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tion from the point of origin to the point of consumption for the purpose of conforming to customer requirements. Reverse logistics includes all of the activities that are mentioned in the definition above. The difference is that reverse logistics enpasses all of these activities as they operate in reverse.Therefore, reverse logistics is: The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, inprocess 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. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics.Reverse logistics is more than reusing containers and recycling packaging materials. Redesigning packaging to use less material, or reducing the energy and pollution from transportation are important activities, but they might be secondary to the real importance of overall reverse logistics.Importance of Reverse LogisticsIf no goods or materials are being sent backward, the activity probably is not a reverse logistics activity. Reverse logistics also includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls, and excess inventory. It also includes recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery.Software IndustryIn the software industry, distributors are attempting to cut down retailer returns by implementing justintime delivery. However, retailers generally overestimate demand because there is not much incentive for them to forecast carefully. Software manufacturers want the product on the retailer shelves, and often agree to stuff the channel. The cost of a box of software is low pared to the price. In one extreme example, a software manufacturer contracted with a third party to destroy 50 million copies of one software product. While this particular manufacturer would have preferred to not produce an excess of 50 million, the pany believes that it is better to guess higher than lower. Because of these kinds of practices, return rates in the software industry recently hovered around 20 percent.Additionally, releasing more software titles forces returns, because the product life cycles of those titles are contracting. Because their risk is low, some retailers will accept software purchased elsewhere. Other retailers, such as Sears, are trying to reduce returns and improve inventory turnover by reexamining channel relationships. Some of these retailers have begun setting up 30day return policies.Retail IndustryThe retail industry, under great petitive pressure, has used return policies as a petitive weapon. The greater the pressure, the more innovative the solutions. Within the retail industry, it appears that necessity, indeed, is the mother of invention.Grocery retailers were the first to begin to focus serious attention on the problem of returns and to develop reverse logistics innovations. Their profit margins are so slim that good return management is critical. Grocery retailers first developed innovations such as reclamation centers. Reclamation centers, in turn, led to the establishment of centralized return centers. Centralizing returns has led to significant benefits for most firms that have implemented them.Over the last several years, retailers have consolidated. Now more than ever, large retail chains are the rule. These large retailers have more power in the supply chain than retailers did a few years ago. In general, the large retailers are much more powerful than the manufacturers. Few manufacturers can dictate policy to large retailers such as WalMart or Kmart. If a manufacturer will not accept returns, it is unlikely that the large retailer will accept those terms easily. In some exceptional cases, retailers will make allowances for a manufacturer39。s products that they believe are not replaceable with similar products.Returns reduce the profitability of retailers marginally more than manufacturers. Returns reduce the profitability of retailers by percent. The average amount that returns reduce the profitability among manufacturers is slightly less, at percent. Survey respondents were asked how they disposition returns. On average, retailers use a centralized return facility to handle returns much more frequently than manufacturers. Retailers are also found to be more likely to sell returns to a broker or similar entity. They were less likely to remanufacture or refurbish than manufacturers which would seem logical given that manufacturers are better at manufacturing than retailers.Manufacturers are significantly more likely to recycle or landfill returned material than retailers. It appears that retailers are further advanced than manufacturers when it es to asset recovery programs. For other disposition options, such as resold as is, repackaging, or donation。 retailer39。s responses were quite similar to manufacturers.2 Out Sourcing In Reverse LogisticsAbstract:Nowadays cost reduction is a fundamental strategy used in panies during fighting for survival, keeping or increase in sales levels and profits. More and more often observed tendency to concentrate mercial and production panies leads to rise of demand for outsourcing in a reverse logistics chain. Concept of outsourcing of logistics servicesA strategy monly termed ‘outsourcing’ is nothing more than a subcontracting, to a specialized panies, a part of functions and processes previously performed on your own. The scope of operations enpassed by outsourcing is being wider and wider. The subcontracting concerns .: transport and forwarding (organizing of transport by the shipper), advertising, market survey, security servi