A Framework for the Role of Warehousing In Reverse Logistics by Shad Dowlatshah - Article Example

Student’s Name Instructor’s Name Course Name Date of Submission A Framework for the Role of Warehousing In Reverse Logistics by Shad Dowlatshah,-Article Summary Introduction Reverse logistics (RL) management has become an area of increased focus by organizations. RL refers to a process in which products moves in the opposite direction from the customer or end-user to the producer along the distribution channel. In other words, RL is the process involving the return of goods by customers to the producer for purposes of ensuring proper disposal. Shad Dowlatshah, that, as much as the RL has been an old concept, it importance has been realized in the recent past as companies, both small and large are increasingly embracing RL concept as a way of minimizing waste and cost so as to ensure competitiveness. The author attributes this to the fact that RL adds value to the supply chain by ensuring that returned goods are properly recaptured and managed to ensure added value to the goods. According to Dowlatshah, RL activities have significance in the supply chain in many ways. According to the Manufacturing Business Technology report, about $100 billion in products current flow through RL channels every year cited Dowlatshah (1265). Unfortunately, as high as 40% of all the products are returned by customers, though this depends on the industry. However, whenever a customer returns a product, this is normally costly to the producer and retailers. In this article, Dowlatshah notes that returned products currently cost American manufacturers and retailers up to $1000 billion annually in lost revenue, handling, disposal, transportation and processing (1265). Apart from the cost factors associated with customer returns, the author notes that such returns also result in lost profitability which they estimate at about 3.8%. The author also report another research finding that predicts that product returns could cost an average of $30-$35 in the next few years. Another study cited by the author, however, predicts that the average cost of product returns by customers could reach $50 per item soon cites Dowlatshah (1265). In the U.S., RL cost is estimated at $35 billion every year and £6 billion in the UK yearly. Therefore, the author is of the view that organizations need to ensure proper management of their RL operations to ensure success. In this paper, the author investigated the warehousing factors that are needed for the effective design of and implementation of RL activities. Literature Review According to Dowlatshah, designing and implementing an effective RL system is critical in giving a company a competitive edge in an industry (1266). Despite recognition of this importance, there is no literature on the warehouse factors that are necessary for understanding, designing and implementing a working RL system. In the first part of the literature review, the author explores the emerging functions of warehousing in RL. According to the author, warehousing is no longer just a place for storing goods. Instead, the roles of the warehouse have been evolving over the years and currently include the management of RL operations. According to the author, a warehouse is an important part of the manufacturing business because it ensures the control of the movement of products that are returned by customers through effective space planning in the warehouse. In this respect, the author notes that effective planning of space in a warehouse is a critical requirement in RL system. Additionally, Dowlatshah note that a warehouse should be capable of providing the visibility and functionality that ensures reduces the risk of incurring high carrying cost and obsolescence (1266). Moreover, the author cite that a warehouse plays a critical role in RL operations as it ensures the development of a working logistics functions, transportation, and inventory management. In the second part of the literature review, Dowlatshah focuses on warehousing technologies, operations, and procedures. Like any other industry, warehousing happens to be one of the areas that have been greatly impacted by the technological advancements that have occurred in the recent past. According to Dowlatshah, for a manufacturing firm to remain competitive, they must ensure that they keep pace with the latest technologies (1267). In particular, the author highlights the importance of implementing computer technology and software in managing the goods returned by customers in the warehouse. According to the author, manufacturing firms and retailing companies that have not implemented technology in the management of RL operations take several months to sort the shipments that customers have returned to the warehouse. However, this affects the operations of a company negatively as it results in high carrying cost and lost revenues. Fortunately, such delays have been reduced through the use of technologies as it takes only a matter of minutes for companies to sort shipments for returned good today. Apart from increasing the efficiency and speed with which returned shipments are being sorted in the warehouse, the author also noted that the use of technology has benefited manufacturing business by enhancing RL operations by ensuring the faster flow of information through the supply chain. Accordingly, Dowlatshah recommends a number of other technologies that manufacturing companies should