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Reverse Logistics Trends and Practices Going Backwards: Reverse Logistics Trends and Practices

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Reverse Logistics Trends and Practices Going Backwards: Reverse Logistics Trends and Practices Going Backwards: Reverse Logistics Trends and Practices Going Backwards: Reverse Logistics Trends and Practices University of Nevada, Reno Center for Logistics Management Dr. Dale S. Rogers Dr. Ronald S. Tibben-Lembke Ó1998, Reverse Logistics Executive Council Contents in Brief CHAPTER 1: SIZE AND IMPORTANCE OF REVERSE LOGISTICS 1 CHAPTER 2: MANAGING RETURNS 37 CHAPTER 3: DISPOSITION AND THE SECONDARY MARKET 73 CHAPTER 4: REVERSE LOGISTICS AND THE ENVIRONMENT 101 CHAPTER 5: EUROPEAN REVERSE LOGISTICS 137 CHAPTER 6: INDUSTRY SNAPSHOTS 159 CHAPTER 7: FUTURE TRENDS AND CONCLUSIONS 187 APPENDIX A: LETTER/COPY OF SURVEY 211 APPENDIX B: DATA TABULATION 219 APPENDIX C: FOR MORE INFORMATION 235 APPENDIX D: EDI 180 TRANSACTION SET 241 GLOSSARY 255 ENDNOTES 267 INDEX 277 ABOUT THE AUTHORS 281 vi Rogers and Tibben-Lembke Reverse Logistics vii Table of Contents CONTENTS IN BRIEF .....................................................................................V TABLE OF CONTENTS .................................................................................VII LIST OF TABLES ..........................................................................................XI LIST OF FIGURES .......................................................................................XIII AUTHORS’ NOTES ......................................................................................XV REVERSE LOGISTICS EXECUTIVE COUNCIL MEMBERS ...............................XVII PREFACE...................................................................................................XIX CHAPTER 1: SIZE AND IMPORTANCE OF REVERSE LOGISTICS 1 1.1 IMPORTANCE OF REVERSE LOGISTICS.................................................1 1.2 REVERSE LOGISTICS ACTIVITIES........................................................9 1.3 STRATEGIC USE OF REVERSE LOGISTICS ..........................................14 1.4 REVERSE LOGISTICS CHALLENGES...................................................27 1.5 BARRIERS TO GOOD REVERSE LOGISTICS.........................................32 CHAPTER 2: MANAGING RETURNS 37 2.1 IMPROVE RETURN "GATEKEEPING"..................................................38 2.2 COMPACT DISPOSITION CYCLE TIME................................................42 2.3 REVERSE LOGISTICS INFORMATION SYSTEMS...................................43 2.4 CENTRALIZED RETURN CENTERS .....................................................50 2.5 ZERO RETURNS ...............................................................................60 2.6 REMANUFACTURE AND REFURBISHMENT .........................................64 2.7 ASSET RECOVERY ...........................................................................66 2.8 NEGOTIATION .................................................................................68 2.9 FINANCIAL MANAGEMENT ..............................................................69 2.10 OUTSOURCING REVERSE LOGISTICS.................................................70 CHAPTER 3: DISPOSITION AND THE SECONDARY MARKET 73 3.1 OVERVIEW OF THE REVERSE LOGISTICS FLOW .................................73 3.2 RETURNED PRODUCT TYPES ............................................................75 3.3 PRODUCT DISPOSITION ....................................................................78 3.4 MATERIAL FLOW ............................................................................86 3.5 SECONDARY MARKETS....................................................................89 3.6 SECONDARY MARKET FIRMS ...........................................................92 3.7 STRATEGIC ELEMENTS OF THE SECONDARY MARKET .......................99 CHAPTER 4: REVERSE LOGISTICS AND THE ENVIRONMENT 101 4.1 LANDFILL COSTS AND AVAILABILITY ............................................ 103 4.2 TRANSPORT PACKAGING ............................................................... 113 viii Rogers and Tibben-Lembke 4.3 RETURNABLE PACKAGING CONSIDERATIONS ................................. 125 4.4 PRODUCT TAKE-BACK................................................................... 133 CHAPTER 5: EUROPEAN REVERSE LOGISTICS 137 5.1 GERMAN PACKAGING LAWS .......................................................... 137 5.2 TRANSPORT PACKAGING ............................................................... 146 5.3 PRODUCT TAKE-BACK................................................................... 149 5.4 EUROPEAN CONCLUSIONS ............................................................. 157 CHAPTER 6: INDUSTRY SNAPSHOTS 159 6.1 PUBLISHING INDUSTRY.................................................................. 159 6.2 COMPUTER / ELECTRONIC INDUSTRY ............................................. 