Previous

Part - III

Design of Reverse Supply Chain Network

In conventional supply chains, logistics network design is commonly recognized as a strategic issue of prime importance. The location of production facilities, storage concepts, and transportation strategies are major determinants of supply chain performance. Reverse logistics should also be taken into account during the design of the support network such as location and capacity of warehouses, plants, choice of outsourcing vendors, distribution channel and supporting technology. Returns information captured should be integrated with forward supply chain information to achieve optimum planning and reduction of costs. The whole support network can then be designed in such a way that it can service both the forward and Reverse Logistics processes efficiently. This is in line with the concept of a closed-loop supply chain design.

The logistic network structure catering to Reverse Logistics can be divided into two portions: -

• The Convergent Network
  This is the portion of the network accumulates used products from individual sources and conveys them to some recovery facility. Companies can set up dedicated returned products collection centers at specific locations or collect the products through retailers and distributors.

• The Divergent Network
  A divergent network part links recovery facilities to individual customers purchasing reusable products. This portion of the network is very much similar to traditional forward supply chain distribution networks and integration with forward supply chain can be done here for maximized optimality.

Strategic points in the Design of Reverse Supply Chain Network

• Acquisition/collection of returned/used products
  Managing the collection and acquisition of used &/or returned products potentially accounts for a significant part of the total costs of any closed-loop supply chain. To design the network for collection a company can install several drop points for customers to hand in used products, integrate the reverse flow of used products with other transportation flows or use a direct express mail system to bypass several stages of the network for fast processing. The type of design depends on different product types and needs of the customers. Retailers and distributors are often used as the points of collection.

Next

* Contributed by -
Rakesh Verma & Vinayak Vhatkar,
PGDIE Class of 2005,
NITIE, Mumbai.