Logistics processes of return flow became more and more important in present business practice. Because of better customer satisfaction, environmental and financial aspects many enterprises deal with reverse logistics performance. The paper is a literature review focused on the design principles of reverse logistics processes Keywords: reverse logistics, designing.reverse logistics, designing

Janusz K. Grabara

Sebastian Kot

English

Research Papers in Economics

  55 
 
 
THEORETICAL FRAMES FOR DESIGNING REVERSE LOGISTICS 
PROCESSES 
 
Prof. Ph.D. Janusz K. Grabara 
Technical University of Czestochowa, Faculty of Management, Poland 
E-mail: grabara@czestochowa.net.pl 
Prof. Ph.D. Sebastian Kot 
Technical University of Czestochowa, Faculty of Management, Poland 
E-mail: sebacat@poczta.onet.pl 
 
 
 
 
 
 
 
Keywords: reverse logistics, designing. 
 
1. Introduction 
 
Over the past few years increasing volumes of return flows, varying from end-of- life 
returns  to  marketing  or  commercial  returns,  has  reinforced  interest  in  the  effective 
management of such flows. In the literature various approaches describing reverse logistics 
flow can be found. The systematic study of return flows and environmental aspects (Corbett, 
C., van Wassenhove, L.N., 1993,) were the main topic in early literature. Later literature has 
studied decisions in remanufacturing of returned products (Thierry, M., Salomon, M., van 
Nunen,  J.A.E.E.,  van  Wassenhove,  L.N.,  1995)  and  inventory  strategies  with  a 
remanufacturing option (Van der Laan, E.A., Salomon, M., Dekker, R., van Wassenhove, 
L.N., 1999). Besides that, there is relevant literature scanning the general issues / problems in 
reverse logistics (Kopicky, R.J., Berg, M.J., Legg, L., Dasappa, V., Maggioni, C., 1993). 
Hardly any attention has been paid to operational and financial aspects of return storage, 
handling  and  transportation.  Strategic  aspects  of  distribution  network  structures  were 
discussed  by  Bloemhof-Ruwaard  et  al  (Bloemhof-Ruwaard,  J.M.,  Fleischmann,  M.,  van 
Abstract 
Logistics  processes  of  return  flow  became  more  and  more  important  in  present  business 
practice.  Because  of  better  customer  satisfaction,  environmental  and  financial  aspects  many 
enterprises deal with reverse logistics performance. The paper is a literature review focused on the 
design principles of reverse logistics processes.    56 
Nunen, J.A.E.E., 1999). Autry et al. (Autry, C.W., Daugherty, P.J., Richey R.G., 2000), deal 
with the bond between reverse logistics performance and satisfaction.  
Fleischmann et al. (Fleischmann, M., Krikke, H.R., Dekker, R., Flapper, S.D.P., 2000) 
be  described  reverse  logistics  management  as  the  process  of  planning,  implementing  and 
controlling  the  efficient  and  effective  inbound  flow  and  storage  of  secondary  goods  and 
related information opposite to the traditional supply chain, for the purpose of recovering 
value or proper disposal. Typically, this comprehends a set of processes such as collection, 
inspection/separation,  reprocessing  (including  disassembly),  disposal  and  redistribution. 
Closed loop supply chain management goes beyond that (Quariguasi Frota Neto J., Walther 
G.,  Bloemhof  J.,  van  Nunen  J.A.E.E.,    Spengler,  T.,  2007).  It  comprehends  all  business 
functions  and  hence  decisions  regarding  the  adaptation  of  business  strategy,  marketing, 
quality management, information systems, logistics and so on in view of closing material 
flows, thereby limiting emission and residual waste, but also providing customer service at 
low cost. Both the forward and reverse chain are considered, since there is a strong interaction 
between the two.  
It is essential to analyze in what respect reverse logistics fundamentally differ from 
forward logistics, and how this affects design principles. Reverse logistics is different on the 
following aspects:  
• in  addition  to  cost  and  service  there  are  environmental  drivers,  complicating  the 
objective function; 
• higher system complexity, in particular in reverse logistics processes due to increased 
number of - and interaction between goods flows. Uncertainty on the supply (collection) side 
of the system regarding volumes, quality, composition and timing;  
• push-pull  nature.  There  is  often  a  mismatch  between  supply  and  demand. 
“Production” (i.e. supply of used products) is not coupled with “demand” (i.e. producer’s 
requirements); 
• numerous “suppliers”/ few “customers”. Used products are the raw materials for the 
reverse chain. Unlike the forward chain, there are a lot more sources of raw materials and they 
enter the reverse chain at small cost or at no cost at all. However, although obtained for 
“free”, the value of return flows is low and may be limited to a small fraction of the flow;  
• unexplored market opportunities. Environmental requirements can be the basis of the 
creation of new markets or result in the reorganization of existing ones for by-products of the 
production process. With such reorganization, materials that would otherwise end as wastes 
would turn into useful products.  
   57 
2. Design principles for reverse logistics  
 
