Blog Month: January 2022

  • Innovation with Reverse Logistics (Part 2 of 2)

    Introduction

    In Part I of this article we gave a short introduction to the Reverse Logistics concept, and the reasoning behind the recent increase in popularity. Many SME’s (Small-Medium Enterprises) now make use of Reverse Logistics to some degree. The benefits gained such as resource management, profit margin increase, and increased customer satisfaction are prominent within any company that maintains a reliable Reverse Logistics Chain. 

    In Supply Chain Management, Reverse Logistics can be used as a strategy to close the circularity of a products’ life cycle. Reverse Logistics is the process that deals with the collection and remanufacturing of used or unnecessary items. From a supplier point of view, Reverse Logistics’ drivers are legislations, which oblige them to manage the remanufacturing of sold products, environmental concerns, strictly linked to the demand of customer to have more sustainable products, and economic benefits, since a returned item can easily be sold instead of producing a new one from raw materials (D’Amico, E. D. 2021).

    This part of the Reverse Logistics Article will cover the latest innovations that are mainly used to gain a competitive advantage within the marketplace. When executed correctly, these innovative technologies allow companies to scale rapidly. SMEs often outsource to professional Supply Chain companies that make use of these technologies. This way, smaller companies can experience the benefit of rapid scalability whilst keeping their investment costs low. It also provides better resource management as they can allocate their personnel to other tasks. In this article, we will zoom in on the two most popular innovations within Reverse Logistics.

    According to D’Amico, E. D. (2021), An implementation of technologies such as IoT (Internet of Things) and Blockchain would allow to improve the functionality of Reverse Logistics. Although these technologies can be expensive to be implemented and require much expertise, they offer possible solutions, especially with the use of RFID (Identification tags usable on products). Traceability, transparency, and prediction are the main benefits of Smart Reverse Supply Chain (SRSC).

    Innovative Technologies

    Internet of Things (IoT)

    According to K. Ashton (2019), IoT describes a network in which every physical product has a virtual identity and is linked to a connection. It represents one of the main pillars of the revolution of Industry 4.0. The IoT is considered as the key that allows objects, such as RFID tags or sensors to communicate with each other and with humans. The holistic connection created a synergized network that allows streamlined Data transfers on a large scale.

    IoT is used within many Supply Chain aspects nowadays. Inventory management is a frequently used aspect. As soon as the quantity falls under an established number, a reorder can be automatically processed with the use of RFID in a virtual cloud. According to Wanganoo (2020),  the structure of IoT is based on four layers. These are:

    • Data storing (RFID)
    • Communicaion
    • Service
    • Display layer

    IoT is able to bring remarkable opportunities to Reverse Logistics. Through the establishment of a connected network of products, the information infrastructure is strongly improved (Gar-2020).

    Blockchain

    Blockchain can be defined as a digital technology that facilitates the recording of transactions and allows for the traceability of a resource. The type of resource can vary between physical (e.g., cars) or an abstract resource (e.g., patents or cryptocurrency). Especially with cryptocurrency, Blockchain allows the record of every transaction. Blockchain as a process can be explained as follows: The moved information can be envisioned as a block, which contains all the pertinent data and passes from one client to the next. The exchange should be endorsed by the organization, which looks at the data and approves it. This guarantees straightforwardness and security. The new record is added to a block, that contains a unique code, named hash. It also contains the code from the previous block and is successively added to a chain of blocks.

    The main concept stimulates the idea of handling information in a decentralized way. Information is verified by the collective, instead of by a single entity.

    When it comes to supply chain and Reverse Logistics, Blockchain can be used to improve the chain in multiple ways. The decentralized structure allows every logistics member to keep real-time track of a product and it increases the reliability of the data (Zhu-2019). The transparency enabled by Blockchain increases the security of a trade. This security is a valuable element needed in any resilient Supply Chain. In addition, Blockchain allows Supply Chains to streamline their transaction process as it can remove intermediate steps form the transactional process. This reduces costs and time, ultimately improving the Supply Chain.

    The figure below clearly illustrates the Blockchain process.

    Figure 1. (The Blockchain process) D’Amico, E. D. (2021, October 10).

    These two innovative technologies allow any company to build a reliable and resilient Reverse Logistics process, ultimately improving the Supply Chain. Would you like to know more about these innovative technologies and how you are able to implement these within your Supply Chain? Contact a ModusLink Expert today by clicking here!

    Bibliography:

    D’Amico, E. D. (2021, October 10). ResearchGate. ResearchGate. Retrieved November 6, 2021, from https://www.researchgate.net/publication/354551628_Analysis_of_Challenges_and_Potentials_of_Reverse_Logistics

    Jenkins, A. (2021, April 5). A Guide to Reverse Logistics: How It Works, Types and Strategies. Oracle NetSuite. https://www.netsuite.com/portal/resource/articles/inventory-management/reverse-logistics.shtml

    Marchese, K. (2021, October 29). Supply Chain leadership. Deloitte United States. https://www2.deloitte.com/us/en/pages/operations/articles/supply-chain-leadership.html

    Niroomand, I. (2021, August 31). The importance of reverse logistics in your supply chain network. Kinaxis. https://www.kinaxis.com/en/blog/importance-reverse-logistics-supply-chain-network

    Reverse Logistics – Rhenus Netherlands. (n.d.). Rhenus. Retrieved November 6, 2021, from https://www.rhenus.com/en/nl/our-solutions

     

  • Innovation with Reverse Logistics (Part 1 of 2)

    Introduction

    Both Challenging and Rewarding. When speaking to any experienced Supply Chain professional, it is these exact two terms that can almost be expected to be brought up somewhere within the conversation. A strong Supply Chain must contain elements such as Resilience, Agility, Responsiveness, Cooperation, Fluency and so forth. Managing to maintain all these elements can be highly challenging. However, if a business succeeds in doing so, the rewards are highly noticeable. Loyal customers, Fast delivery, Capability to adapt to the market, freedom in spending resources, time management, effective return management and so on.

