Final Project - Reverse Logistics Model Analysis.doc - QSO...

QSO 425 Final Project 1
7-2 Final Project
Keshia Quintana
October 20, 2019

QSO 425 Final Project 2
Forward and reverse logistics go hand in hand when looking at the big picture in supply
chain. It’s important to have a working process for both, in order to ensure minimal waste and
maximum customer satisfaction. Most supply chains will stop measuring the success of their
goods once the product is shipped and is delivered on time. While this can be an accurate
measurement of customer satisfaction and profit, it doesn’t account for all cases (Newcastle
Systems. 2017, October 17). Therefore, it’s crucial for a business to practice reverse logistics and
below I will explain the many reasons why.
Reverse logistics can represent a significant chunk of supply chain cost, and it’s typically
not very well managed. Estimates range from 1 percent of overall supply chain costs when well
managed to almost 10 percent when it’s not very well managed (Bentz, B. 2015, July 9). Owners
and/or managers should look at what they currently have in place within their supply chain and
determine how you can use the current infrastructure to put a reverse logistics process in place.
For example, FedEx is making deliveries from a manufacturer to a wholesaler. Once the
shipment is delivered, the truck deadheads, or drives with an empty trailer, back to origin. FedEx
is charging the customer for the round trip, regardless of returning with an empty trailer.
Meanwhile, the wholesaler has been sending return items back to the manufacturer as they come
in via another common carrier service. This is considered wasteful and the proper solution would
be to consolidate returns and take advantage of the delivery truck that the company is already
paying for to return any inventory back to the manufacturer. By implementing this process, the
wholesaler can eliminate the additional cost and therefore will have higher profit margins.
The potential impact of this type of resource sharing on the overall performance of supply
chains should be minimal. The only downside is that the inventory that needs to be returned will
take longer to arrive back to the factory. This could affect the manufacturer’s production if they

QSO 425 Final Project 3
are planning on refurbishing items to be used again. Although, I believe that if there is a weekly
scheduled truck, a process in place, and the manufacturer understands the additional cost
incurred to get a return item back to the factory individually rather than consolidated, the good
will outweigh the bad. Another issue may be that when consolidating the return inventory, it
means that the inventory will stay at the wholesaler’s warehouse for longer than normal while
enough inventory is consolidated. If it is a crowded warehouse, this may pose some safety
concerns due to overcrowding.