THE CONCEPT OF REVERSE LOGISTICS.

A REVIEW OF LITERATURE1

Isabel Fernández Quesada2

ABSTRACT

This paper aims at providing a review of Reverse Logistics concept from a broad
set of articles, published mainly in the last decade. From their reading, the author
has detected the lack of a desirable largely accepted consensus on what constitutes
Reverse Logistics, either on what the range of activities should be included within
its scope or how to denominate each of its options in a not fuzzy way.

The clarification of the concept matters for several reasons. On the one hand, most
of the so called, environmental regulations -which have been passed in a growing
manner, in recent years and in many parts of the world- usually mention some
objectives to be reached in certain periods of time, in relation to some of the
Reverse Logistics activities (being perhaps the most common one, recycling
targets). Given that not only consumers, but also both companies and
municipalities are committed with these goals, it would be handy and desirable to
have a clear idea of what is meant by each denomination and the implications that
each one may have.

On the other hand, having a definite guideline of this conceptual framework would
allow for some comparative studies about the different levels of implementation
within the members of the chain or between different channels, being more
accurate and reliable.

On the previous literature review basis, the paper concludes by providing a

reasoned characterization of this new part of the Logistics.

Key words: Reverse Logistics, Review of literature, Concept proposal

1. INTRODUCTION.

Reverse Logistics is an issue that has received growing attention, above all, in the last
decade, given the confluence of several situations. On the one hand, there is a
verifiable concern about environmental matters and sustainable development. In this
sense, several are the legal regulations that have been passed in a number of countries,
being perhaps the pioneers, Germany (with its taking-back packaging and electronic
devices regulations) and Netherlands (with its stringent automobile laws). However,
the effect has quickly spread out along Europe, USA and Japan, among others.

On the other hand, economical reasons have also had their contribution in this
increasing importance of Reverse Logistics issues. By means of the returned products,
companies stand the possibility of recovering either constituent material, that not

1
Paper presented at the Annual Conference for Nordic Researchers in Logistics, NOFOMA’03, in
Oulu (Finlandia).
2
University of Oviedo (Spain). E-mail: [email protected]

1
longer need to be purchased in the same quantities, or added-value. Whether the
savings come only from materials purchasing costs or from materials, labor and
overhead costs respectively, firms may are increasingly interested in being efficiently
involved as market competition shrink more and more the margins.

Perhaps due to its rapidly growing in importance role, the concept of Reverse
Logistics has not been kept sharply defined. In fact, as several authors contend
(Fleischman, 2000; Mason, 2002; Soto and Ramalhinho, 2002; Kivinen, 2002; Tan et
al., 2002) and from the review of literature, there is not yet a largely accepted
consensus about defining Reverse Logistics in practice, given among others the broad
topics susceptible of being covered by it, activities, products, points in the supply
chain, etc.

Reverse Logistics is not a blur in all its facets. As we will see, definitions sometimes
overlap in some of them. However, some other aspects may be judged as giving only
a partial vision, whereas in other cases, they may become controversial. For instance,
if a vendor is not able to sell a certain product to the initially appointed market and
then he decides to send it to his own Distribution Center from where the unsold
product may be resold to another vendor or broker who will try to sell it in secondary
markets, should the whole operation be considered as “Reverse Logistics flow”?

The paper is built as follows. In the next section the above idea is reinforced by
definitions extracted from the review of recent literature. The sample of definitions
chosen to be included in the paper did not aim at being exhaustive (more articles than
the ones put forward where reviewed, although only the ones considered as most
representative for the objective of the analysis were included). By comparing the
different meanings provided by the different authors, the lack of an overall agreement
results diaphanous. Section third is then concentrated on the terms, which have been
detected to be the main source for the different interpretations. In fourth section some
beliefs are disclosed. All these considerations are taken into account in the fifth
section to round off with delineating a concept proposal. Conclusions are drawn in the
final section.

2. REVIEW OF LITERATURE

Beckley and Logan (1948), Terry (1869) or Giultinian and Nwokoye (1975) had
already pay attention to returns but without referring to them as Reverse Logistics
flows. Murphy and Poist (1989) are some of the first authors in using Reverse
Logistics as such. They used Reverse Distribution as an equivalent term (after them,
the double terminology has also be kept in some cases [Barry et al., (1993); Carter
and Ellram, (1998); Jayaraman et al., (2003)]. Murphy and Poist define Reverse
Logistics (p.12) as “ the movement of goods from a consumer towards a producer in a
channel of distribution”. Therefore, these authors do already touch upon the direction
to adopt by the flows considered as Reverse Logistics flows. Any good that may
satisfy this condition is considered then as taking part in the Reverse Logistics flows.
Producer is not necessarily appointed as the original manufacturer. As far as the
distribution channel is concerned, nothing is specified in the definition. Doubts may
arise between the two main possibilities to be distinguished: the referred distribution
channel being the previously utilized in the forward channel or any other.

