Logistics Professionals Have Mostly Been Trained to Be Forward Focused - Literature review Example

Reverse Logistics Presented by Name Presented To Lecturer Institution Topic Date Introduction: The Council of Logistic Management (1998), cited in Refele (2004) describe logistics as a component of the supply chain process that deals with planning, implementing and controlling the flow of goods and services from the origin to the destination. The destination of the goods and services are the consumers. In addition, logistics deals with the storage of goods and services. Logistics aims at meeting the various needs and requirements customers. Reverse logistics is as important as forward logistics and firms are encouraged to pay attention to reverse logistics as well (Oloruntoba and Gray 2006). Discussion: Movement of materials is common and paramount for every organization. For instance, manufacturers of various goods must move law materials from their suppliers and deliver finished goods to their customers. Logistic then plays an important role in this movement. The key logistic activities, according to Phelan (2009) include: Customer service: this includes setting the wants and needs of the customers, establishing customer response to goods and services and setting out customer level. Transportation: this involves selecting the mode and service of transportation required, consolidating freights, routing of carriers, scheduling of vehicles, selecting transport equipment, processing claims and auditing transportation rates. Inventory management: this involves establishing policies for stocking raw materials and finished goods, forecasting short-term sales and revenues, determining product mix to use at various stocking points. Inventory management also involves determining and establishing the number, location and size of the stocking points as well as the push and pull strategies required. Demand forecasting and planning: forecasting and planning help in determining customer demands in order to setup or plan for production requirements. Logistics should therefore forecasts the orders available at the supplier and the amount of finished goods and services that the company should deliver at the various points and timing of delivery. While forecasting is important activity in logistics, it is important to balance between the benefits realized from forecasting and the cost involved. This is because forecasting often involves large costs. Information and Communication: logistic should ensure real time information flow with the material suppliers, customers, between the other logistic activities and other participating bodies in the supply chain such as retailers and wholesalers. The aim of this logistic activity is to ensure success of the other activities of logistics. Materials handling: these include raw materials, materials undergoing manufacturing as well as finished goods. Movement of materials does not add value to them but only reduces their value through damage while it also adds to the cost. Logistic management therefore should aim at minimizing material handling and movement. Packaging: packaging helps in advertising and protecting the products while in storage or during transportation. It is important that the logistic management ensure that packaging serves its purpose at the least cost possible. Warehousing and storage: this activity creates time and place utility by allowing production of products and their retention for later distribution or consumption. Activities involved in this logistic activity include layout and design of the warehouse, automation, outsourcing and management. Parts and Service Support: this logistic activity involves management of the support products such as spare parts as well as responding to complains or questions that customer raise during the time they use or own the product. While the logistic management should try to achieve least cost for this activity, it is important to consider the cost involved if the organization looses a customer because of poor parts and service support. Importance of the logistics activities of demand forecasting and customer service to any reverse logistics operation: The above section has given a synopsis of the various logistic activities. Demand forecasting and customer services are among the logistic activities involved in logistics management. The section below now gives the importance of demand forecasting and customer service to reverse logistics operation. This section addresses also how these two activities of logistic management add value to reverse logistic in terms of place, form and time utility. The relationship between a product manufacturer or a service provider and the customer continues even after the customers purchase the products or services. In many cases, this relationship exists even after the customers have purchased the product and extends in the entire lifetime of the product or entire period through which the customer owns the product. Such services occurring after purchasing, and which maintain the relationship between the manufacturer and the customers, include product repair and maintenance, customer support activities such as trainings, warranties and upgrades. Others include complementary products and services as well as product disposal. Reverse logistics is therefore an important aspect that companies should address. Gunasekaran and Ngai (2003) indicate that management of the reverse activities is important since customers strengthen their loyalty towards the products they get from the company. In addition, management of the reverse activities helps products to receive higher prices. When customers realize that the company supports products even after purchase, they can easily buy the products at higher prices. Reverse activities are also important sources of revenues. Gunasekaran and Ngai (2003) describe reverse logistic as movement of goods and services backwards through the supply chain. It could be movement of goods and services from the final consumer to the manufacturer for replacement or servicing. Gunasekaran and Ngai (2003) suggest that reverse logistic is essential in planning for transportation and storage. For instance, the management should consider reverse logistic when estimating storage capacity as well as transportation capacity. In addition, proper reverse logistics in an organization help customers to gain confidence in the goods and services they get from the organizations. According to Gunasekaran and Ngai (2003), many companies fail to address reverse logistic making their customers lack confidence about the goods and services they get from the companies. Vogt and Pienaar (2002) indicate that reverse logistics helps companies to recapture the value of goods or to dispose the goods properly after customers have used them. While reverse logistics is essential in every company, research indicates that processes involved in reverse logistics can be very expensive compared to forward logistics. In addition, research indicates that the process of reverse logistics can take several steps compared to forward logistics (Oloruntoba and Gray 2006). This indicates that reverse logistics is an element in the supply chain that companies should pay great attention. It is as important as forward logistics. Tibben-Lembeke and Dale (2002) point out that reverse logistics depicts more reactivity than forward logistics but is less visible. In addition, companies do not usually initiate reverse logistics but results from actions taken by consumers and other members down on the supply chain. There are various reasons as to why reverse logistics occur in firms or companies. First, reverse flow of goods or services or even information arises since there is the need for recycling, reusing or for proper disposal. As an example, plastic bottles may return to the manufacturers after the consumers