56 Int. J. Logistics Systems and Management, Vol. 3, No. 1, 2007 —_—_—_ The theory and practice of Reverse Logistics Laura Meade Department of Information Systems and Supply Chain Management MJ Neeley Schoo! of Business ‘Texas Christian University TCU Box 298530, FL. Worth TX 76129, USA E-mail: Lmeade@tcv.edu Joseph Sarkis* Graduate School of Management (Clark University 950 Main Street Worcester, MA 01610-1477, USA Fax: (508) 793-8822 E-mail: jsarkis@clarku.edu *Corresponding author Adrien Presley Division of Business and Accountancy Truman State University 100 East Normal Kirksville, MO 63501, USA E-mail: apresley @truman.edu [Abstracts This paper provides a review of the literature on Reverse Logistics (RL). Ie provides an overview of definitions, research and research ‘opportunities inthis field. Tis a Gimely and important concept with significant imermational research under completia at this time. Ample opportunities exist, for the growth of tis field duc to its multi-functional, and interdisciplinary focus. It also is eitieal for organisations to consider from both an economic and environmental perspe these issues are discussed and summarised in this paper Keywords: Reverse Logistics (RL) Reference to this paper should be made as follows: Meade, 1. Sarkis, J, and Presley. A. (207) ‘The theory and practice of Reverse Logistics’, Int J Logistics Svstems and Management, Vol. 3, No.1, pp-56-84 Biographical notes: Lavra M, Meade is an Associate Professor of Supply ‘Chain Practice at Texas Christan University. She graduated with a BSME from Valparaiso University. She later attended the University of Texas at Arfington Where she received an MBA and a PRD in Industrial Engineering. Her work experience inchides. General Dynamics and the Automation and Robotics [Revearch Institute, She has published several articles in the area of enterprise Copyright © 2007 Inderscience Enterprises Ltd i The theory and pra modelling, supply ch been published in Gi Engineering Manage Management Intern Research, Logistics International Journal related to supply | ‘Management, Strateg and Foundations of groups thew compan Sciences Institute and Joseph Sarkis is eu Graduate School of M the State University ‘multicriteria decision technology, environm managerient, justia over 170 articles in and edited books. He News, and serves nt Adrien Presley is an Accountancy at Miss in Operations. Manage Nerest include suppl justification, and mana Engineering from the | 1 Introduction Reverse Logistics (RL) conti recent changes in environme (Asheroft, 2004), Traditional ‘customer service function, wi retum them to their suppl organisational competitive a decision (Schwartz, 2000; Mo an inerease in popularity, not business” issues as wel. Inthe be assured they can return t Logistics Executive Council, | for handling, transportation, a | Meyer, 1999). This estimate | time, and the cost of convertn | More recently, an envito towards remanufacturing, recy | and practice eee Cuneor that a greening of industry wito. 12007 | —— Logistics ain Management ‘on Reverse Logistics search and research vacept with significant ple opportunities exist and tnterdisiplinary both an economie and ed and summarised in we we Logis 4 e. L. Sarkis, J. and es. Int J Professor of Supply red with a BSME from jof Texas at Arlington mnginering. Her work mation and Robotics the area oF enterprise The theory and practice of Reverse Logisties 37 ‘modelline, supply chain management and reverse logistics. Her research has heen published in Greener Management International, IEEE Transactions on Engineering Management, Engineering Management Journal, Supply Chain Management International Journal, International Journal of Production Research, Logistics and Transportation Review Journal, and OMEGA: An Intemational Journal of Management Science. She has also taught courses related to supply chain management, including Global Supply Chain Management, Strategies, Supply Chain Management Operations. Procuremen tnd Foundations of Supply Chain Management, and has led several student groups thru company sponsored projects. She is a member of the Decision Sciences Insitute andthe Council of Supply Chain Management (CSCMP), Joseph Sarkis is currently a Professor of Operations Management in ‘The Graduate School of Management at Clark University. He earned his PRD from the State University of New York at Buffalo. His research interests include multicriteria decision-making, supply chain management, management of technology, environmentally conscious operations and logistics, performance management, justification issues, and enterprise modelling. He has published ‘over 170 anicles in a number of peer reviewed academic jourals. conferences land edited books. He is currently serving as Ealtor of Management Research Neves and serves on the editorial board of a variety of journals. Adrien Presley is an Associate Professor in the Division of Business and AAccountaney at Missouri's Truman State University where he teaches courses in Operations Management and Information Systems, His research areas of interest include supply chain management, sustainable production, strategic jistfieation, and management of technology. He received his PRD in Industrial sineering rom the University of Texas at Arlington. 