167 6.3 AUTOMOTIVE INDUSTRY ............................................................... 175 6.4 RETAIL INDUSTRY......................................................................... 182 6.5 CONCLUSIONS............................................................................... 185 CHAPTER 7: FUTURE TRENDS AND CONCLUSIONS 187 7.1 REDUCING THE REVERSE LOGISTICS FLOW..................................... 187 7.2 MANAGING REVERSE LOGISTICS FLOW.......................................... 202 7.3 CONCLUSIONS............................................................................... 209 APPENDIX A: LETTER/COPY OF SURVEY 211 APPENDIX B: DATA TABULATION 219 APPENDIX C: FOR MORE INFORMATION 235 APPENDIX D: EDI 180 TRANSACTION SET 241 D.1 EDI BASICS .................................................................................. 241 D.2 EDI 180 TRANSACTION SET .......................................................... 245 D.3 CRITICISMS OF THE 180 SET .......................................................... 249 D.4 COMPLETE 180 TRANSACTION SET TABLE ..................................... 252 GLOSSARY 255 ENDNOTES 267 INDEX 277 ABOUT THE AUTHORS 281 Reverse Logistics ix Reverse Logistics xi List of Tables 1.1 Supply Chain Position of Survey Respondents..............3 1.2 Sample Return Percentages..............................................7 1.3 Common Reverse Logistics Activities...........................10 1.4 Characterization of Items in Reverse Flow ...................13 1.5 Strategic Role of Returns ................................................18 1.6 Problem Returns Symptoms...........................................30 1.7 Barriers to Reverse Logistics ..........................................33 2.1 Key Reverse Logistics Management Elements .............37 2.2 Return Reason Codes......................................................48 2.3 Disposition Codes ...........................................................49 2.4 Impact on Profitability ...................................................56 2.5 Typical Benefits of a Centralized Return Center ..........60 2.6 Remanufacturing and Refurbishing Categories...........64 3.1 Reasons for Returns ........................................................74 4.1 Costs of Utilizing Reusable Containers.......................129 6.1 Book Returns as a Percentage of Gross Revenue........161 6.2 Comparison of Disposal Options between Retailers and Manufacturers ........................................184 6.3 Comparison of Technologies Utilized to Assist Reverse Logistics Processes, by Retail and Manufacturing Segments ...........................185 7.1 Key Reverse Logistics Management Elements ...........208 D.1 Sample EDI Transaction Purchase Order....................243 D.2 RDR Segment Diagram Key.........................................246 xii Rogers and Tibben-Lembke D.3 1292 Returns Disposition Data Element......................246 D.4 1293 Return Request Reason Data Element ................247 D.5 1294 Return Response Reason Data Element..............248 D.6 180 Transaction Set Table .............................................253 Reverse Logistics xiii List of Figures 1.1 Size of Research Respondents .......................................4 1.2 Return Policy Distribution...........................................20 1.3 Change in Return Policies............................................22 1.4 Kenneth Cole Advertisement......................................24 1.5 The Chasm between Manufacturers and Retailers....28 3.1 Flow of Returns and Secondary Market Goods.........90 4.1 Rigid Plastic Totes ......................................................117 4.2 Rigid Plastic Totes with Integral Lids.......................117 4.3 Folding Plastic Bulk Containers................................118 4.4 Folded Plastic Bulk Container...................................119 4.5 Collapsible Wooden Container .................................119 4.6 Disassembled Containers Fold Flat ..........................120 4.7 Sectional Wooden Containers ...................................121 5.1 German “Green Dot” Symbol ...................................139 5.2 Flow of Materials in German DSD............................141 5.3 Transportation Packaging Coded for Recycling In Germany .................................................................147 6.1 Independent Booksellers’ Market Share...................164 6.2 Problems with Computer Lifecycles.........................168 7.1 Inventory-Driven Carrying Costs .............................190 D.1 EDI Transaction Structure .........................................242 Reverse Logistics xv Authors’ Notes There are many people who have made this piece of work possible. This project has truly been a group effort. Without the assistance of several student research assistants this work could have not been completed. Mihaela Ghiuca, the
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