Edition 58
The Concept of Reverse Logistics. A Review of Literature
by Isabel Fernandez, Professor of Logistics and Production Organization, Engineering University in Oviedo (Spain)

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Reverse Logistics (RL) is an issue that has received growing attention in the last decades, due to the occurrence and simultaneity of several situations. On the one hand, there is a verifiable concern about environmental matters and sustainable development, as the many legal regulations that have been passed in a number of countries prove. On the other hand, economical reasons have also had their contribution in this increasing importance of RL issues. If operations are a major source of value-added (Porter 1985), by means of the returned products, companies stand the possibility of recovering either constituent material (that would no longer need to be purchased in the same quantities) or added value. Whether the savings come only from materials, labour or/and overhead costs, some firms have already shown increasing interest in being efficiently involved as market competition shrinks the margins more and more.

Perhaps due to its rapidly growing importance, the concept of RL took a while in being widely defined. In fact, as several authors contended at that time (Fleischman 2000; Mason 2002; Soto & Ramalhinho 2002; Kivinen 2002), there was not a largely accepted consensus about defining RL in practice. There were also other broad topics feasible of being covered by it, such as activities, products, points in the supply chain, etc. Given definitions sometimes overlapped in only certain aspects. Some others could be judged as giving only a partial vision, whereas in yet other cases, they could become controversial. To illustrate the development of the RL concept let us go revising some initial definitions extracted from a past literature review and analysing some terms, which were detected to be the main source for the different interpretations.

REVIEW OF LITERATURE
Beckley & Logan (1948), Terry (1869) and Giultinian & Nwokoye (1975) had already paid attention to returns but without referring to them as RL flows. Murphy (1986) is arguably one of the first authors in using the basic concept of RL. He used Reverse Distribution as an equivalent term ; after him, the double terminology was also kept in some cases (Pohlen & Farris 1992; Barry, Girard & Perras 1993; Bloemhof-Ruwaard, van Beek, Hordijk & Van Wassenhove 1995; Carter & Ellram 1998; Jayaraman, Patterson & Rolland 2003). Murphy defined Reverse Distribution (1986: 12) as “ the movement of goods from a consumer towards a producer in a channel of distribution”. Therefore, this author already touched upon the backwards direction of flows in order for them to be considered as RL flows. The original manufacturer is not necessarily the “producer” in this definition. As far as the distribution channel is concerned, nothing was specified in the definition. Doubts could arise between the two main possibilities to be distinguished: the referred distribution channel being the previously utilized (in the forward channel) or any other.

In 1992, Pohlen & Farris drew the attention to the fact that the recyclable material did not necessarily flow backwards through the same channel. The question that was raised then was what they meant by “recyclable”: only products whose destination was recycling used different channels to go backwards? Or, were they using the word “recyclable” in a very broad sense of the term (meaning any product that could be returned)?

For Giuntini & Andel (1995a: 73) RL was defined as “an organization’s management of material resources obtained from customers”. With this definition, the authors skipped the problem of stating exactly the direction taken for the material resources. Even more, they seemed to stress just one aspect for a material resource flow to be considered as a RL flow; this unique feature referred to its origin. As long as the item came from the consumer, the activities operated on it would be considered RL activities.

In the same year 1995, Thierry, Salomon, Nunnen & Wassenhove coined the term “Product Recovery Management” (PRM) to describe “all those activities that encompass the management of all used and discarded products, components, and materials that fall under the responsibility of a manufacturing company. The objective of product recovery management is to recover as much of the economic (and ecological) value as reasonably possible, thereby reducing the ultimate quantities of waste” (Thierry et al. 1995: 114).


Figure. Thierry et al.’s integrated supply chain view (1995: 18)

According to them, products and materials could be sent back either to the original manufacturer (therefore, in the same business chain), or to other companies involved in other business chains, provided the activity of these companies consisted of manufacturing.

They distinguished three categories of activities: service, product recovery and waste management activities. Returned products and components could be resold directly, recovered, or disposed of (incinerated or put to landfill). Focusing only on recovery options, five different further alternatives could be found: repair, refurbishing, remanufacturing, cannibalisation, and recycling, listed in order of the degree of disassembly required.

Although it has to be noted that these authors did not use the term RL, a parallelism could be easily drawn from the mention of the activities included within the PRM’ scope and the direction followed by the recovered items. Another conclusion from their work is that Direct reuse/resale, Incineration and Landfilling were kept out from the PRM coverage even if some backwards flow was also implied in these three options.

“RL refers to the logistics management skills and activities involved in reducing, managing and disposing of hazardous or non-hazardous waste from packaging and products” (Kroon & Vrijens 1995: 56). This definition made evident the extent to which, so far, confronting concepts could be found in the literature. If Thierry et al. had discarded waste management from their PRM definition, these authors seemed to focus on it. Kroon & Vrijens’ article was concerned with the flows generated by the returnable containers, which are a type of secondary packaging in the sense that they are susceptible of being used more than once in the same form.