    SME’s (Small/Medium Enterprises) often struggle to effectively manage their Supply Chain due to limited capacity and resources. A popular solution to this can be given in the form of Outsourcing. Many SME’s take advantage of Outsourcing the core components of their Supply Chain to experienced professionals within the industry. This allows them to quickly scale their business and invest their time and resources into other parts of the business without sacrificing on the importance of the key driver behind their business, the Supply Chain. A large Supply Chain element that is often prioritized when Outsourcing is the process of ‘Reverse Logistics’. This is because the element is highly impacting the customer satisfaction ratio, and overall Supply Chain performance.

    The definition of Reverse Logistics

    Reverse Logistics is often referred to as Reverse Supply Chain, and part of Closed Loop Supply Chain. It has its first definition published only in the beginning of the nineties by the Council of Logistics Management (Bri-2004, S. 4) and thus still represents a young sector of Logistics.

    The most acknowledged definition of Reverse Logistics is ‘’the process of planning, implementing and controlling flows of raw materials, in process inventory, and finished goods, from a manufacturing, distribution or use point, to a point of recovery or point of proper disposal’’ (Bri-2004, S. 5).

    Figure 1(The Reverse Logistics Process) (Chi-2018)

    The Figure above clearly illustrates the core elements of the Reverse logistics Process. Products are received from the end-customer and transported back to the warehouse in question. They are then carefully inspected for defects, depending on the reasoning behind the return. They are then adequately sorted and either resold/recycled or scrapped.

    The introduction of Reverse Logistics within Supply Chain Management didn’t go as smooth as expected. Businesses often quickly experienced the challenges that come with Reverse Logistics such as capacity management, customer expectations, waste management etc. These challenges were often too grand to build a strong Reverse Logistics process. It is only as of recent that Reverse Logistics has become increasingly popular to manage effectively. There are a couple reasons for this. The uprising of eCommerce businesses is one explanation as many products flow quickly through an eCommerce business, increasing the importance of managing the returns process. Another reason for the increase in popularity of Reverse Logistics management has to do with the uprise of strong Technological Solutions/Innovations such as IOT (Internet of Things), AVG’s (Automated Guided Vehicles), etc. These solutions allow SMEs to overcome the challenges that come with effectively managing a reverse Logistics process.

    Smart Reverse Supply Chain (SRSC)

    The concept of merging the above-mentioned Technology/Tools, together with Reverse Logistics forms the concept that is called ‘Smart Reverse Supply Chain’. To overcome the challenges that come with managing your Reverse Logistics process, Businesses decide to make use of the uprising beneficial technologies mentioned above. They can choose to individually adopt these technologies, or collectively make them work together to strengthen the synergy within the Reverse Supply Chain.

    SRCS can manage flow times and information exchanges more effectively between logistical partners. This minimizes the uncertainties and difficulties when returning products. (XU – 201-1b). According to Xu (Xu-2011b), each product can be equipped with a tag to be associated with a unique identity and to be able to communicate with other devices.

    The two key elements that ought to be managed effectively to improve SRCS are (Xu-2011a):

    • Identification tools: In order to implement a well-organised Smart Reverse Logistics, it is necessary to establish appropriate identification methods such as RFID (ID Tags), 3-D and 4-D Barcodes to permit the recognition of incoming and handled object and the communication between them
    • Standardization: To allow every member of the Closed Loop Supply Chain to pro- cess and identify the products, it is necessary to establish a standardization of the used technologies. Although there is the EPC, which uniforms the identity of every item, also the reading technologies need to be standardized

    These two elements are best managed through the innovative technologies such as Artificial Intelligence and Machine Learning, Blockchain and Internet of Things (IoT). Would you like to know more about these innovative technologies and how you are able to implement these within your Supply Chain? Stay tuned for our next Blog where we go more in depth or talk to a ModusLink Expert today clicking here!

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    Bibliography:

    D’Amico, E. D. (2021, October 10). ResearchGate. ResearchGate. Retrieved November 6, 2021, from https://www.researchgate.net/publication/354551628_Analysis_of_Challenges_and_Potentials_of_Reverse_Logistics

    Jenkins, A. (2021, April 5). A Guide to Reverse Logistics: How It Works, Types and Strategies. Oracle NetSuite. https://www.netsuite.com/portal/resource/articles/inventory-management/reverse-logistics.shtml

    Marchese, K. (2021, October 29). Supply Chain leadership. Deloitte United States. https://www2.deloitte.com/us/en/pages/operations/articles/supply-chain-leadership.html

    Niroomand, I. (2021, August 31). The importance of reverse logistics in your supply chain network. Kinaxis. https://www.kinaxis.com/en/blog/importance-reverse-logistics-supply-chain-network

    Reverse Logistics – Rhenus Netherlands. (n.d.). Rhenus. Retrieved November 6, 2021, from https://www.rhenus.com/en/nl/our-solutions/contract-logistics/logistics-solutions/reverse-logistics/