2
In 1992, Pohlen and Farris II draw the attention about the fact that the recyclable
material does not necessarily flow backwards through the same channel. The question
that is raised now is what they meant at “recyclable”. Only recyclable material may
use different channels to go backwards? Or, are they using recyclable in a very broad
sense of the term?

For Giuntini and Andel (1995, p. 73) Reverse Logistics is defined as “an
organization’s management of material resources obtained from customers”; with this
definition the authors skip the problem of saying exactly the direction taken for the
material resources. Even more, they seem to stress just one aspect for a material
resource to be entitled to be considered as a Reverse Logistics flow; this unique
feature is its origin. As long as the item come from the consumer, the activities
operated on it will be considered Reverse Logistics activities.

In the same year 1995, Thierry et al. coin 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, p. 114).

Return flows 2
Forward flows

service

raw parts modules product

distribution users
materials fabrication assembly assembly

6 5 4 3 1

7,8

1. Product Recovery Direct

Waste Management
Management Reuse
2. Repair
7. Incineration 5. Cannibalization 1. Direct reuse/
3. Refurbishing
8. Landfilling 6. Recycling resale
4. Remanufacturing
Figure 1. Thierry et al.’s integrated supply chain view.

According to them, products and materials can 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 consist of
manufacturing.

They distinguish three categories of activities: direct reuse, product recovery, and
waste management activities. Returned products and components can be resold

3
directly, recovered, or disposed (incinerated or landfilled). Focusing only on recovery
options, five different alternatives can be found: repair, refurbishing, remanufacturing,
cannibalization, and recycling, listed in order of the required degree of disassembly.

Although it has to be noted that these authors did not use the term Reverse Logistics,
a parallelism can be easily drawn from the mention of the activities included within
the scope of PRM and the direction followed by the recovered items in the figure.
Another conclusion to highlight from their work it is that what they define as Direct
reuse/resale or Incineration or Landfilling is kept out from the PRM coverage even if
some backwards trip is also implied by them.

“Reverse Logistics 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 and Vrijens, 1995, p.56). If this definition was also
listed in this work is to make evident the extent to which, so far, confronted concepts
can be found in the literature. If Thierry et al. have discarded waste management from
the PRM definition, these authors seem to focus on it. Their article is concerned with
the flows generated by the returnable containers, which are a type of secondary
packaging3 in the sense that they are susceptible of being used more than once in the
same form.

According to Stock (1998, p. 20), the term Reverse Logistics is 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, have their
correspondent translation in Thierry ‘s terms, Stock (like Kroon and Vrijens and
unlike Thierry et al.) also stresses on waste disposal. Source reduction will be
commented a bit later in this paper.

“Reverse Logistics 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 view of Reverse Logistics
includes the reduction of materials in the forward system in such a way that fewer
materials flow back, reuse of materials is possible and recycling is facilitated”.
(Carter and Ellram, 1998, p. 85). The fact of reducing materials used in the processes
is according to some authors (Rogers and Tibben-Lembke, 1998) considered as Green
Logistics and not Reverse Logistics, although the same authors agree in that the
bound line between both concepts is not always clear. On the other hand, Carter and
Ellram seem to keep tight to the same channel in which the forward flow was
generated, against the more broad view in which other companies outside the business
chain could be favoured from the returns flows.

Krikke et al. (1999) mention the need for the European Original Equipment
Manufacturers to set up a reverse logistic system for their discarded products, which,
according to them, involves determining an optimal degree of disassembly and
assigning optimal recovery and disposal options.

3
Secondary packaging is packaging material used for packaging products during transport from a
sender to a recipient (pallets, slipsheets, etc), either in retail or in industry.

4
“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” is the definition given by Rogers and Tibben-
Lembke (1999, p. 2; 2001).

