Transforming Reverse Logistics into a Profit Center

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Reverse logistics is the process of returning faulty goods from customers. Reverse logistics and returns management continue to be an important part of the world economy. The development of a reverse logistics competency could augment a firm’s supply chain strategies, and if well executed, could transform returns from a cost center to a profit center by extending the productivity of materials, resources, and labor. Information Technology can improve the reverse logistics benefits for a firm that collaborating with supply chain members. In having a superior logistics performance, some competencies are required in considering relationships, technology, and reverse logistic. (Tyler R. Morgan, Robert Glenn Richey Jr, Chad W. Autry, 2015)
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The first hypothesis is firm collaboration will be positively associated with a reverse logistics competency. (Tyler R. Morgan, Robert Glenn Richey Jr, Chad W. Autry, 2015) The reverse logistics should benefit from the key relationships formed within the context of reverse logistics collaboration, given the joint information sharing that occurs. The second hypothesis is a firm’s level of IT competency has a positive moderating influence on the relationship between its collaboration and reverse logistics competency. (Tyler R. Morgan, Robert Glenn Richey Jr, Chad W. Autry, 2015) The third hypothesis is a reverse logistics competency will be associated with increased logistics performance. Base on article (Fugate et al., 2010) mention in research, logistics performance according to the literature, as the efficiency, effectiveness, and differentiation of firm-level logistics activities. (Tyler R. Morgan, Robert Glenn Richey Jr, Chad W. Autry, 2015)Reverse logistics practices can be seen as not only financially beneficial, but also as environmentally conscious, and as a result, stakeholders are sometimes pressuring companies to evaluate their supply chain as a potential avenue to address sustainability concerns. For example, cost reduction or reduced capacity utilization stemming from the recapture and reuse of returned components/ingredients can lead to greater customer fulfilment via product availability. Firms that can leverage collaboration to develop a reverse logistics competency are able to reduce, reuse, and recycle products in ways their competitors cannot, leading to a cost savings advantage and to an increased focus on service-related aspects such as fulfilment, thereby leading to greater levels of objective effectiveness. (Tyler R. Morgan, Robert Glenn Richey Jr, Chad W. Autry,

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