More on new Reverse Logistics trends

Editor’s note: In the course of composing a feature-length article for our sister publication, Logistics Management, we interviewed Diane A. Mollenkopf, Ph.D., McCormick Associate Professor of Logistics Department of Marketing and Logistics University of Tennessee College of Business Administration.This is the second of a two-part Q&A session for an SCMR web exclusive on Reverse Logistics.

SCMR: Is there a shortage of reverse logistics specialists?

DM: There are several specialized 3PL providers that work in the reverse logistics arena within the U.S. These providers not only handle transportation, but tend to have a network of processing facilities for handling return goods, sorting and providing various levels of processing for their customers. As more and more companies recognize the value that can be gained through effective reverse logistics, there may well be opportunity for other 3PLs to expand their services to handle returns goods. But because the economics of forward and reverse flows are very different, just because a 3PL is good at forward distribution doesn’t mean they’ll be good at handling the reverse flow. Customers looking for 3PL reverse services need to make sure that the 3PL really has the skills necessary to efficiently and effectively handle the reverse flow.

SCMR: How are universities preparing a new generation of reverse logistics professionals?

DM: Increasingly universities such as The University of Tennessee are incorporating discussions of closed loop supply chains into their curricula. This might be through lectures, analytical modeling, case studies requiring analytical processing and presentation, simulation exercises, etc. Students are increasingly being recruited for internships and full-time jobs with reverse logistics providers. Once students see the career potential of working in the reverse logistics arena, they tend to get very excited about learning even more.

SCMR: What other trends can you identify for our readers?

DM: One important trend for both managers and students is the recognition that supply chains are really two-way flows of goods. Integrating the forward and reverse flow of goods could significantly change existing networks. One company I’ve worked with totally revamped their production system to produce less against and initial forecast, but increased their production capacity to respond quickly to market demand for replenishment production. This overhaul was undertaken because of the high number of returns that had been traditional in their company (thought to be ‘normal’ within the industry in general). By restructuring their manufacturing processes, they were able to dramatically reduce their returns, and increase their financial performance. What returns did still occur were better integrated into their network for even more cost containment.

As companies become increasingly sensitive to the impact of high (and volatile energy costs), the need to reduce environmental footprints and build more sustainable businesses, the role of reverse logistics and returns management is going to become increasingly important. As resource scarcity becomes increasingly apparent – from oil to water to rare earth elements – the configuration of supply chains and the ability to recapture products for components or materials will become increasingly important for supply chain managers.

SCMR: Is there a recent body of academic research we can share with them?

DM: One example that focuses on creating customer value through returns management is:

Mollenkopf, D., Frankel, R., and Russo, I. (2011) Extending Customer Value Theory: Returns Management at the Marketing-Operations Interface, Journal of Operations Management, Special Issue on Field Research in Operations and Supply Chain Management, 29, 391-403.

Or readers might be interested in
Defee, C.; Esper, T; and Mollenkopf, D. (2009). Leveraging Closed-loop Orientation and Leadership for Environmental Sustainability. Supply Chain Management: An International Journal 14(2), 87-98.

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