This definition is notably more ambitious, naming different types of items (no matter
their condition of new or used) along with an idea of direction followed by the
materials flows. However, solely the initial point of origin in traditional chain is
accepted as destination of these reverse flows. When arguing the reason why, in their
view, source reduction belong more naturally to Green Logistics than to Revere
Logistics, they add the following (Rogers and Tibben-Lembke, 1999, p. 3): “if no
goods are being sent “backwards”, the activity probably is not a Reverse Logistics
activity.

In spite of it, other possibilities are still admitted within their particular Reverse
Logistics scope, such as, secondary markets, outlets [“(in the clothing industry)
retailer’s only sales alternative channel” (Rogers and Tibben-Lembke 1999, p. 82)],
etc. even if these destinations are not the initial “point of origin”.

The later remark also applies to the definition given by Dowlatshahi (2000, p. 143)
when he contends that Reverse Logistics is “a process in which a manufacturer
systematically accepts previously chipped products or parts from the point for
consumption for possible recycling, remanufacturing or disposal.”. This author
coincides then with some previously mentioned starting and final points of the reverse
flows, being respectively the point of consumption and the original manufacturers. He
differs from others in discarding returns from other different partners in the chain than
consumers. Disposal is deemed within the scope of Reverse Logistics although
secondary markets are not conceived within it.

Ritchie et al. (2000) underlines that logistics does 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. He points out, for instance, the increasingly frequent occurrence that
product recalls appear to have in the last years in private sector (as his article examine
the Reverse Logistics process within the Manchester Royal Infirmary Pharmacy; in
this pharmaceutical arena, the efficacy in withdrawing expeditiously the drugs from
market, in case of need, result critical). His perspective drives the attention again on
the suppliers as final destination of returned products and thus, endorsing the
backwards direction of goods flows.

Fleischmann (2000), one of the authors aware of the confusion surrounding the
concept, and after considering four definitions from the literature, concludes in the
following characterization (p. 6): “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”. As he recognizes, municipal waste collection
is not accepted within the definition’s scope, as it does not concern flows opposite to
the traditional supply chain direction. On the other hand, “upstream flow” substitutes
the producer destination of returned goods stated but some other perspectives.

5
“The logistics of return flows, called Reverse Logistics, aims at executing product
recovery efficiently” (Hillegersberg et al., 2001, p.74). When the authors stress the
meaning of return flows they only admit 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. within the PRM, Hillegersberg et al., unlike them,
admits also energy recovered by incineration. The list of products susceptible of
returning is in this case more restricted.

A research report of Kivinen (2002) brings another perspective. He writes that

different service providers have different types of Reverse Logistics concept. For
instance, some companies may speak only about the recycling of goods, which may
actually include sophisticated features of Reverse Logistics. His piece of advice is
therefore, between the parties involved, to define clearly what Reverse Logistics will
be understood in their relationships, as different persons will most probably have
different views about Reverse Logistics.

To conclude the review, we provide three recent formal definitions:

The European Working Group on Reverse Logistics (see De Brito and Dekker, 2004)
puts forward the following definition: “The process of planning, implementing and
controlling backward flows of raw materials, in-process inventory, packaging and
finished goods, from a manufacturing, distribution or use point, to a point of recovery
or point of proper disposal”

The RL Executive Council4: “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”.

Next section summarizes the main confusing terms detected from the review of
literature.

2. SOME CONFUSING TERMS

The confusion detected regarding the following terms was mainly due to a pair of
words, which may have a close meaning in certain contexts or double meanings of the
words. 7 terms are analysed in the following: what is implied by “backwards”
direction, are reverse flows equivalent to flows of returns, are recovery and reverse
synonyms, what is the difference between Green and Reverse Logistics, what is
disposition, or recall or recycling?

2.1. Backwards direction

In accordance to the previous section, it follows that no unanimity exist regarding the
direction products must take, once they abandon the forward supply chain, fact that

4
http://www.unr.edu/coba/logis/page6.html

6
may happen at any point/time within it. Some authors (Carter and Ellram, 1998;
Dowlatshahi, 2000; Ritchie, 2000; Guide et al., 2003) attribute the denomination of
“reverse” whenever this direction is exactly the opposite (solid black straight arrows
in original channel in Figure 2) to the forward one used by the product in its trip to the
final destination, that is, if the product comes back through the same channel sent by a
supply chain partner (for instance, from retailer to distributor, from distributor to
manufacturer, from consumer to retailer or to manufacturer, etc.).