According to Stock (1998: 20), the term RL was used to refer to “the role of logistics in product returns, source reduction, recycling, material substitution, reuse of materials, waste disposal, and refurbishing, repair and remanufacturing”. Although the majority of possible focuses, mentioned in the definition, had their correspondent translation in Thierry ‘s terms, Stock (like Kroon & Vrijens and unlike Thierry et al.) also emphasised the waste disposal aspect.

“RL is a process whereby companies can become more environmentally efficient through recycling, reusing and reducing the amount of materials used. Viewed narrowly, it can be thought of as the reverse distribution of materials among channel members. A more holistic RL view includes the materials reduction in the forward system in such a way that fewer materials flow back, reuse of materials is possible and recycling is facilitated” (Carter & Ellram 1998: 85). The fact of reducing materials used in the processes was according to some authors (Rogers & Tibben-Lembke 1998) considered as “green logistics” and not “RL”, although the same authors agreed in that the boundary line between these both concepts was not always clear.

Krikke, Harten & Schuur (1999) mentioned the need for the European Original Equipment Manufacturers (OEM) to set up a reverse logistic system for their discarded products, which, according to the authors, involved determining an optimal degree of disassembly and assigning optimal recovery and disposal options. The OEM are in this case the point of destination for the return flows.

“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 or creating value or for proper disposal” was the definition of RL given by Rogers & Tibben-Lembke (1999: 2; 2001).

This definition, notably more ambitious, named different types of items (regardless their new or used condition) along with an idea of direction followed by the materials flows. However, solely the initial point of origin in traditional chain was accepted as destination of these reverse flows. When arguing the reason why source reduction, in their view, belonged more naturally to green logistics than to RL, they added (Rogers & Tibben-Lembke 1999: 3): “if no goods are being sent “backwards”, the activity probably is not a RL activity”. In spite of the comment, other possibilities were admitted within their particular RL scope, such as secondary markets, outlets, etc. even if these destinations are not the initial “point of origin”.

The later remark also applies to the definition given by Dowlatshahi (2000: 143) when he contended that RL is “a process in which a manufacturer systematically accepts previously shipped products or parts from the point for consumption for possible recycling, remanufacturing or disposal”. Therefore, he agreed with some previously mentioned starting and final points of the reverse flows, these being respectively the point of consumption and the original manufacturers. He differed however from other authors in discarding returns coming from other partners than consumers. Disposal was accepted to be within the scope of RL definition but secondary markets were not conceived within it.



Ritchie, Burnes, Whittle & Hey (2000) underlined that logistics did not stop with the delivery of goods to customers, but also offers the opportunity for stocks to be returned to suppliers via a feedback loop. Their perspective drew the attention again on the suppliers as final destination of returned products and thus, endorsing the backwards direction of goods flows.

Fleischmann (2000: 6), one of the few authors aware of the confusion surrounding the concept, concluded that “the process of planning, implementing and controlling the efficient, effective inbound flow and storage of secondary goods and related information opposite to the traditional supply chain direction for the purpose of recovering value or proper disposal” was the content of RL. As he recognized, municipal waste collection was not accepted within the definition’s scope, as it did not concern flows opposite to the traditional supply chain direction. On the other hand, “upstream flow” substituted the producer destination of returned goods stated in some other definitions.

“The logistics of return flows, called RL, aimed at executing product recovery efficiently” (Hillegersberg, Zuidwijk, Nunen & Eijk 2001: 74). When the authors stressed the meaning of return flows they only admitted end of life (EOL) products either for customer use, or for obsolescence in the forward supply chain. Apart from the activities included by Thierry et al. (1995) within the PRM, Hillegersberg et al. (2001), unlike them, admitted also energy recovered by incineration in the definition. The list of products susceptible of returning was in this case more restricted.

A research report by Kivinen (2002) brought yet another perspective. He wrote that different service providers must have different types of RL concepts. For instance, some companies may speak only about the recycling of goods, which may actually include sophisticated features of RL. His piece of advice was therefore to define clearly, between the parties involved, how RL would be understood in their relationships, as different persons would most probably have different views about RL.

To conclude this review, one more definition from the RL Executive Council : “RL is the process of moving goods from their typical final destination to another point, for the purpose of capturing value otherwise unavailable, or for the proper disposal of the products”.

SOME CONFUSING TERMS
The confusion detected in the definitions may be mainly due to some words that may have a close meaning in certain contexts or double meanings of the words. Let us discussed some of them in more detail.

What “BACKWARDS” Direction Means?
In accordance to the previous section, it is quite clear that no unanimity existed regarding the direction products take in RL, once they abandon the forward supply chain, which may happen at any point/time within it. Some authors (Carter & Ellram 1998; Dowlatshahi 2000; Ritchie et al. 2000; Guide, Jayaraman & Linton 2003) call a flow “reverse” whenever the direction of flow is exactly the opposite to the previously used forward one. That means the product comes back through the same channel, sent by a downstream supply chain partner.

Other authors, however, admitted the deviation of these returned products towards different channels as susceptible of being also considered as RL (Thierry et al. 1995; Fleischmann 2000; Reverse Logistics Executive Council). Recycling activities provide with a myriad of cases that are within this second broader sense “reverse”, given that, on the one hand, recyclers interested in materials may be different from the original manufacturers (about all in secondary recycling). On the other hand, original manufacturers may not dispose of the specific equipment required for recycling.