have done away with them. The manufacturer might have requested for their return in order to have materials for making other bottles for later use. On the other hand, there could be government policy for consumers to return such items to the manufacturers so that they can safely dispose off the items. This would be the case in an environmentally conscious government or society. Another reason for reverse flow of goods is if the product shows performance problems. Such a reverse flow commands for either a replacement or repair. For instance, when the product fails to perform as the manufacturer has specified the problem then lies with the manufacturer and the product flows back to the manufacturer to replace it with a new one. More so, reverse flow of a product from the consumer to the manufacturer arises due to the consumer changing his mind. This is the situation where the consumer decides to buy another product instead of using the one he has already purchased. Demand forecasting involves estimating the amount of goods and services that the customers will consume. Flyvbjerg et al. (2005) suggest that there are different techniques for conducting demand forecasting. Such techniques include educated guesses, history of sales data and performing tests on the market in order to obtain current data. Demand forecasting helps in establishing product and service prices. In addition, demand forecasting is essential in establishing the capacity required at the time as well as in the future. Demand forecasting also helps in deciding whether to enter a new market as well as establishing strategies of entering the market (Flyvbjerg et al. 2005). Tibben-Lembeke and Dale (2002) indicate that there is much uncertainty involved in reverse logistics. This makes demand forecasting to be difficult. In addition, demand forecasting in reverse logistics is difficult because different products have different reverse flow rates. This makes it difficult to forecast the return rate since there are varying factors that affect the return rate of the products. Such factors could include the ease of using the product and the rate of technology change among others. Nevertheless, demand forecasting, according to Tibben-Lembeke and Dale (2002), is important in ensuring that there is material available for remanufacturing. Therefore, demand forecasting in reverse logistics ensures time and place utility. Time utility involves making sure that material needed for remanufacturing is available when the company requires it. Place utility, on the other hand ensures that such material is available at the point it is required. Customer service, according to Fredrik (2006), integrates all the elements involved in the customer interface and manages them. This logistic activity is very important in attracting and retaining customers. However, customer service is not concerned with customer satisfaction. As opposed to customer satisfaction, which is concerned with fulfilling the needs of the customers, customer service deals with the customers throughout the entire period of ownership and product use. This entire period of use and ownership forms the reverse logistic operation. In dealing with the customer service, it could be important to minimize the cost involved in customer service but on the other hand, it is even more costly to loose a singe customer. While it is difficult to attract a single customer, one unsatisfied customer can have a greater effect if he reveals his experience to others. The effect of this would be a loss of more customers. The various element of the customer service involves the before sale service, during the sale service and after the sale service. The first two elements occur when the product lies in the hands of the manufacturers and are more concerned with forward logistics. The last one, after the sale customer service is more concerned with reverse logistics. Customer service during the period after sale involves product installation, product warranty, provision of repair and spare parts as well as provision of support services. Tracking of the products is another aspect of reverse logistics customer service where the company follows the product in order to establish its effectiveness or need for improvement. Product tracking could also include reminding customers about the service for the products among others. Product return is also part of the reverse logistics customer service that is concerned with product return for replacement or disposal. Products returned, according to Tibben-Lembeke and Dale (2002) provides firms or companies with materials for remanufacturing. In order to handle product returns effectively, it is important that the company have good information about the customers and the products. While this strengthens customer trust and loyalty towards the company and its products, the readiness of customers to return products provides the company with enough material for remanufacturing. According to Gunasekaran and Ngai (2003), several firms underestimate or do not consider the cost involved with poor customer service due to the difficulties in determining such costs. However, firms can utilize customer service to create a difference between itself and other firms, which are its competitor, with the aim of establishing a better competitive ground. The question is whether all customers should receive the same service. Gunasekaran and Ngai (2003) suggest that the Pareto Principle also find application in customer service. Some products have more importance than others do. Similarly, some customers have more importance to a firm than others have and should therefore receive more customer service that those with less importance. Conclusion: Reverse logistic is concerned with the backward flow of products from the consumer to the manufacturer. The backward flow could also arise from supply chain individual down the line such as retailers and distributors to the manufacturer. Processes involved in reverse logistics can be very expensive and can involve several steps compared to forward logistics. However, reverse logistics is as important as forward logistics and firms should great attention to it. Demand forecasting and customers service are important activities of the reverse logistics that have great impact on economic utilities in reverse logistics. Demand forecasting helps in ensuring that material for remanufacturing are available both in time and in place. Similarly, consumer service ensures that materials for remanufacturing are available in time and in place. List of references References Flyvbjerg et al., 2005. How (In) Accurate are Demand Forecasts in Public Works Projects? The Case of Transportation. Journal of the American Planning Association, Volume 71, Number 2. Fredrik, N, 2006. Logistic Management in Practice- Towards Theories of Complex Logistics. The International Journal of Logistics Management, Volume 17, Number 1. Emerald Publishing Limited. Gunasakaran, A & Ngai, E. W. T, 2003. The Successful Management of a Small Logistics Company. International Journal of Physical Distribution & Logistics Management, Volume 33 Number 9. MCB UP Limited. Oloruntoba, R & Gray, R, 2006. Humanitarian Aid: An Agile Supply Chain? An International Journal of Supply Chain Management, Volume 11, Issue 2. Emerald Group Publishing Limited Phelan, 2009. Guest Column: Knowing When a WMS or WCS Is Right for Your Company. Enom, Inc. Rafele, C, 2004. Logistic Service Measurement: A Reference Framework. Journal of Manufacturing Technology Management Volume 15 Number 3. Emerald Group Publishing Limited. Tibben-Lembke, R & Rogere, D, 2002. Differences between Forward and Reverse Logistics in a Retail Environment. An International Journal of Supply Chain Management, Volume 7, Number 5. MCB UP Limited. Vogt & Pienaar, 2002. Business Logistics & Management - Theory and Practice. Oxford Read More