Other authors, however, admit the deviation of these returned products towards
different channels (solid black curved arrows in Figure 2) as susceptible of being also
considered as Reverse Logistics (Thierry et al., 1995; Fleischmann, 2000; Knemeyer,
2001; Reverse Logistics Executive Council). Recycling activities provide with a
myriad of cases within this second sense, given that, on the one hand, recyclers
interested in materials may be different from the original manufacturers (about all in
secondary recycling, explained later in this section) and on the other hand, original
manufacturers may not dispose of the specific equipment required for recycling.

2.2. Logistics of the returns versus Logistics of reverse flows

Reverse Logistics may refer to flows in reverse, that is, flows of goods that go in
strictly backwards direction through the channel (solid black straight arrows in
original channel in Figure 2).

However, another more ample perspective was found in the literature (Fleischman et
al. 2000), which refers to the management of returns not only in backwards direction
but also, in forward direction once returns products have been transformed (repaired,
remanufactured, etc.) and come back again to the markets (dotted green arrows in
Figure 2). In this second sense all operations suffered by products, once have been
returned are considered within the Reverse Logistics scope.

2.3. Recovery versus reverse

Another polemic arena is caused by the terms “recovery” and “reverse”. Both seem to
be, in certain pieces of work, synonyms as it happens with the term “return”.
However, a more attentive and detailed reading brings a more global scope to the term
“recovery”. Within recovery sense, a greater number of activities may be included
than under the heading of reverse.

Etymologically speaking, the concepts of recovery and reverse are not equivalents.
According to the dictionary the term recovery has its roots in the Latin term
“recuperare” which is “to take”. However, the term reverse is the past participle of the
Latin term “reversus” which is “to turn back”. From the previous meanings it may be
easily inferred that the vision that corresponds to the term recovery is noticeably more
ample than the one inferred from the term reverse. Not all that is “take” has to be
“turn back”.

As a prove of the interchangeability of these both terms, let is recall the definition
given by the European Working Group on Reverse Logistics (Revlog) about Reverse

7
Logistics. According to Revlog5, “Reverse logistic stands, in a broadest sense, for all
operations related to the reuse of products and materials. The management of these
operations can be referred to as Product Recovery Management.” It could have been
referred to as Reverse Logistics Management instead, avoiding the misunderstanding
introduced with the term Recovery.

2.4. Green Logistics versus Reverse Logistics

Although these two terms have already been mentioned in the paper, it is worth to
devote to them a special epigraph.

It has been remarkable the increasing number of laws being passed mainly in the last
decade with regard to the environment protection. Both the number of them but also,
they becoming more stringent and demanding may well have had a considerable
influence for the terms Green Logistics and Reverse Logistics being likened perhaps
without a sound basis. The fact of that environmental management is drawing
growing attention among researchers and practitioners (not only from supply chain
management field), is something that can easily be contrastable. In this vein,
Handfield and Nichols (1999) underline 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 et
al. (1995) showed how 60% of the managers interviewed considered environmental
issues to be very important in the business of their companies. These examples serve
at demonstrate the increasing weight of green issues nowadays.

However, van Hoek (1999) contributes with his article to not mix up reverse with
green logistics. The term “green logistics” is coined to refer to those practices within
the supply chain that aim at reducing sources of waste and resources of consumption.
They are not specific of Reverse Logistics processes. For instance, disassembly is an
operation needed within Reverse Logistics before deciding, in not few cases, what to
do afterwards (repair, remanufacture or recycle it). However, only will it be 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 lost of
added value if not also materials.

2.5. Recycling

Next, the focus is on just one of the options widely accepted within the scope of
Reverse Logistics, the recycling. As already pointed out in the introduction of the
paper, the use of the term “recycling” may be source of misunderstandings. 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 item disassembly. However, it is not unusual to come
across a more general meaning of the term by implying at any activity in the
backwards process.

5
http://www.fbk.eur.nl/OZ/REVLOG/

8
Recycling has been the target of quite a few acts, being perhaps the one with most
broad impact the EU Directive on Packaging and Packaging Waste 94/62/EEC. The
EU Directive on Packaging and Packaging Waste 94/62/EEC addresses the need to
conform to the EU waste management hierarchy, i.e. minimise the generation of
waste and to increase reuse, recovery, and recycling of wastes. The Directive sets
recycling and recovery targets, which must be achieved by specific deadlines.

In the implementation of the Directive on Packaging Waste (94/62/EEC), two of the

three objectives are stated as:

∗" not later than 5 years from the date by which this Directive must be
implemented in national law, between 50% as a minimum and 65% as a
maximum by weight of the packaging waste will be recovered.

