Reverse Logistics

Trident University International

LOG302

Module 4: Reverse Logistics

Case Assignment

Professor:

Module 4: Reverse Logistics

Case Assignment

Introduction

In the business-driven society that we study and interact with on a daily basis, it is important to see and comprehend all the important individual parts of business and how they act together to create a successful operation. Thus far in this course, the modules have explored many of the logistical parts of business such as facility planning and warehouse operations, the specific operations of product distribution, and even the quality control of all logistics of a business. Understanding these individual parts of business is important, but one specific part of business logistics that is imperative to know and understand is the process of reverse logistics. Reverse logistics is becoming more and more common and needed in businesses across the entire world. This is largely due to the significant increase of online shopping that happens from day to day. For example, there is a certain level of risk from buying online because you are not physically holding or inspecting the object for flaws, defects, or damage. This level of risk is drive behind the mass amount of returns that businesses deal with every day. The remainder of this paper will explore this idea in more detail. The purpose of this paper is to investigate the common practices and obstacles that are frequent for MyShoppingCart.com when dealing with reverse logistics. This paper will discuss any opportunities for MyShoppingCart.com to profit from product returns. Now that this paper has been clearly defined, let’s get started with any opportunities for MyShoppingCart.com to profit from product returns.

Opportunities to Profit from Returns

As mention above, it is important to know and understand how to deal with the complex operations of reverse logistics. To start, it is most beneficial to first define reverse logistics. Reverse logistics can be simply defined as the control of returning goods, products, and services to the original business from the customer after a purchase has been made. In more detail, reverse logistics ensures that customers get their money returned to their accounts, products are properly disposed of, and that unwanted items are either remanufactured, refurbished, reused, or recycled (Magazine, 2006). While not as common as the fore mentioned processes, reverse logistics also includes processes such as returning items to the business’ supply vendor because of damage, recalls, out-of-season items, surplus inventory, proper disposal of hazardous material, and returning outdated equipment (Magazine, 2006).

From the business’ point of view, reverse logistics, according to the definition above, is a process that is unwanted, yet inevitable. For this reason, it is imperative for businesses to have reverse logistics practices in place to make the process as smooth and successful as possible. Aside from successfully completing reverse logistics, any wise business would also have a system and process in place to attempt to make a profit or simply break even on the returned items. For many electronic businesses, profiting on reverse logistics is simple. These electronic businesses could resell the electronic items such as computers, phones, or speakers at a discounted price. Also, if the items are beyond repair, the electronic business could simply take the items to a recycling or refurbishing center to profit off the spare parts. This, however, is not the case for MyShoppingCart.com because they deal with groceries. While there are not as many venues to make a profit for grocery delivery based businesses, there are still a couple that are worth exploring.

One way for MyShoppingCart.com to make a profit on their reverse logistic efforts is to establish cash flow processes. When dealing with reverse logistics, cash flow is generally dealt with by providing in-store credit and discounts to customers for future purchases (Magazine, 2013). This is a wise tactic for MyShoppingCart.com to implement for many reasons. One reason is because it will provide a venue that enables MyShoppingCart.com to avoid returning the customers money that they used to purchase the groceries at hand. This will automatically stop the company from taking a more significant loss. This concept builds onto the second reason. The second reason that this is a wise tactic to implement is because it will then ensure that the customer’s next purchase will be with MyShoppingCart.com. This will minimize the amount of money lost and even provides the opportunity to make a profit by ensuring the chance for the customer to return to the store for more groceries.

Another way for MyShoppingCart.com to make a profit on their reverse logistics efforts is to find ways to sell the outdated and spoiled grocery products. One way to sell the spoiled goods to farmers. Though the farmers most likely won’t pay much for the spoiled food, it would still be more money for the business than if it were to be thrown in the garbage. Farmers commonly go to local grocery stores to purchase spoiled goods for many reasons. Some reasons include feeding their animals and livestock and they even use it to increase the richness of their soil to generate better crops (Moorhead, 2015). The next way to make a profit off the spoiled returned groceries is to sell them to energy producing factories. Any spoiled product, from rotten bananas to corn husks, can be sold to energy producing factories where the products would be burned in a controlled environment which then produces power and energy for homes and cities (Moorhead, 2015). Now, this paper will summarize the main points of this paper with a conclusion.

Conclusion

In conclusion, as businesses grow and develop, it is paramount that they know and understand the processes of reverse logistics. As more and more people are utilizing online shopping instead of in-store shopping, business must be prepared for the customers that will inevitably return flawed, defected, or damaged products. This concept is especially true for the MyShoppingCart.com grocery delivery business describes throughout this course. Knowing, understanding, and implementing these reverse logistic practices and procedures is especially important for MyShoppingCart.com due to the large amount of orders that come from the Silicon Valley area. The purpose of this paper was to investigate the common practices and obstacles that are frequent for MyShoppingCart.com when dealing with reverse logistics. This paper discussed if there were any opportunities for MyShoppingCart.com to profit from product returns.

References

Magazine, R. L. (2013). Profits in Reverse Logistics. Retrieved December 05, 2017, from http://www.reverselogisticstrends.com/rlmagazine/edition51p22.php

Magazine, R. L. (2006). What is Reverse Logistics? Retrieved December 05, 2017, from http://www.rlmagazine.com/edition01p12.php

Moorhead, J. (2015, May 12). Heres How Your Grocery Store Deals with Waste. Retrieved December 05, 2017, from https://www.thekitchn.com/what-happens-to-grocery-store-waste-the-grocery-insider-218928