Integrated Framework for Reverse Logistics.docx
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Integrated Framework for Reverse Logistics.docx
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IntegratedFrameworkforReverseLogistics
IntegratedFrameworkforReverseLogistics
1Introduction
Acompletesupplychainconcepttypicallyincludesforwardandreverselogistics.However,reverselogisticshasbeenmuchlessexaminedthanforwardlogistics.Reverselogisticshasrecentlyemergedascrucialissuesinbothpracticesandacademicstudies.Reverselogisticsencompassesplanning,implementingandcontrollingtheefficientandcosteffectiveflowofrawmaterials,in-processinventory,finishedgoodsandrelatedinformationfromthepointofconsumptiontothepointoforigintorecapturevalueordisposeproperly.IntheEuropeanUnion,theWasteElectricalandElectronicEquipment(WEEE)directive,thiscameintoforceinAugust2005,andtheRestrictionofHazardousSubstances(RoHS)directive,whichcameintoforcein2006;requirescompaniestotakeresponsibilityforproductthattheysellthroughouttheproductentirelifecycle.Reverselogisticshasbecomeimperativeforbusiness.Manypreviousstudieshaveattemptedtoformulatemathematicalmodelsofreverselogistics.Amongthesestudies,Minetal.presentedageneticalgorithmmodeltodeploycentralizedreturncenters.KlausnerandHendricksonexploredtherelationshipbetweenproductreturnratioandreverselogisticsstrategy.KulshreshthaandSarangiexaminedthelinkbetweenrecyclingandpricediscrimination.Althoughtheseoptimizationmodelsprovidepartialreverselogisticsolutions,theyincludemanyassumptionsthatwouldnotholdinreality.Sincereverselogisticactivitiesaretoouncertaintoformulize,theinformationaboutthemshouldideallybecombined.Additionally,somestudieshaveinvestigatedthisissuefromtheperspectiveoftheentiresupply
chain.Forinstance,Beamonextendedtheforwardsupplychain,andproposedthegreensupplychainconcept.Tibben-LembakeandRogersdiscussedthedistinctionbetweenforwardandreverselogisticsinmultipledimensions.MollenkopfandClossdiscussedthehiddenvalueofreverselogisticsfromtheentiresupplychain.Richeyetal.surveyedreverselogisticsprograms,andclaimedthatinformationisacriticalfactor.Companiesareincreasinglyutilizingreverselogisticsasabusinessstrategy.Forinstance,loosereturnpoliciesmightgivecustomerstheimpressionofhighproductquality.Additionally,abusinessmayearngoodwillfromsociallyorenvironmentresponsiblebehavior.However,thesereverselogisticsstrategiesmightleadtoalargeamountofreturnedandrecycledmerchandise.Businessesrequireadditionalinformationtoresolvethisviciouscircle.Otherwise,theopaqueinformationmightinvokeahugebullwhipeffect.Asbusinessobtainsmoreinformation,theycanpredictandprepare,orevenpreventbadeffectsinreverseactivities.Ifthereturnedproductsarefashionmerchandise,suchas3Celectronicproductorseasonalclothes,thentheproductremainingvaluemightfallwhentheyaresentbackbytheconsumertotheproducersite.Therefore,ifsufficientinformationisavailabletoenablebusinessestopredictreturnsearly,thenbusinesscouldproperlyprepareandreduceprocesstimetomaintaintheirremainingvalues.Additionally,duetotheenforcementofWEEEorRoHSinEuropeanUnion,manufacturerswouldbecomeconcernedwiththerecycleratioatanytime.Thisstudyconsidersthesereverselogisticactivitiesmoreactively.Anagent-basedmodelispresentedtoincreaseinformationtransparencydegree(ITD)oftheentiresupplychainmanagement(SCM).AsupplychainwithahighITDservesasanearlywarningsystem,andworksveryefficiently.AHighITDenhancesinformationsharingwithinanentiresupplychainmanagement(SCM).
2ProblemDescriptions
Previousstudieshavecategorizedreverselogisticactivitiesintothreegroups,asshowninTable1,namelyreturn,repairandrecycle.Intheprocessofforwardlogistics,suppliersproviderawmaterialtomanufacturers,whomakeproducts,whicharethensenttocustomers,generallythroughdistributors.Conversely,acustomermightsendaproductbackforreturn,repairorrecycling.Additionally,manufacturersandsuppliersalsoneedtodealwithdefectiveornonworkingproducts.Recyclingcollectorsneedtodisposeoftheserecycledproductsproperly,andtransferreusablematerialsbacktothesupplierandmanufacturer.Thisprocessisknownasreverselogistics.Thesereverseactivitieshavethefollowingproblems.
(1)Ifacustomerreturnsproducttoadistributor,thenthedistributormightstockreturnedproductstoaparticularlevel,thensendthembacktomanufacturer.However,thispracticeadverselyaffectsthemanufacturer,whohaslesstimetoprocessthereturnedproducts,thustheloweringtheirremainingvalue.
