Reverse Logistics: Time to Bring It Front and Center

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12 | 2009
In This Issue:

Where processes are concerned, technical failure often goes hand in hand with people failure."

— Gabriele Piccoli, Editor

While writing the introduction to this issue of Cutter Benchmark Review, I took a moment to reflect on the past year and the end of the holiday season. Those around the world who celebrate Christmas have just finished engaging in the schizophrenic activity of feeling the spirituality of the event while at the same time being immersed in the mundane and earthly consumeristic activity of Christmas shopping. These days, I get to spend my time between the US and Europe, where my family lives, typically spending holidays on the American side of the pond. For that reason, my Christmas shopping is compounded by all kinds of requests for hard-to-find items to bring back to the Old Continent. This is the time of the year when I get in touch with my inner Santa. On the list, amongst some old favorites like football jerseys, this year I imported a few interesting items much more easily found in the US. They included oversized salad-tossing tongs and Zubbles, the colored nonstain, nontoxic, blowing bubbles that apparently represent a significant innovation feat. Tim Kehoe, the inventor of Zubbles, spent more than a decade and an estimated US $3 million in the development of this product, which finally started shipping a few months ago. I will remember this story next time someone complains about systems being late and overbudget!

Of course, where processes are concerned, technical failure often goes hand in hand with people failure. In my little "international Santa" case, that typically happens when friends from back home try to make purchases from US retailers online. This year, a friend tried to buy two football jerseys for his 18- and 16-year-olds at the NFL shop online -- for the record, they were that of Tom Brady and of the athlete formerly known as Chad Johnson ... that is, Chad Ochocinco. Unfamiliar with sizing and ordering procedures, he proceeded to place an order for two toddler jerseys. Once I received the shipment and realized the mistake, I had to scramble (like a quarterback, I guess, to keep with the football story) to return the merchandise and place a new order for the jerseys of the correct size — all before my departure date.

Why am I recounting this incident you may ask? Well, after the holidays, we are reminded of how lucky we are and of the many gifts we have received in life. We are also reminded of the importance of the Christmas shopping season for retailers and the economy -- and we are reminded of the criticality of a good reverse logistics process! Such a process, often neglected but clearly important, is the focus of this issue of CBR. Reverse logistics, as defined in Wikipedia, is "the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal." Thus, reverse logistics has to do with products, defective or otherwise, that have to flow back upstream in the distribution chain in order for value that would be lost otherwise to be recaptured. As our contributors point out, attention to reverse logistics is probably more important than ever in these difficult economic times.

To help us navigate this subject on the academic side is Kathryn Brohman, Assistant Professor of Management Information Systems at the School of Business at Queen's University in Kingston, Ontario (Canada). I have known and collaborated with Kathryn for more than seven years now; we share an interest in customer service systems and IT-enabled service. But Kathryn is also a recognized expert in systems design and development and a project management coach (a topic for which she already contributed to CBR) and is becoming increasingly interested in the reverse logistics process. Helping us from the practice side is Eileen Brown, an Associate Partner in IBM Global Business Services. Eileen has a wealth of experience in supply chain and operations issues, having spent more than two decades in this space. Eileen's broad base of knowledge also spans other areas as she has held executive positions in supply chain management (SCM), M&As, IT, and manufacturing operations within the electronics services and manufacturing industries.

Kathryn departs from a very general overview of the topic. I find her framework particularly useful in that it puts something that could be considered very low level and operational in its proper strategic context. She then explains the process analysis that she uses to diagnose the various gaps: execution expectations, execution visibility, execution process, and execution architecture. Kathryn then analyzes the survey data based on the framework she has introduced and, from the analysis, develops guidelines for those who intend to engage in the optimization of their reverse logistics processes.

Eileen's piece is a product of her significant work experience in the area of SCM and it contains a wealth of insight and relevant statistics drawn from sources beyond Cutter. She, like Kathryn, also begins by setting the context for her analysis focusing on the big picture and the role of the firm's strategic posture vis-à-vis the setup and performance of the reverse logistics processes. She then intersperses the survey findings throughout her analysis, making a number of important and immediately actionable suggestions.

Reverse logistics is not a glamorous topic and does not receive much attention in the managerial press and academic venues. Yet, it becomes apparent to all of us when we are touched by it, as I was during this Christmas season, that it can be a very important component of strategy execution from a number of perspectives: manufacturing, customer service, and analytics. I hope that this issue of CBR will help you reflect on the state of the art of reverse logistics in your firm and perhaps spur you into action.