Reverse Logistics Technologies and Its Forms

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Table of Contents

Abstract
Introduction
Background
Literature Review
Findings
Conclusion
Future Research Recommendation
References

Abstract

The present paper is aimed at researching and illustrating the most general tendencies in reverse logistics (RL) and some of its forms. For this purpose, automated return systems (ARS), recycling, and refurbishment have been selected. ARS were chosen for their fundamental place in RL processes; recycling and refurbishment are the examples of different reuse forms. Apart from that, information technologies (IT) were discussed as the recent improvements in all the RL processes. In the paper, all the mentioned RL methods are defined, and the technologies employed in them are illustrated with examples. Upon researching the issues, it is concluded that IT integration is the main tendency in the modern RL while other tendencies are mostly applicable to particular RL processes. It is demonstrated that technological advancement is crucial for the improvement of RL effectiveness and feasibility. The rapid development of RL technologies is pointed out, and the concern about their timely and sensible implementation is expressed.

Introduction

Reverse logistics (RL) is a term that is used to define the process of materials, goods, and other resources returning from the consumption point: hence, it is the “reverse” movement of goods and materials (Shi, Li, Yang, Li, & Choi, 2012, p. 220). Nowadays, most industries are extremely unlikely to avoid this movement, which means that they need to maximize the efficiency of related processes for the sake of competitiveness. Properly chosen RL techniques and technologies can improve performance and reduce costs; inadequate choices lead to an opposite effect (Ramírez & Morales, 2013). As a result, the research in the field of RL technology is of primary importance nowadays.

It should be mentioned that specific RL technologies depend very much on the type of the industry. Moreover, the specific systems and technologies applied by a separate company are expected to be customized and purposefully distinguished to provide the competitive advantage in this field (Huscroft, Hazen, Hall, & Hanna, 2013). Still, certain general tendencies can be singled out. In this paper, these tendencies will be paid particular attention, while specific technologies will be provided as examples.

Background

By defining RL as the reverse movement of goods and materials, one admits that the scope of processes related to it is immense. Indeed, the type of the returning object defines the specifics of its RL, and these objects are admittedly diverse. Still, some of the RL features determine all its processes: they include the purposes, stages, common funding issues, and the “omnipresence” of RL.

The purpose of RL may be concerned with disposal, as well as value creation or re-creation, for example, through repairing, reusing, or recycling (Daugherty, Richey, Genchev, & Chen, 2005, p. 78; Shi et al., 2012, p. 220). The stages of RL consist of planning, implementation, and control of the relevant (material- or good-specific) complex processes. For example, with respect to used batteries, the implementation process includes “collection, transportation, storage, sorting, loading/unloading, recycling, and final disposal” (Shi et al., 2012, p. 218). These processes all require funding, and very often they are not paid off. Daugherty et al. (2005) point out that RL has been a relatively underdeveloped field, particularly in commercial organizations, which can be explained by the fact that RL is often not economically rational, for example, in the terms of recycling (Wright, Richey, Tokman, & Palmer, 2011). At the same time, RL is practically unavoidable for most industries, even though the rates of return vary from 3% to 50% of shipments. The highest rates were noted in the magazine publishing industry due to the short shelf life of this particular product (Daugherty et al., 2005, p. 79). The combination of omnipresence and funding issues turns RL into a particularly significant challenge. One of the ways of RL management and improvement is the development and implementation of advanced technology that is going to be discussed in relation to particular RL forms in this paper.

The forms of RL may include the return of damaged or low-quality products, refurbishing, remanufacturing, and so on. Here, automated return systems (ARS), recycling, and refurbishment have been selected for illustration purposes. ARS were chosen for their position in the RL processes while recycling and refurbishment are two forms of goods and materials reuse, the differences of which demonstrate the diversity of RL. Also, information technologies (IT) are going to be discussed since they tend to affect all the mentioned RL forms along with other ones.

