outsource RL and to what degree is a strategic one. The selection of Third – Party RL Provider too is a crucial decision.

10) Collaborating between supply chain

If costs get out of control due to extra consumption of employee or monetary resources it affects the bottom line. RL cost elements are hard to chart due to the intrinsic complex nature. Attention on these cost elements would be beneficial for the practicing organisations.

Adam Robinson. (2014)45. Cost reduction is required for improving the Bottom line of the business. Understanding the RL cost equation will help to control and reduce unnecessary costs thereby positively impacting the bottom line. The RL management metrics need to be understood for real cost reduction. The RL cost equation takes into account the crucial cost elements associated with the creation, processing, handling and final disposition of the product returns.

The RL cost equation is given below:

Processing Costs+ Logistics Costs+ Credits/Replacements Cost+ Asset Depreciation

= Total Reverse Logistics Costs

It is essential to note that a decrease in either one / all of these RL cost components directly goes to the bottom line. The cost components are explained