∗within this general target and with the same time limit, between 25% and
45% (by weight) of the total amount of packaging materials contained in
packaging waste will be recycled, with a minimum of 15% by weight for each
packaging material. "

It must be said that when the Directive refers to recycling, two different kind of
recycling meanings (not always familiar in common use) are been used. These are
primary recycling and secondary recycling.

Primary recycling means that the constituent material of a product can be transformed
into a product on the same value-level as in the first cycle of its usage (e.g. the glass
recovered from glass bottles may be used to produce glass bottles again; recycled gold
value does not decrease along with recycling times). In secondary recycling,
recovered materials are used for lower-value applications (e.g. polyurethane foam
material from car seats can be transformed into carpets under-layers).

But the Act also mentions the term of “recovered” in the first target and in this context
recovery means “any of the applicable operations provided for in Annex II B to
Directive 75/442/EEC”. The recovery options listed in this Annex are: use as fuel,
recycling, recovery of components (used for pollution abatement or from catalysts),
and land treatment. This perspective of the recovery options is much more restrictive
than the one used by scholars and practitioners.

2.6. Disposition

Looking up in the dictionary the term “disposition” provides with two different
meanings that apply in the present context:

1) the act or means of getting rid of something. In this case, the word disposition
is taken as a synonym of the term disposal. Therefore, if the company should
decide the disposition of its products, should determine the final destination for
the items. The two options within this kind of disposition will be incineration or
landfill.

9
 2) the state or the manner of being arranged (Meyer, 1999). Words such as
arrangement will be considered as equivalent. The alternatives for a company
included under this second meaning are more numerous ranging from repairing,
remanufacturing, refurbishing and recycling, to reselling or disposing of the
product (in the first sense).

The use of “disposition” may then result a bit tricky if the context does not provide
further hints to distinguish between the two mentioned meanings, given that a
company may “dispose of” a product in the second sense without, at the same time,
“disposing of” it in the first meaning.

“At the simplest level, it (Reverse Logistics) can be described as the disposition of
returned goods” (Tan and Kumar, 2003).

By no means, the remark on the utilization of this word intents to be critical with their
users. Actually, it has been correctly used by all of them. However, given that the
meaning may be quite different depending of the context, it would be advisable to
choose it only when the sense does not drive to ambiguities or misunderstandings.

2.7. Recall

Recall is one of the motivations one product may be return for in the supply chain
(although not an Reverse Logistics activity).

Recall is also a confusing term. Sometimes the word recall 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 et al. 1997; Rogers and Tibben, 1999; Ritchie et al.
2000; Muffato, 2003). However, the term may be also found implying at a more
general perspective; recall a product equal to repossess the product by the
manufacturer (Jayaraman et al., 2003).

3. SOME “NOT’S”

The fact of a product coming from the end of the traditional logistics chain, that is,
from the consumption point does not entitle it straightaway as an item belonging to
the reverse flow chain. Not all products provided by the consumer take part of the
backwards channel. One example could be the following: one consumer does not
longer require a product, and consequently he decides to put in motion a process of
sale by his own by means of e-commerce (e-commerce makes nowadays, at least
theoretically, this possibility be accessible to anyone). Another consumer acquires the
item. This operation has had no backwards direction at all; therefore there is no sound
reason to call it Reverse Logistics.

On the other hand, it is not absolutely necessary to be part of the Reverse Logistics
chain that a product, which is taken the backwards direction in the channel, has been

10
initially sent backwards by the consumer. Different participants involved in the chain
may, at any moment, send back products.

A third characteristic is that Reverse Logistics products do not have to present a used
condition neither must have reached their end of their usable life (EOL). A defective
product sold to a consumer or even detected at the retailer store before being sold may
be sent back to the manufacturer to be repaired, without having been used and
consequently, with the faintest possibility of having exhausted its life cycle. For
instance, a product damaged in transit from the manufacturer warehouse to a
distribution center does not satisfy either any of those two conditions (being used or
an EOL product).

