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Efficient Design of Reverse Supply Chain: Strategies for Optimizing Returns and Recovery

This guide explores the strategic design of reverse supply chains, focusing on optimizing processes for the collection, storage, transportation, and disposal of returned products. It discusses utilizing existing forward distribution networks, creating specialized reverse networks for specific products, and the benefits of outsourcing to 3PLs. Factors like product type, marginal value of time, and the differences between centralized and responsive reverse networks are analyzed. Strategies such as preponement are recommended to maximize recovery value and minimize losses in rapidly depreciating products.

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Efficient Design of Reverse Supply Chain: Strategies for Optimizing Returns and Recovery

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  1. Reverse SC Network Design P.Chandiran

  2. Options before the organisation • Use your existing forward distribution network for collection, storage, transportation and disposal/remanufacturing/recycling. • Design a new reverse SC network separately for returned products • Outsource a 3PL for managing returns and disposal • Industry wide collection network in the case of returned products of same type(batteries, paper,PET bottles, Beer bottles)

  3. Network design also depends upon type of products • Some categories like Pharma products, the returned products should not mix with new products. So we need to have separate network • In Some products, the structure, nature and properties change during the usage and hence it is not possible to collect by existing channel(eg.Paper, plastic products, ) • Some products has long PLC • Some have short PLC

  4. Marginal Value of time of a returned product • Marginal value of time: the loss in value per unit of time spent awaiting completion of the recovery process • High MVT: PCs can lose value at rates of in excess of 1% per week, Cell phones, • Low MVT: Returned value is low but the rate of decrease of value is low-Durables, Power tools, motors, Batteries

  5. Network design also depend on MVT of products

  6. Efficient Reverse SC Network-Centralized model Scrap Remanufacture Centralized Evaluation and Test facility Product Returns Parts recovery Re-stock Retailers/Dealers

  7. Efficient Network • Collection only and no inspection • Delays are more • Economies in transportation, processing, inspection and storage • At the centralized facility, decision should be made regarding fate of the collected product • More suitable for stable, long PLC and low MVT products

  8. Responsive Reverse SC Network Inspection and Testing Restock Remanufacture Centralized Evaluation and Test facility Product Returns Parts recovery Scrap Retailers/Dealers

  9. Responsive network • Inspection and testing at decentralized level • Unwanted stuff thrown at the collection stage itself • Faster transportation with less lot size • Money value decrease very fast. • Preponement is the strategy • Preponemnt save the value of collected products by taking decisions at the earliest

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