Literature Review

Automated Return Systems

Return systems (RS) are central to RL since they are the points of the goods’ and materials’ return. The automation of related processes tends to contribute to the performance, speed, and cost of RS (Condea, Thiesse, & Fleisch, 2010). Naturally, they typically require certain initial funding, but after that, if used in a sensible way, they are paying off. A technology that has been used for the past several years in the field of ARS is the radio-frequency identification (RFID) that has a number of pluses and minuses, which define its employment possibilities. Condea et al. (2010) demonstrate that when combined with sensor technology, RFID is a relatively cheap and precise product-sorting and decision-making component of ARS that is characterized by exceptional performance speed. Its merits have been pointed out by third-party logistics companies, for example, GENCO (Condea et al., 2010).

Apart from that, ARS typically incorporate a number technologies that are aimed at solving various issues or at facilitating the return process. For example, Andel (2006) describes a system that included barcodes and RFID tags to identify bins with the returned goods (clothes in that case), carousel modules to facilitate picking, and a software warehouse management system that ensured smooth implementation of all the necessary operations.

Improvements in Recycling

Recycling that has become a buzzword nowadays is also a part of RL. The need for recycling is twofold: it is practiced to protect the environment and human society from harmful substances and to reuse valuable materials that would be wasted otherwise (Shi et al., 2012). Li, Dahmus, Guldberg, Riddervold, and Kirchain (2011) also point out that recycling makes the manufacturer less dependent on supply, which is a hidden advantage, but it is not always applicable.

The problem with recycling is that very often it is not profitable. Wright et al. (2011) demonstrate that as the supply of recycled materials increase, their prices tend to decrease, and the process produces even less value. Naturally, this issue is mostly concerned with “unwanted” materials, such as paper, plastic, glass, and so on. For more valuable ones, like rare metals or alloys, the situation can be different. For example, it is mostly metal substances that make battery recycling economically reasonable (Shi et al., 2012).

Recycling can be regarded either as a complex chain of events or the part of RL that does not include the processes of collection, storage, and control. The first meaning allows some room for generalization: for example, the automatization of sorting technologies is a modern trend in a number of recycling fields, such as plastic and aluminum (Nojabaei, Nematshahi, & Franchetti, 2015; Li et al., 2011). Li et al. (2011) demonstrate that the use of sorting technologies reduces costs of recycling, and the modern ones are characterized by better performance. For example, Nojabaei et al. (2015) describe an emerging plastic sorting technology that is based on the submersion of waste in ferrofluids, the density of which is then changed with the help of electromagnetic waves (hence it is called EM-Ferro method). Apart from it, Nojabaei et al. (2015) mention five older automatic sorting technologies that are used for plastic sorting (including electrostatic, near-infrared scanning, and ultrasound scanning). The authors demonstrate that the specifics of the methods include various initial costs, energy costs, and environmental benefits. According to the authors, EM-Ferro offers cost reduction in the long-term period and is environmentally friendly, which makes it a feasible option.

The second meaning of recycling technology depends very much on the object that is being recycled. For example, Sidorov, Rigin, Goryunov, and Min (2014) discuss the resources-saving off-grade waste recycling technology they developed in 2014. It consists of treating the waste with a specifically created solution, subjecting it to vacuum refining in a special furnace, and filtering it with the help of a foam-ceramic filter. The resulting superalloy is reusable, and its production cost is at least 20% lower than that of the usual process (depending on the waste components, the cost could further reduce). In this case, recycling is used to create value that makes it profitable and environmentally-friendly. This positive result is made possible due to technological advancement.

Technology in Refurbishment

Another specific form of RL is refurbishment. Its characteristics are defined by its purpose: it is meant for reuse of returned goods (most often, various electronic and electrical equipment); the products are verified and guaranteed to retain the functionality of a new one. As a result, refurbishment requires significant investments before any value can be returned to the product (Skinner, Bryant, & Glenn Richey, 2008). The refurbishment option has a number of positive effects: it reduces waste, creates notable value, and provides jobs when performed by the third party; still, it is not always possible.