From reverse logistics point of view, we are able to following important rules Impose 
sustainability  standards  on  suppliers.  Selecting  sustainable  suppliers  requires  additional 
selection criteria. One of the issues to be solved is the supplier paradox: the one supplying 
reusable  parts  may  loose  most  business.  This  needs  to  be  compensated,  for  example  by 
outsourcing repair to the original supplier, who as a bonus also has most knowledge and 
dedicated equipment. Also, suppliers may co-design the product to enable modularization and 
design for recycling (Tsoulfas, G.T., Pappis, C.P., Minner, S., 2000). 
Make use of accounting systems that account for the full life-cycle costing of a product 
or  service,  and  the  environmental  impacts  it  creates.  Based  on  this,  develop  and  design 
recoverable  products,  which  should  be  technically  durable,  repeatedly  usable,  harmlessly 
recoverable after use and environmentally compatible in disposal (Gotzel, C., Weidling, J.G., 
Heisig, G., Inderfurth, K.,  1999). Extending service and function, especially at the usage 
phase, improves eco-efficiency and reusability. Modularity and standardization also improves 
opportunities for repair and (cross-supply chain) reuse of components and materials.  
Make  use  of  management  tools,  such  as  ISO  9000-14000,  life  cycle  analysis, 
environmental accounting methods, that may help business to identify and select opportunities 
for improvement. For example, using less energy is obviously good for the environment. It is 
also self-evidently good for business because it cuts companies’ costs, and eventually avoids 
potential  environmental  liabilities.  It  is,  therefore,  a  prerequisite  to  the  long-term 
sustainability of business. To replace non-renewable and polluting technologies, it is crucial 
to support the use of solar, wind, water and geothermal energy (among others), as well as 
reduction in energy consumption.  
Create new markets. The environment can be at the basis of the creation of new markets 
or  of  the  reorganization  of  existing  ones  for  certain  (material)  flows  resulting  from  the 
production process. With such a technical reorganization, materials that would formerly have 
ended as wastes are turned into useful by-products ( Faucheux, S., Nicolai, I., 1998). Facilities 
should be located close to possible end-users. Such a policy would ease the direct delivery of 
used products from end-users (Angell, L.C., Klassen, R.D., 1999). Furthermore, companies 
can also offer waste disposal services (Corbett, C., van Wassenhove, L.N., 1993).  
Manage additional uncertainty. In recovery situations only a part of the flow is valuable, 
but it is hard to say beforehand which part. This means that sorting and initial testing should 
be decentralized to separate junk from valuable returns. The same goes for sorting and volume 
reduction in e.g. plastics recycling. Intrinsic to the push-pull nature of reverse channels, there 
will often be a mismatch between supply and demand for recyclable products and choice of   58 
the  right  recovery  channels,  even  in  situations  with  perfect  information.  E-market  places 
provide  a  good  support  tool.  Companies  that  manipulate  materials  and  energy  should  be 
organized  in  such  a  way  that  they  can  respond  rapidly  to  changes  in  management  and 
processes.  Changing demands for goods and  services  will also push design changes.  The 
study of alternative plans is necessary in order to achieve eco-optimization. “Do the same but 
do  it  better  or  try  to  do  something  different”  (Angell,  L.C.,  Klassen,  R.D.,  1999).  Pro-
activeness, especially to intended legislation, has proven to be effective in many situations. 
Match  network  design  with  recovery  option.  Regarding  cost  and  service  driven  network 
design, (Fleischmann, M., Krikke, H.R., Dekker, R., Flapper, S.D.P., 2000) give an overview 
of case studies. They conclude that compared to traditional forward logistics, reverse logistics 
has some distinguishing common characteristics, in particular in terms of processes to be 
carried out. Typical characteristics of product recovery networks include a convergent part 
concerned with collection and transportation from a disposer market to recovery facilities, a 
divergent part for distribution to a re-use market, and an intermediate part related with the 
recovery  processing  steps  required.  Moreover,  they  derive  typical  types  of  networks  per 
recovery option, where they distinguish networks for material recycling, remanufacturing, 
reusable components, reusable packaging, warranty and commercial returns. These network 
types generally differ in terms of network topology, the role of and cooperation between 
actors and the collection and routing system used.  
Environmental  aspects  may  influence  network  topology,  the  role  and  cooperation 
between actors and the collection and routing system used, and they also raise the issue of 
product  design  as  a  critical  element  (Tsoulfas,  G.T.,  Pappis,  C.P.,  Minner,  S.,  2000). 
Decisions to be taken concern modularity, kind of materials, involvement of suppliers (co-
design),  disassemblability,  life  cycle  considerations,  type  of  equipment  used  and 
standardization  of  modules/components  in  the  product.  Parameters  affecting  the  decision 
include pollution generated, energy use, residual waste, life cycle cost, production technology, 
secondary materials, by-products, recyclability, product complexity, product function, and so 
on.  
Enhance quality and rate of return. In a multicriteria model presented by Krikke at all 
(Krikke, H.R., Bloemhof-Ruwaard, J. M., Van Wassenhove, L.N., 2000) that optimizes the 
supply chain of refrigerators on both economic and environmental (LCA based) criteria. The 
model is run for different scenarios using different parameter settings such as centralized 
versus decentralized operations, alternative product designs, varying recovery feasibility and 
return quantity, and potential EU legislation. The most important conclusion of the project is 
that,  next  to  efficient  logistics  combined  with  optimal  product  design,  system  optimality   59 
depends on return quality and rate of return. In fact, in this case study these effects outperform 
the impact of product design and logistics network structure. 
 
