THE OTHER WAY

Logistics Insight Asia, 1/1/2008

From the manufacturer to the consumer. However long and involved the route may be, that’s what comes to mind when we think of the products moving through the supply chain. But it’s not always the case.Things can also go the other way.

Recalls are one big reason. In fact, product recalls hardly seem to be a rare event these days: Mattel toys, Dell laptops, Vioxx arthritis drugs, Firestone tires – they have all had to make the long trek back to their manufacturers after being found to be potentially harmful or lethal.

Of course, any such recall is extremely bad news for the company involved and requires careful crisis management to limit the inevitable injury to brand reputation and future sales. But having made the admission that we sent something wrong out there, there’s still the huge task of actually reaching into the supply chain and dragging it all back again.

That’s where reverse logistics comes in. The term basically describes all the physical and administrative processes involved in moving material from the point-of-use to the point-of-manufacture. Some estimates put reverse logistics costs at four percent of total logistics costs, which equates to US$100 billion annually in the US alone.

But reverse logistics also seems to be a rather neglected endeavor. A recent study in Europe by Sven Verstrepen and his colleagues at the Flanders Institute of Logistics (detailed in this issue’s cover story) found reverse logistics processes to be “out of control” for more than half of the companies surveyed. Key contributing factors: inadequate attention from higher management; poor process capabilities; weak IT integration.

Already quite a big money spinner for the 3PLs, the Flanders’ survey indicates a willingness for companies to outsource more of their reverse logistics activities, and so we are likely to see the third-party players getting more of the action.

Sven Verstrepen tells Logistics Insight Asia that he is keen to see a similar reverse logistics study carried out in Asia and is looking for participants. If you would like to be part of this, do please get in touch through us. And we always welcome any other comments or contributions you may have. After all, it’s not all one way.