Are Reverse Flows Equivalent to Flows of Returns
RL may refer to flows in reverse, that is, flows of goods that go in strictly backwards direction through the channel. However, another more ample perspective was found in the literature (Fleischman, Krikke, Dekker & Flapper 2000; Stavros, Costas & Theodore 2003), which refers to the management of returns not only in backwards direction but also, in forward direction once returned products have been transformed (repaired, remanufactured, etc.) and again come back to the markets. In this second sense, all operations where products, once having been returned, are involved are also considered within the RL scope.

Both perspectives coincide in considering Reverse Logistics flows those that are sent backwards along the supply chain (for instance, from end consumers to manufacturers). However, there was an obvious disagreement with regard to accept as RL activities those performed in order to send to the markets returned products already transformed.

Are “RECOVERY” and “REVERSE” Synonyms
Polemic was also caused by the terms “recovery” and “reverse”, which are terms etymologically speaking not equivalents. According to the dictionary, the term recovery roots in the Latin term “recuperare” which means, “to take”. However, the term reverse is the past participle of the Latin term “reversus” which means, “to turn back”. From the previous meanings, it may be easily inferred that the signification of the term recovery is noticeably more ample than the one inferred from the term reverse. It could summarily be illustrated by stating that not all that is “taken” has to or needs to be “turn back”.

In spite of their different meanings, both seem to be, in certain pieces of work, considered synonyms (as it also happens with a third term: “return”).

What is the Difference Between Green and RL
Although these two terms have already been mentioned, it is worth to devote to them a special thought.

The increasing number of laws being passed mainly in the last decade with regard to the environment protection has been remarkable. Both the sheer number, but also the laws becoming more stringent and demanding, may well have had a considerable influence for the terms “green logistics” and “RL” being likened. In this vein, Handfield & Nichols (1999) underlined the seminal role that the “green” issues will play in the future of this field. On the other hand, the survey carried out by Murphy, Poist & Braunschweig (1994) showed how 60% of the managers interviewed considered environmental issues to be very important in the business of their companies. These examples served to demonstrate the increasing weight of green given already at that moment.

Van Hoek (1999) contributed with his article to avoid mixing up RL with green logistics. The term “green logistics” was coined to refer to those practices within the supply chain that aim at reducing sources of waste and resources of consumption. They are not necessarily specific of RL processes. For instance, disassembly is an operation closely related to RL; it is critical before deciding, in many cases, what to do afterwards with the product (repair, remanufacture or recycle it). However, it will be only linked to Green Logistics in the design process if the disassembly operations are carefully thought for not going through destructive operations, which implied at least a loss of added value if not also materials. Furthermore, some forward logistics processes from original manufacturer to original customer could be also “green”.

Recycling
The use of the term “recycling” may be a source of misunderstandings, as shown for instance, in the paper by Lave & Hendrickson (1999) where the lack of an agreement in U.S.A. when it comes to decide what constitutes the so-called Recycling of Municipal Solid Waste (MSW), or which part of the post-consumer waste has to be included in it, was already highlighted.

The most commonly accepted meaning is that recycling implies the fact of recovering materials, which take part in the composition of the recyclable product. Recycling therefore involves the higher degree of disassembly of the item. However, it is not unusual to come across a more general use of the term that implies any activity in the backwards process or any reusing option (see Pohlen & Farris II 1992; Guide et al. 1997; Azzone & Noci 1998 as some examples).



Recall
Similarly occurred with the term Recall. It is used to refer the reverse process of consumer goods, which could potentially endanger the customer. Efficient recall strategy is, in this sense, concerned with minimising public risk, getting back as many faulty products as possible and minimising cost and inconvenience for the customer and the company (Smith, Thomas & Quelch 1997; Rogers & Tibben-Lembke 1999; Ritchie et al. 2000; Muffatto & Payaro 2003). However, the term could be also found implying a more general perspective; in this case, recall a product equals to repossess the product by the manufacturer (Jayaraman et al. 2003).

CONCLUSION
This look back to the inception of the RL concept shows how this recent area within the supply chain management went through a refinement process to become the important issue that it is in today’s businesses.
RLM
Isabel Fernández has been professor of Logistics and Production Organization at the Engineering University in Oviedo (Spain) since 1997. Professor Fernández earned her PhD in Reverse Logistics at both the University of Vaasa (Finland) and the University of Oviedo. She also earned the title of European Doctor. Prof. Fernández obtained an MSc from the University of Vasque Country and MBA from University of Oviedo. She formerly was a Senior Lecturer in the Department of Industrial Management at the University of Vaasa (Finland) and Visiting Professor at the IESEG (Lille- France) for several years. Her major research interests are logistics management, Reverse Logistics, cost analysis, inventory control and time series analysis. She has published over 90 articles in academic journals and conferences and has participated in several research projects and books. She acts as external referee for several scientific journals. Member of ADINGOR (Association of Production Organization Engineers) and Board member of the International Society for Productivity and Quality Research and the International Centre for Innovation and Industrial Logistics (ICIIL). She has consulting experience in private companies.

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