implement to ensure effective management of RL operations as relates to the warehouse (1267). The technologies include automatic identification system, barcode scanners, Radio Frequency Identification (RFID) tags, RFID-based reverse logistics framework and optimization methodology as these technologies not only help in the collection of points of returned products, but also for recycling operations. In the third part of the literature, the author examines the hidden warehousing costs as they relate to RL operations. According to the author, understanding and minimizing the hidden costs is important in ensuring efficient and effective management of RL operations. In the literature, Dowlatshah reveals that more than 80% of the U.S. warehouses lose money due to ineffective utilization of warehousing systems (1267). In this respect, the author noted that there are hidden costs associated with RL with regards to transportation, processing, inventory and warehousing, which they suggest should be minimized to ensure efficient operation of RL system. In the last part of the literature, the author explores the use of the third party in warehousing system as they relate to RL operations. In this part, Dowlatshah examines mainly the benefits and challenges associated with the use of in-houses and outsourcing of the warehousing activities (1268) despite the many challenges, the author note that third party and public warehousing is increasingly becoming a trend that companies can no longer ignore. Methodology The researchers conducted an exploratory study that sought to investigate the sub-factors of warehousing as they relate to RL operations. The researchers collected data using two in-depth studies involving two companies in two different industries namely automobile and medical instrument manufacturers. The Dowlatshah analyzed the data by developing warehousing sub-factors, proposition, and insights about RL system (1268). Findings The researchers observed some things from the study. First, the researchers observed that the effectiveness of warehousing with regards to RL operations is positively related to effective use of warehousing functions or 3P warehousing providers. Secondly, the researchers observed that warehousing system effectiveness as relates RL is positively related to warehousing techniques, technologies, equipment and good use of operational capabilities in the warehousing operations. Thirdly, Dowlatshah noted that the effectiveness of warehousing system in light of RL operations is positively related to the layout and storage space for physical separation (1269). Additionally, the study showed that effectiveness of warehousing systems with regards to RL operations is positively related to a company's ability to divide total stock cost according to details, timeliness, relevance and accuracy for returned goods. Lastly, the researchers noted that warehousing system effectiveness in RL is positively related to the ease with which returned manufactured parts are identified, allocated, accessed, retrieved and used. Discussion of Findings The study found that effectiveness of warehousing system has positive relations with a number of things. Firstly, the researchers found that the effectiveness of warehousing system has a positive relationship with warehousing functions and 3P providers of warehousing services. This means that companies should ensure that the warehousing functions and 3P providers are managed to ensure the effectiveness of warehousing system in RL. Secondly, the findings show that manufacturers should ensure that technology, equipment, methods and operation capabilities of the warehousing system as relates RL is effectively implemented to achieve an optimal result. Additionally, the findings highlight the importance of maintaining an efficient layout and storage space to ensure the effectiveness of warehousing system in RL. Additionally, the findings demonstrate the importance of ensuring effective management of inventory costs to ensure accuracy, relevance, timeliness and that the returned goods are properly documented. Conclusion Reverse Logistics has become an area of increased importance to manufacturing companies. The literature and the findings have shown that effective management of RL operations is critical in enhancing a company's competitive advantage by helping minimize costs associated with handling, disposing of, processing and storing returned goods. Additionally, the study has shown that there are a number of warehousing sub-factors that are associated with RL operations, including technology, outsourcing and layout and storage space among others. Recommendations Based on the study findings, the researchers have come up with a number of recommendations for future research. Firstly, the researchers recommend that further research is conducted on the role of technology in warehousing operations. Secondly, the researcher recommends further research to be conducted on the innovations that have emerged in the area of warehousing. Thirdly, the researchers recommend that further research is conducted to investigate the significance of third-party providers is conducted. Additionally, the researcher recommends that further research is conducted on the uncertainties associated with RL warehousing operations. Work Cited Dowlatshah, Shad. A framework for the role of warehousing in Reverse Logistics. International Journal of Production Research, 50.5(2012): 1265–1277. Print. Read More