Reverse Logistics for Retail Organization

Reverse Logistics for Retail Organization

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Devise and design a reverse logistics program for a retail organization. You may choose any industry but
you must include the following:
� Overview of the organization (purpose, mission, vision, product, service, etc.)
� Current forward supply chain/operational plan (is it effective, needs work, how do they fit into the
supply chain)
� How will they benefit from a reverse logistics program (what activities will be included and for what
purpose).
� What will the program include? Why?
� What is the cost and benefit to the company?
� How will you implement a reverse logistics program? What steps are needed?

Contents
1.0. Reverse Logistics for Retail Organization 3
1.1. Organizational Overview 4
1.2. Current Forward Supply Chain 5
1.3. Benefits of Reverse Logistics 8
1.4. Program of Reverse Logistics 10
2.0. Cost and Benefits of Reverse Logistics 10
2.1.1. Steps for Implementing Reverse Logistics 11
3.0. Conclusion 12

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1.0. Reverse Logistics for Retail Organization

Companies are recently adopting the services of reverse logistics in order to recapture value and
enhance customer satisfaction. Reverse logistics helps companies to address the advantages of
repairing and remanufacturing products for clients or refurbishing product returns for the
potential resale. Effectively implementation of reverse logistics can easily turn losses because of
cost of disposal into profits for a retail organization and improve satisfaction of customers.
Reverse logistics perform value addition processes on customer returns and the entire return
processes. Reverse logistics is important to process for retail organizations because it covers
customer returned products, the processing of the returns by servicing and the returning of
handled products to customers as well as putting materials back into stock and refurbishing the
returned items for resale. This has made returns process a very important component of the
processing that takes place within the retail supply chain network. Reverse logistics is an
opportunity to generate additional revenue companies and support the demand for original
products as well as enhance customer satisfaction. Thus, reverse logistics contributes
significantly to national GDP and it is speedily becoming an essential component of profitability
and competitive position of retailers and manufacturers (Coyle, Langley, Novack & Gibson,
2016).
Product returns are the main regular component of reverse logistics. However, most firms
do not handle their product returns effectively. This is because product returns are not part of
central strategies and components of their business supply chain network. Therefore, many
companies in the supply chain industry are working closely with 3PL provides in order to ensure
proper handling of their product returns (Christopher, 2016). Besides, other companies are still

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considering the best practices and strategies to handle reverse logistics. There are massive
revenue opportunities and cost implications that follow all product sales. For these reasons,
companies are establishing the “closed loop” approaches to the logistics that include product
recalls, service contract returns, product returns, used equipment and replacement components
for refurbishment, reusing and selling as raw materials (Coyle et al, 2016). Thus, it is important
for companies to consider reverse logistics as part of successful growth strategies. Companies
with firm disposition logic ensure strategic asset-recovery approaches. Repairs recalls and
returns as well as used items can also play a significant role in branding implications. Various
companies take brand protection as a paramount strategy and they ensure that their products are
not actually sold in secondary market as well as ensure no selling of their products in discount
stores. Traditionally, firms have successfully focused on the internal operations’ efficiencies and
then incorporated to improve forward logistics. The best estimates for distinctive rates of returns
are related with e-business is offered by Dell Corporation. Companies expect that a significant
portion of their product sales will be returned. There is a huge mistake assumed by companies
that their outbound operations will handle product returns by operating activities in reverse. On
the other hand, reverse logistics should manage diverse and unique operations that are not part of
the forward logistics such as a collection of obsolete, damaged and unwanted items and product
repackaging. The more the complexity of the product the higher the percentage of product
returns because of factors such as more variables that have gone wrong as well as greater risk of
unqualified operators and probably regulated end-life-life disposition (Christopher, 2016).

1.1. Organizational Overview
Dell Corporation is a popular global technology company based in the United States. Its
headquarters are in Dell Way, Texas, United States. The cooperation manufactures, sells, repairs

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and develops computer products and services. Dell Corporation is not the largest technology
company in the world and employees over 103,300 people globally. The company has frequently
featured in the Fortune 500 list. Besides, after HP and Lenovo, Dell is known as the third largest
vendor of world-class PCs (Abdelkafi & Pero, 2018). The corporation is the sixth largest
company in Taxes. Dell Corporation provides technology solutions, services, and support. The
corporation offers desktops, laptops, workstations, tablets, monitors, printers, servers, storage,
software, and storage as well as networking products. Thus, the company serves customers
across the world. For these reasons, Dell Corporation serves in the technology sector in the
hardware industry as well as in the computer and storage sub-industry. This makes Dell one of
the success stories of the 20th century. The company was started in 1984 by Michael Dell. The
company’s mission statement is one of the most successful computer companies worldwide. It
delivers the best customer experience in markets it serves. The company meets customer
expectations by providing “the competitive pricing, highest quality, company and individual
accountability, financial stability, leading technology, superior corporate citizenship, best-in-
class service support, and flexible customization capability (Abdelkafi & Pero, 2018).”