3. Conclusions  
 
Generally it is well known that sustainability is costly and the domain of environmental 
idealists. Few companies have established reverse logistics in form of closed loop supply 
chains and the ones that have usually implemented end-of-pipe solutions are enforced by law. 
Present results on the state of the art of “reverse logistics” and conclude - amongst other 
things- that “the state of development” of “reverse logistics” is analogous to that of inbound 
logistics of 10-20 years ago.  
Although one case is insufficient to draw generic conclusions, that the most eminent 
mistakes made by business companies are:  
Life cycle approach is missing. Many troubles in recovery phase are caused by bad 
product design. Reverse logistics process should be designed in concert with the forward 
logistics. Sometimes this requires a partial redesign of the forward logistics as well. Existing 
supply chains thus strongly affect the design of reverse logistics  but may also be affected 
themselves. Extend service and enhance function, especially at the usage phase, to improve 
eco-efficiency and reusability. 
Optimization on out-of-pocket costs only. In the reverse logistics, next to out-of-pocket 
costs we must also include obsolescence costs and service related criteria must be included. 
This is in fact a very old principle. The importance of lead time effects both on costs and 
service level has been extensively reported in classic logistics literature. However, there is a 
danger that reverse logistics is going to reinvent the wheel at this point.  
Neglect of sustainability as an optimization issue. It is necessary to develop and design 
recoverable  products,  which  should  be  technically  durable,  repeatedly  usable,  harmlessly 
recoverable after use and environmentally compatible in disposal. Very important is to add 
energy use of the entire system as an optimization criterion. Using less energy’s obviously 
good  for  the  environment.  It  is  also  self-evidently  good  for  business  because  it  cuts 
companies’ costs, and eventually avoids potential environmental liabilities. It is, therefore, a 
prerequisite to the long-term sustainability of business. To replace or reduce the use of non-
renewable and polluting technologies, it is crucial to support the use of solar, wind, water and 
geothermal energy (among others), as well as to reduce energy consumption. A number of 
management  tools,  such  as  environmental  assessment,  life  cycle  analysis,  environmental 
accounting methods, but also  “simple”  logistics principles can help business identify and 
select opportunities for improvement.   60 
References 
 
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THEORETICAL FRAMES FOR DESIGNING REVERSE LOGISTICS PROCESSES

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