Within the Reverse Logistics lexicon, the most important words begin, according to
Giuntini and Andel (1995) with “R”. One of this “R” stands for Re-engineering (being
the rest Recognition, Recovery, Review, Renewal and Removal). Re-engineer the
reverse stream implies, for these authors, to reduce (one more R) the amount of
material, which will end up as waste. And, indeed (as stated in the introduction), one
of the perhaps most powerful drivers for the implementation of Reverse Logistics
practices has been the problem generated from waste; waste is nowadays a big
problem in many countries due to the increasing volumes and the lack of landfills
where to dispose of it (Fernández, 2003). Waste reduction is one of the aims behind
Reverse Logistics practices (for instance, the ambitious German legislation regarding
packaging has obliged manufactures to deploy techniques for dealing with their
responsibility on the packaging recovery, reducing therefore its disposal). However,
Reverse Logistics are not directly concerned with reducing the need for raw material
(as Green Logistics may be), although this reduction may be a side effect of adopting
them.

4. CONCEPT PROPOSAL

Given the previous disparate views of the Reverse Logistics definition, this author
feels that the time for reaching an unanimous agreement on the scope of this
discipline has come. Up to now, and although some researchers noticed it before and
did some comments as passing, no article was strictly devoted to try to clarify the
concept neither to draw the attention of the rest of the community working on the
subject.

As stated by Fleischmann (1997), products may return to its original producer or may
be diverted towards a third party. In fact, it seems to be verified that it is common
practice to carry out remanufacturing activities in-house whereas recycling is more
often being performed by specialized companies (Thierry, 1997).

The following figure shows, by mean of black solid arrows all the possible
movements a return product may follow. The blue dotted arrows represent the
traditional forward logistics flows used by new products. The green dotted arrows
stand for several ways the returned items may take, once the required operation has
been performed on them.

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 DIFFERENT CHANNEL

Another Distributor
Manufacturer or CRC* Retailer

Close-outs

Buy-outs Close-outs
ORIGINAL CHANNEL

Recall

Seasonal items, Rotation, Surplus

Damaged Surplus, Damaged, Damaged, Defective,

Close-outs unwanted
Original CRC/
Retailer Customer
Producer Distributor
Outlets
Secondary
DISPOSAL Markets

Remanufactured, Refurbished, Repaired, Recycled Market

*CRC: Centralized Returns Centers

Figure 2. Different issues for returns.

In what there is no polemic approach is in considering the black solid straight lines as
Reverse Logistics. All of them represent backwards flows within the original channel
through which the product was originally being sent to the market. The conflict
appears when looking at either the curve black arrows (that is when other channels are
involved) or the dotted green arrows (representing returns already reprocessed in most
of the cases, disposed of or deviated to another markets).

If we focus for instance, on the retailer from the original chain and we think that a
product has been sent back to this retailer from his customer, with the package intact
(because the customer did not open it), and the retailer decides to sell it to another
retailer, who may be able to sell the product to another customer or market, the prime
retailer could be seen as a wholesaler regarding the second retailer, and the idea of
still being in the forward chain will apply. Nothing goes back in this case.

A similar case is posed when coping with buy-outs. Buy-outs, according to Rogers
and Tibben (1999), happen when one manufacturer purchases a retailer’s entire
supply of a competitor’s goods. If a manufacturer from another channel buys from the
retailer this kind of stocks, again the retailer could be seen as another middleman of
the channel. Items from the selves of retailer’s facilities go to another destination
(manufacturer in lieu of customer). Unlike the previous case, there is a movement,
which could be seen as backwards if the partners in chain are thought in the order
manufacturer-distributor-retailer, but not within the same channel neither with
materials or added-value recovery aims (plain competition driver).

Something different happens when this manufacturer happens to be a recycler. The

recycler needs the return of the product for get access to its constituent parts and

12
materials. Recyclables may have their origin in household waste (final customers who
discard products for one or another reason), retailers, distributors or the very original
manufacturer. The recycling was not the original destination for the product, which
was aim at reaching the market where would be used by the final customers. In this
case, there is indeed an intention of recovering materials.

On the previously expounded basis, Reverse Logistics is proposed to be defined as:

The management of any type of items (used or not, finished products or just
components, parts or materials), which, for different kind of reasons are sent by one
member of the supply chain to any other previous member of the same chain. In
addition, flows taken place out of the original chain, whose origin is located in the
original supply chain, are also included provided they are consequence of activities of
repairing or recovering added value or material.

5. CONCLUSIONS

A comprehensive review of the literature from the last decade drove to appreciate the
lack of a not widespread accepted concept of Reverse Logistics. After analysing the
different definitions and applications (type of work not found hitherto in the literature
reviewed), some blurred terms, ill-defined and even, in a few cases contradictory,
visions were detected. An attempt of disclosing the sources of possible
misunderstandings is followed, as final contribution, by a proposal of a concept, kept
at the same time, concise but comprehensive.

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