Reverse logistics week 4 Case Study
Reverse logistics usually stands for all the operations that are usually associated to the recycle of the products and materials. It incorporates the planning, and controlling the efficient use of raw materials to ensure that there is flow of raw materials, finished products as well as the consumption of the same. Remanufacturing and refurbishing are the key activities of revere logistics. The process also includes activities such as management. The chain in reverse logistics is the goods from the consumer to the distributor and finally to the manufacturer.
A Reverse Logistics manager, has their main role is to increase the profits of the firm by improving the way the goods are handled. The Return process is usually complex and long process and many overhead costs are usually involved. The manager is responsible for minimizing them and thereby ensuring better management. Constant reviewing and analyzing of benchmarks will ensure better management. Alpha Prime Electronics needs to have a well and clearly outlined reverse logistics system that will ensure cost saving and better management.
Given the organization, would you consider outsourcing the reverse logistics function. Show your calculations to justify your decision. Include direct and indirect costs in the calculation.
Outsourcing the reverse logistics function would be very important and a cost saving measure. It will ensure that there is no work backlog and ensure that all the company functions are running smoothly and faster. This being a new role, I would consider outsourcing since it is a cost saving measure and guarantees the organization quality service in a short period. In addition, it will ensure that the company avoids the huge backlog and give us all the expertise that we may need from the company, which may not be available internally.
The Reverse Logistics Cost Equation is an assortment of cost related to creation, handling, processing and final disposition of an item. The Equation is:
Processing Costs+ Logistics Cost+ Replacement Costs+ Asset Depreciation = Total Reverse Logistics Cost
A reduction in these costs will mean that the company will make a profit.
As for the Company the Processing Costs are
Processing Costs- $5 PER ITEM
Logistics Costs-$5 PER ITEM
Replacement Costs- $7 PER ITEM
Asset Depreciation Costs-$2 PER ITEM
The total reverse Logistics Cost amounts to $ 19. In case we outsource mean that all these costs will be lower. This will amount to at most 12 PER ITEM, which will be a huge saving. This justifies the need to Outsource.
2a. if you chose to outsource, explain which company would you select. Defend why you would use a particular company.
I would outsource to Andlor Logistics Systems, which has a proven record of accomplishment in Logistics and is cheap in the handling of the reverse logistics. It has the work force as well as the know how to enable us be successful in the logistics reversal. It therefore offers quality and reliable service. The firm has its offices in the United States Of America and offers a reliable partner.
Explain the new reverse logistic process, map out the new revere logistic process and defend the process that you are proposing. In particular, make sure that you explain how you will be improving the damaged and non-damaged returns processes
Below is the current map of the organization and its current structure. Revere logistics will be responsible for customer care and logistics inventory, which are equally important aspects of the firm. The first role will be to ensure that the queries of the customers are handled immediately. In addition, setting a technical support desk in the UK, which will be responsible for tackling the issues for the overseas consumer, in the shortest period, will be the next point of action. This
The other role will be in inventory management, will be handled by an in-house department and the inventory must be handled in the shortest frame of time. The other role is that of logistics that will be outsourced. The justification for this is to ensure that the company is not involved in any logistics and take advantage of the expertise and the resources that Andlor Logistics Systems has.
- What other changes would you make to the organization? Why? Support your reasoning?
The logistics department of the organization is core and ensuring that its workings are smooth is equally important. With that said, coming up with a policy that will increase the speed, the solving of customer queries is another measure I would institute to ensure efficiency and effective organization. Opening the customer support desk in the UK is also another measure that I would institute. Autonomy of the various departments is also another measure I could institute to ensure that the company is a compact unit but each as a functional unit is also another measure that I would institute.
- Discuss and address other considerations about reverse logistics.
Reverse logistics also has other costs that are involved in spite of being a cost cutting measures. These costs include labor costs, reconciliation among other costs.
Harrington, R. (2006 )GM for Reverse Logistics / Projects, NYK Logistics.: Reverse Logistics Magazine.
Gordon, R. & Curlee, W. (2011).The virtual project management office: Best practices, proven methods. Vienna, VA: Management Concepts.