1.2. Current Forward Supply Chain
Dell has realized the benefits of logistics and developed measures to put emphasis on its
direct sales and supply chain management strategies. The company has become one of the most
successful PC corporations globally. This allowed the company to improve the methods to make
products and services as well as deliver the highest quality products to customers. The company
has followed an exceptional “direct build-to-order” sales system for over two decades. This
allows consumers to plan their own configuration as well as directly place orders with the
corporation via phones or through the company Website. The company holds itself and suppliers

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to high standards of excellence and prioritizes responsibilities and sustainability. The company
has established high standards to follow in order to ensure respect and protection of workers,
environment, and communities. The company strives for 100% transparency and opens doors for
suppliers and its operations to allow customers to see first-hand how the company products are
manufactured and the workers who make them (Christopher, 2016).
Dell Corporation is “well-known for its innovations in supply chain management and
electronic commerce.” The corporation has a competitive advantage in its “build-to-order” and
its direct-sales model and as well as “configure to order” approaches to manufacturing and
delivering company and individual PCs which are configured according to specifications of
customers . Supply chain incorporates all these characteristics like supplier, wholesalers,
transport, customers, retailers, manufacturer, and all other components which connect the above
(Coyle et al, 2016). The company central goal is to provide high-quality products and services
and fulfill demands of customers by adding value to the services and products. The supply chain
of forwarding logistics of Dell Corporation has a structure as shown in the figure below.

Forward Supply Chain of Dell Corporation

The company has a supply chain that is purposefully effective and implement in all its
levels in the network. The 3 levels of Dell supply chain network are strategic, tactical and
operational practices. They are used on making strategic level decisions in regard to the
Suppliers Manufactu

ring Storing Merging Customer
Order Customer

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organization. The decisions are critical because they reflect the overall corporate strategy of the
corporation. Therefore, the company has an unconventional idea that uses a direct sales method
which comes from a strategic level. The senior management of the company gives the strategic
direction in consideration of the good that the firm manufactures and provides to their
consumers. The company uses the manufacturing process theory in foreign markets. The
management analyses and predicts the capacity in the supply chain. This allows the organization
to take measures that expand the facilities accordingly to handle forward supply chain. This is
mandated to the middle-level management team. There is a significant outcome at the
operational levels. The entire tasks of the supply chain of Dell Corporation are done
systematically by the operational level (Christopher, 2016).
The company approach to the supply chain can be categorized as a push-pull strategy
because diverse options are pulled to consumers. Option controls of the corporation are
strategically decided in order to permit consumers to select customized products. The choices of
customers then pull demand for the manufacturer of computers by dictating what elements,
consumables, and parts are required within the logistics and assembly lines. The value chain of
Dell adds value from suppliers to the customers and gives the company with a competitive
advantage. The inbound logistics deals with more than 165,000 channel partners. The
corporation uses just-in-time philosophy to handle reverse logistics. This offers the company
opportunity of saving on huge inventory costs and sustaining cost leadership through an
integrated network. The company allows materials to be shipped within hours and abruptly
received at the assembly unit of Dell. The outbound logistics allows Dell to practice mass
customization. The organization is able to complete order fulfillment in a reduced duration as
compared to other retailers in the industry. Overall, the company completes customer shipments

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in time always and stays committed to its promises of product customization resulting in a
cumulative advantage of part modularity. Thus, inventory programs are managed by vendors,
mass customization and demand management. The supply chain of Dell has developed a
competitive strategy by targeting customers who value modern PC models customized to their
specifications and delivered according to determining time (Coyle et al, 2016). The customers of
Dell are classified as having very high demand uncertainty due to the vast variety of computers,
rapid delivery, and the high levels of innovation. Therefore, an efficient forward supply chain
should use inexpensive, slow model of distribution and economies of scale in its production. The
corporation should build a responsive forward and backward supply chain to allow the company
to meet the needs of its customers. This is because responsive logistics strategies are suited best
in meeting the specifications of targeted clients by the company. However, the supply chains of
Dell us strategic and effective. The needs small work to be done of the network to incorporate
reverse logistic and strategic fit in the supply chain (Christopher, 2016).

1.3. Benefits of Reverse Logistics
Reverse logistics is becoming one of the most strategic operations of the supply chain for
retailer and manufacturers in the electronics industry. Logistics play a significant and central role
in enhancing customer satisfaction. For instance, the forward supply chain doesn’t fare well in
ensuring on-time deliveries at the best prices to the final customers, and then the loyalty of
customers and success of the company ultimately hang on the balance. Despite the fact that
reverse logistics is relatively a new concept to supply chain network, it is gradually becoming
one of strategic aspect that companies should take full advantage of its business operations.
Embracing reverse logistics is strategic for Dell because it will ensure proper handling of product
returns from customers. This will include repair, value recovery, redistribution, warranty

