Reverse Supply Chain

Management

Dr. Peeyush Mehta

Vipul Mathur
 Definition of RSCM

A set of approaches utilized to efficiently

integrate suppliers, manufacturers,
warehouses, and stores, so that merchandise
is produced and distributed at the right
quantities, to the right locations, and at the
right time, in order to minimize system-wide
costs while satisfying service level
requirements
 Relevance of RSCM
The amount of product returns can be very high, with
some industries experiencing returns at over 50% of
sales.
Sales opportunities in secondary and global markets
have increased revenue generation from previously
discarded products.
End-of-life take-back laws proliferated in foreign
countries requires businesses to effectively manage the
entire life-cycle of the product.
Consumers have successfully pressured businesses to
take responsibility for the disposal of their products that
contain hazardous waste
 Process steps in RSCM
Acquisition of products from customers
Reverse logistics: Process of retrieving the
product from consumer for the purposes of
capturing value or proper disposal
Inspection & disposition
Reconditioning
Distribution & sales
Process
 Examples
Printing industry: Repurchase of old edition, un-
sold books.
Computer industry: Resale due to fast moving
technology
Automobiles: Resale due to new models
availability e.g. Maruti True Value scheme
Electronic industry: Mobile phones, televisions
etc. repurchased to recover electronic parts
 Time value of product returns
Marginal Value of Time (MVT)

The loss in value per unit of time spent awaiting

completion of the recovery process

MVT (%)= Decrease in value of product

Time
Example: Time sensitive consumer electronics products such as
PCs can lose value at rates in excess of 1% per week, and the
rate increases as the product nears the end of its life cycle
Shrinking pipeline for product
returns
 RSCM decisions
Efficient RSCM: A supply chain designed
to deliver product at low cost
Best for Functional products
Suitable for products with High MVT
Responsive RSCM: A supply chain
designed for speed of response
Best for Innovative products
Suitable for products with Low MVT
Efficient RSCM: Centralized model
 Responsive RSCM: Decentralized
model

* evaluation of products at retailer or reseller

 Trade offs
Efficient RSCM
Designed for economies of scaleboth in processing
and transport of product at the expense of long delays
Suitable for low MVT

Responsive RSCM
Improve asset recovery by reducing time-
Preponement
Issues: Technical feasibility; cooperation between
manufactures and resellers.

Suitable for high MVT