(2)Recyclinglaws,suchasWEEEandRoHSintheEuropeanUnion,increasetheimportanceofrecyclingactivities.Businessesneedtomonitorrecycleratios,andraisethemtocomplywithrecyclinglaws.(3)Finally,intherepairaspect,repairingprocessingtimeshouldbereducedtomaintaintheimageofabusiness.Table1.ThedefinitionofreverselogisticactivitiesActivityDefinitionResultReturnConsumersreturntheproductsboughtwithincertainperiodoftimeforanyreason(rationalorirrational).Dependingonpolicies,customermayreceiveanotheridenticalnewproduct,anequivalentproductexchangeorfullmoneyback.RepairConsumerssendbrokenproducttorepaircenter(ororiginalproducer).Customergenerallywouldreceiveworkableproductback.RecycleConsumerssendunvaluedorunwantedproducttorecyclingcollectors.Customersmightormightnotreceiverewards.Alltheseproblemsarecustomer-centricanddifficulttopredict.However,iftheITDoftheentiresupplychaincouldbeimproved,thenthepredictionaccuracycouldbeenhancedtoenabletheupstreamanddownstreamenterprisesofsupplychaintobepreparedearly.
3ProposedFramework
Thisstudyassumessymbiosisintheentiresupplychainsystem.Thesupplychain’sparticipantsareassumedtosharethreedatabases,namelycustomer,productandtransaction.Theaccesspermissionsareasfollows.
(1)InthecustomerDB,thedistributorcaninsertandupdateandallotherparticipantscanonlyquery.
(2)IntheproductDB,themanufacturercaninsertandupdateandallotherparticipantscanonlyquery.(3)InthetransactionDB,thedistributorcaninsertandupdate;manufacturercanupdate,andallotherparticipantscanonlyquery.Theshareddataareupdatedregularly.Thissymbiosisassumptionisconsistentwiththeconceptofstrategicpartners,inwhichinnovativeenterprisessharesalesdata,customerbuyingpatternsandfutureplanswiththeirpartners.Sincemostreverseactivitiesaretriggeredbycustomers,andarehardtopredictaccuratelybyconventionalanalyticapproaches,heuristicsandAItechniquesmighthelp.Intheforwardsupplychain,Piramuthudevelopedanagent-basedframeworktoautomatesupplychainconfiguration,andtoimprovetheperformanceofthesupplychainwithdynamicconfiguration.However,toourknowledge,nostudyhasappliedagentstoreverseactivities.Thisstudypresentsanagent-basedapproach.AsillustratedinFigure1,twoagents,thesensoragentandthedisposalagent,areintegratedwithintheproposedframework.Sinceanagentcouldautonomouslymonitorthechangingenvironmentandreactautomaticallytocompleteagoal,theymighthelpfullymanagethiscustomer-centricproblem.
4BusinessIllustrativeScenarios
Tounderstandtheproposedframeworkclearly,thethreeclassesofreverselogisticactivityaredescribedasfollows.
4.1ReturnScenario
Accordingtotheproposedframework,thesensoragentmonitorsthedata,whicharegatheredfromtheconsumersiteandshareddatacenter;performsweeklycrossanalysestodiagnosethereturnprobability,andtransmitsalarmsignals.Forinstance,assumecustomerismakinganincreasingnumberofcomplaints,andthather(his)profile(Gender,Education)=(Female,High)matchesonereturnpatterninTable3.Thesensoragentverifiesthewarrantperiodoftherelatedtransaction.Iftheguaranteeperiodhasexpired,thena“moderate”signalissent.Conversely,iftheproductisstillunderguarantee,thenan“influential”signalissent,whileiftheoriginaltransactionamountwasalsolarge,thena“serious”signalisflagged.Thedisposalagentthenrecommendsappropriatetreatments.Formoderatesignals,thedisposalagentautomaticallysendsane-mailtoacustomeracknowledgingthecustomer’sconcerns.For“influential”signals,thedisposalagentadvisesacustomerspecialisttocontactthecustomerinordertopreventpossiblereturn.Forserioussignals,thedisposalagentrecommendsperformingrelatedbusinessprocessessuchaspreparingreturnstock-location.Afterthetreatmentiscompleted,thesensoragentshouldfollowupthecustomersatisfactionandgivefeedbacktothedisposalagent.Theproposedframeworkcouldprovideanearlywarningtothemanufactureraboutpossiblereturns,andadditionallycouldsummarizethetop10returnreasonsforproductre-design.TheITDwouldincreaseunderthisframework.
4.2RepairScenario
Basedontheproposedframework,thesensoragentwouldanalyzethecomplaintsfromconsumersmonthly,andcalculatetherepairpossibilities.Forinstance,supposethatsomecustomersofelectronicproductsliveinthemoistarea,matchingaruleinTable2.Thesensoragentjudges,accordingtothepastdata,thatsomepartsoftheseproductsmightmalfunctionlater.Ifthesepartsarenormalmaterials,thena“moderate”signalistransmitted.Ifthesepartscontainspecialmaterials,thenan“influential”signalissent.Iftherepairingbehaviorswouldrequireparticularengineerskills,thena“serious”signalisflagge
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