One of the most significant parts of the refurbishment process is the decision-making: the reuse of a good should be deemed beneficial when compared to the production of a new one (O’Connell, Hickey & Fitzpatrick, 2012, pp. 531-532). An example of goods selection model includes the sorting, initial inspection that defines potential for reuse, and a more thorough technical assessment that concludes if refurbishment is a feasible option. For the time being, manual selection and sorting are carried out; troubleshooting is facilitated by industry-specific tools (O’Connell et al., 2012, p. 537). Hall et al. (2009) point out that refurbishment of scientific equipment can be deemed necessary when the technology used by a unit becomes outdated; in this case, the improvement may be considered more feasible than the creation of a new piece.

The process of functionality restoration of an item is obviously industry-specific. For example, Hall et al. (2009) describe the refurbishment of sonar that included removing beam steering option to improve the reliability of the equipment. As a result, the sonar’s flexibility was decreased, but such an effect was considered to be reasonable as the work of the unit used to be too unstable before the refurbishment. The sensible usage of refurbishment was able to prolong the usage phase of the sonar’s lifecycle.

Information Technologies

IT have been penetrating various fields of human activity, and RL is not an exception. Daugherty et al. (2005) stated that RL is “information intensive” (p. 78). In other words, it requires a comprehensive informational infrastructure for the collection, management, and application of data that corresponds to the needs of a particular company’s RL (Huscroft et al., 2013). As a result, the investment in modern IT is one of the factors that contribute to the overall RL performance and competitiveness of a company.

IT assists during all the three stages of RL, but its planning capabilities have been particularly noted as they serve to reduce the inherent uncertainty of RL and the subsequent expenses (Shi et al., 2012, pp. 222-223). An example of such a system is the Enterprise Resource Planning (ERP) one; it is multifunctional, and one of its functions includes reverse logistics (Daugherty et al., 2005; Kamiński, 2010). Apart from that, there is a number of information system (IS) models that have been developed for RL or general logistics. They are diverse and can employ, for example, technologies like Agent and Multi Agent Technology, Java platform, Web technologies, and other variants (Shi et al., 2012, pp. 223-224).

IT are among the most rapidly developing kind of technologies; that are being purposefully improved to enhance their performance and increase their applicability (Kamiński, 2010). The integration of IT in RL is of primary importance nowadays.

Findings

From the conducted research, several findings follow.

RL is a general term used to define numerous processes within different industries that are assisted by various technologies. The few similarities that exist between them allow the following generalizations. All the RL processes have three stages: planning, implementation, and control. This similarity defines the importance of IT and IS for any kind of RL. The study of particular types of RL demonstrates that while the tendency for automation of separate processes is visible and necessary for cost efficiency, it is not always applicable (for example, in the case of refurbishment selection process).

RL technology is constantly developing, and new solutions for various issues are being offered nowadays and used along with older ones. For example, EM-Ferro is used along with the electrostatic separation that was first implemented in the 1990s (Nojabaei et al., 2015, p. 34). It is logical to suppose that the still employed technologies have certain advantages (for example, in the terms of costs or precision). However, it is also important to point out that for more than a decade, researchers attempt to draw the public attention to the processes and technologies of RL. For example, Daugherty et al. (2005) were dissatisfied with the level of attention paid to RL in general, and Huscroft et al. (2013) are concerned with poor IT usage in RL nowadays. In other words, it is not ruled out that the implementation of RL technologies is inadequate.

