ENVIRONMENTAL SUSTAINABILITY OF LOGISTIC COMPANY

Environmental Sustainability Of Logistic Company

Environmental Sustainability Of Logistic Company

Introduction

Firms are beginning to acknowledge that, in many cases, reaching the final customer does not automatically represent the end of the journey for a product/service. Products flow backwards after reaching their point of consumption for numerous reasons. For example, what happens when damaged and/or defective goods reach this final point? What if the final customer has received incorrect items or quantities? What if repairs are needed or piles of unsold merchandise await their destiny in a costly overstock situation? These questions are mainly related to the product side of the process. Marketing-related causes for returns must also be addressed, including customers' dissatisfaction with a particular product and/or customers who change their mind after the initial purchase. Straightforward abuse of firms' return policies by some customers provides for additional volume of the market-related returns (Rogers & Tibben-Lembke, 1999). For years, the answers to these issues were given secondary attention, at best. The obvious reason for neglecting to implement a state-of-the-art reverse logistics program is cost related. Companies are already hard pressed to cut costs—including logistics expenditures—to a minimum; dealing with returns is considered an unnecessary and costly effort.Even as companies begin to recognize the value-added potential of reverse logistics, they often fail to distinguish the specific dimensions of the reverse process. Often, they attempt to incorporate it within their forward logistics operations (Knemeyer, Ponzurick, & Logar, 2002). Although intuitively appealing, this simplistic perspective of reverse logistics can be misleading. While it is true that both forward and reverse logistics must be engaged in handling the physical flow of goods and services, some notable differences exist when management capabilities are addressed. Stock and Lambert (2001) warn about the potential danger of equating forward and reverse logistical flows by stating that “most logistics systems remain ill equipped to handle product movement in a reverse channel.” In a study related to the recycling industry, for example, the factors affecting the reverse logistics channel proved to be substantially different from those linked to traditional logistics ' forward flows (Pohlen & Farris, 1992).

These authors conclude that “differing product characteristics, extensive handling, and low density shipments pose considerable obstacles to establishing an efficient reverse channel” (p. 35) by just mimicking the forward flows. A strategic shift in the understanding of the complex nature of reverse logistics is necessary.

WCC—a pseudonym for our focal company, “Wholesale Computer Company ”—provides a great opportunity to examine the successful implementation of a reverse logistics program. At WCC, the necessity of dealing with returns gradually transformed into a pressing problem. Returns began piling up in the distribution center, without a clear company protocol and dictate regarding who was responsible for processing. The situation became critical when customers—including key accounts—started to complain about excessive wait times for returns-related financial credits and, as a result, started to divert some or all of their business to WCC's competitors. The initial reaction of WCC's management was to substantially increase the budget for reverse logistics, with ...