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recovery, and product recalls. Reverse logistics is important because it will improve company
reputation, easier management of inventory, focus on the core business functions and ensure
better flexibility (Hsu, Tan & Mohamad Zailani, 2016).
Products supplied in the forward logistics of Dell include computers, PCs, copiers,
printers, and IT equipment. These products can be returned by customers anytime. It is important
for the management to establish proper reverse logistics that will strategically handle its
activities and create opportunities for the company. Reverse logistics will be profitable for the
company in terms of return on investment. Dell can use reverse logistics for returned products
and end-of-life products in order to gain an additional return on investment from the items. This
will ensure retention of the high-value dollar through recycling and proper handling of product
returns. The company will add value to adopting strategies for environmental protection. This
enhances customer loyalty and public image of the company. The company will gain all
customers engaging in the green movement (Hsu, Tan & Mohamad Zailani, 2016). The company
should capitalize on this opportunity to sell safe products to individuals and company
organizations. Dell should promote itself as responsible for end-of-life products through
recycling and handling of returned products. This will help the management to speak and meet
the desires of its customers. Overall, the strength and loyalty of customer base are cultivated
along the added value of business growth through improved public confidence (Rushton,
Croucher & Baker, 2014).
Adopting reverse logistics will help Dell to improve its operations and recycling
strategies in order to create more raw materials for production. Re-strategizing reverse logistics
processes will make the company to avoid future lack of resources and save costs. The reduced
corporate costs will reflect a decreased service and product prices. The company will create and

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sustain growth by attracting more customers as well as position the brand strategically in the
market through prices and quality of products.

1.4. Program of Reverse Logistics
The program will involve strategies to handle product returns. There will be operations
for covering items returns from customers and processing of the returns by servicing. In addition,
it will include the process of returning the repackaged, refurbished and remanufactured products
to the customers. There will also process for putting materials back into stock and refurbishing
items for resale. The network for reverse logistics will create collection and separation centers
that will identify returned products that need direct reuse, repair or rebuilding. It will be a
strategic approach to ensure proper disposal. This will create channels for product
remanufacturing and recycling of parts and materials. The network will have processes to handle
recalls, end-of-life returns, seasonal returns, parts, and repairs. Therefore, the process will
involve the disposition and sorting process, company recall, and repair and parts process,
accounting visibility reports and item received in the returns facility (Rushton, Croucher &
Baker, 2014).

2.0. Cost and Benefits of Reverse Logistics
The cost of implementing reverse logistics is high. Reverse logistics is all about costs.
Dell will incur the cost of goods themselves, cost of moving and storing goods as well as the cost
of the potential impacts on keeping returned and non-returned products flowing. Companies Dell
should strategically enhance its reverse logistics by targeting its customers effectively. The cost
will include inaccurate counting and misleading procedures. There is also cost of inaccurate
paperwork and damage to products during handling processes. There are costs of pilferage and

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shrinkage that leads to delays in handling customer returned products. Besides, reverse logistics
is costly because products are returned in small amounts and there is a cost of mishandling at the
destination between the delivery unit and storage unit. Thus, the cost of reverse logistics will
include “processing costs, logistics costs, credits or replacement costs and asset depreciation
(Rushton, Croucher & Baker, 2014).”
Dell will benefit strategically by improving and sustaining its reverse logistics channel.
The company will be able to enhance customer loyalty and satisfaction. This will be an effective
and efficient way to ensure that products are strategically linked with custom designs or
specification. The company will be able to create more opportunities and reduce the rate of
product returns. Therefore, Dell will build its brand reputation, establish a competitive
advantage, focus on core business functions, and ensure easier inventory management and better
flexibility (Hsu, Tan & Mohamad Zailani, 2016).
2.1.1. Steps for Implementing Reverse Logistics
The steps will include;
 Establishment of help desk for customer service
 Deport repairing facility
 Service logistic for field services such as warehousing, transportation, spare parts
management, and replacement management.
 Refurbishment for the returned products
 Counting and screening audit for returned products
 End-of-life manufacturing
 Remanufacturing and fulfillment activities

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 Process management of information technology
 Recycling
 Management of waste and scrap
 Warranty and asset management
 Environmental and sustainability resources

3.0. Conclusion
Reverse logistics should be taken seriously by retailer and manufacturers in order to
enhance customer loyalty and satisfaction. However, focusing on reverse logistics is extremely
difficult and strikes to the very heart of a retailer’s profitability. Dell should use effective
reverse logistics in order to reduce real costs while enhancing customer satisfaction. This will
build company sales and brand recognition. The reverse logistics should not only contain
disposition logic but the use of more advanced capabilities that contain tracking and monitoring
codes that specify the reasons for product return. In addition, it should contain internet
massaging features for helping the company to ensure the satisfaction of customers as well as
contain features that can assign financial value estimates to returned products.

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References

Abdelkafi, N., & Pero, M. (2018). Supply chain innovation-driven business models: Exploratory
analysis and implications for management. Business Process Management
Journal, 24(2), 589-608.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Coyle, J. J., Langley, C. J., Novack, R. A., & Gibson, B. (2016). Supply chain management: a
logistics perspective. Nelson Education.
Hsu, C. C., Tan, K. C., & Mohamad Zailani, S. H. (2016). Strategic orientations, sustainable
supply chain initiatives, and reverse logistics: Empirical evidence from an emerging
market. International Journal of Operations & Production Management, 36(1), 86-110.
Rushton, A., Croucher, P., & Baker, P. (2014). The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.