Conclusion

RL is often the least profitable form of a company’s activity (unless it specializes in RL) but it is also unavoidable. The combination of these features defines the need for continuous performance and efficiency improvement that is primarily achieved through the implementation of modern technologies. The concern of researchers with the adequacy of technological advancement in RL suggests that this issue is not paid sufficient attention. The reluctance to allocate appropriate funding to RL endangers the competitive advantage of most industries since, as it has been pointed out, returns happen almost everywhere. Apart from that, the implementation of new technologies is an issue itself: it is necessary to promote technological advancement in a reasonable way by taking into account the relative advantages and disadvantages of various solutions that are available nowadays. To sum up, the study, development, and reasonable implementation of RL technologies are necessary for all the industries concerned as well as third party companies as it is the primary way of improving the efficiency of RL processes that are among the most unpredictable and costly ones and tend to be unavoidable.

Future Research Recommendation

From this study, it can be concluded that papers devoted to RL are typically concerned with a particular industry or even specific technology, which is justified by the differences in various fields of activity. The present research was aimed at a general demonstration of the significance of technological advancement in the field of RL, and, as a result, there are several limitations to it. First of all, it does not discuss all the aspects of RL. The attempt at demonstrating the stages of planning and control through IT discussion was made, and various aspects of the implementation stage were introduced, including selection, sorting, and recycling and repairing. All the stages can be singled out in a separate study due to the volume of related information. Secondly, some of the forms of RL were not dwelled upon, for example, disposal of waste or repurposing. These forms can be discussed in future research on the topic.

References

Andel, T. (2006). Going global. Material Handling Management, 61(9), 22-26. Web.

Condea, C., Thiesse, F., & Fleisch, E. (2010). Assessing the impact of RFID and sensor technologies on the returns management of time‐sensitive products. Business Process Management Journal, 16(6), 954-971. Web.

Daugherty, P. J., Richey, R. G., Genchev, S. E., & Chen, H. (2005). Reverse logistics: Superior performance through focused resource commitments to information technology. Transportation Research. Part E, Logistics & Transportation Review, 41E(2), 77-92. Web.

Hall, C., Röttger, J., Kuyeng, K., Sigernes, F., Claes, S., & Chau, J. (2009). First results of the refurbished SOUSY radar: Tropopause altitude climatology at 78°N, 16°E, 2008. Radio Science, 44(5), 1-12. Web.

Huscroft, J., Hazen, B., Hall, D., & Hanna, J. (2013). Task‐technology fit for reverse logistics performance. The International Journal of Logistics Management, 24(2), 230-246. Web.

Kamiński, A. (2010). Computer Integrated Enterprise in the MRP/ERP Software Implementation. Foundations of Management, 2(2), 25-36. Web.

Li, P., Dahmus, J., Guldberg, S., Riddervold, H., & Kirchain, R. (2011). How Much Sorting Is Enough. Journal of Industrial Ecology, 15(5), 743-759.Web.

Nojabaei, S., Nematshahi, O., & Franchetti, M. (2015). An economic and environmental evaluation of the em-ferro plastic sorting technology. American Journal of Economics and Business Administration, 7(1), 33-47. Web.

O’Connell, M., Hickey, S., & Fitzpatrick, C. (2012). Evaluating the sustainability potential of a white goods refurbishment program. Sustainability Science, 8(4), 529-541. Web.

Ramírez, A., & Morales, V. (2013). Improving organisational performance through reverse logistics. Journal of the Operational Research Society, 65(6), 954-962. Web.

Shi, X., Li, L., Yang, L., Li, Z., & Choi, J. (2012). Information flow in reverse logistics: an industrial information integration study. Information Technology and Management, 13(4), 217-232. Web.

Sidorov, V., Rigin, V., Goryunov, A., & Min, P. (2014). Resources-Saving Technology for Recycling Off-Grade Waste Products Cast from Superalloys. Metallurgist, 58(5-6), 360-366. Web.

Skinner, L., Bryant, P., & Glenn Richey, R. (2008). Examining the impact of reverse logistics disposition strategies. International Journal of Physical Distribution & Logistics Management, 38(7), 518-539. Web.

Wright, R. E., Richey, R. G., Tokman, M., & Palmer, J. C. (2011). Recycling and reverse logistics. The Journal of Applied Business and Economics, 12(5), 9-20. Web.

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