1 Introduction Reverse Logistics (RL) continucs to rise in prominence and volume commensurate with recent changes in environmental laws and the number of e-commerce related returns (Asheroft, 2004), Traditionally, RL. is an activity within organisations delegated to the customer service function, where customers with warranted or defective products would return them to their supplier. However, it is increasingly becoming an area of organisational competitive advantage, making the pursuit of this function a strategic decision (Schwartz, 2000; Mollenkopf and Closs, 2005). tn the last decade, RL has seen an increase in popularity, not only due to environmental issues, but economic and “good business” issues as well. In the e-commerce arena, RL is critical issue as buyers need (0 be assured they can return the item and receive a refund. According to the Reverse LLogisties Executive Council, US firms spend more than an estimated $35 billion annually for handling, transportation, and processing of retumed e-products and continues to grow (Meyer, 1999). This estimate does not include disposition management, administration time, and the cost of converting unproductive returns into productive assets. More recently, an environmental corporate management dimension with a focus towards remanufacturing, recycling, and reclamation has added vigor to this area of study and practice (e.g., see Gungor and Gupta, 1999). Especially convincing is the argument that a greening of industry will be less likely to occur without jointly addressing. the58 L. Meade, J. Sarkis and A. Prestey ‘economic and environmental implications of RL. Regulatory initiatives and pressures influencing both environmental and reverse logistics dimensions are becoming more and more pervasive, Waste management legistation is especially being implemented in Buropean countries, with Germany leading the way. For example, the WEEE (Disposal fof Waste Electrical and Electronic Equipment) from the European Union requires businesses throughout the world to be solely responsible for financing the management, recycling and disposal of electronic waste. Enactment was initiated in August 2004 and ‘with planned effective implementation by June 2006, though continuous delays have ‘made this date uncertain in many EU countries (Schneiderman, 2005), Thus, manufacturers will eventually be responsible for their products, from light bulbs to mainframe computers, after consumer use and at the end of a product's life. This responsibility includes RL activities such as collecting, sorting, dismantling, upgrading and packaging. The purpose of this regulation is to eliminate the amount of products being dumped or incinerated, thus causing damage to the environment (Revlog, 2004), The level of financial outlay and additional pressures from evolving environmental ‘and electronie commerce and other business practices implies that strategic influences of RL decisions exist. One of these implications is the outsourcing decision, which may include the selection of third-party (3PL) (or fourth-party (4PL)) RL. providers. RL suppliers play a role in helping organisations in closing the loop for products offered by those organisations, Furthermore, the number of logistics companies offering RL services hhas continued to grow. Part of these outsourcing organisations duties is managing the ‘complete RL supply chains. It has been found that consolidating returns can reduce the overall supply chain costs by as much as 25% (Boersma, 2003). Even within the last few years, the perspective and importance of RL has continued to grow in both business and research communities. Thus, the purpose of this paper is 10 provide an updated perspective on RL from theoretical and practical perspectives. This paper reviews the definition of RL, its functions and mechanisms, The issues currently facing RL. will be presented from both environmental and business dimensions including discussion of 3PL/4PL, e-ogistics, and environmental developments. Furthermore, after presenting a summary of current research, an overview of what we believe to be some research directions is also presented. 2. Reverse logistics: what is it? ‘The Reverse Logistics Executive Council provides the following widely accepted definition of RL: “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 of proper disposal” (Rogers and Tibben-Lembke, 1999, p.2). The definition of RL can be viewed holistically to include the reverse distribution of materials and recycling, as well as reducing the quantity of materials in the forward system (Caner and Ellram, 1998), Along with the forward supply chain the organisation needs to consider the implications and affect of RL. RL is a relatively novel frontier for management and includes the handling and disposition of retumed products and information The theory and pra ‘As ean be seen in Figur product. In this figure, there Porter's value chain appro Togisties. Included in this i significantly different funct ‘within a single organisati Figure 1 Operational lite eye RL can take on many differ provided as part of the retu products to the shelf, more Blumberg (1999) categorise © field service and afters © specialised high value ‘© reclamation of personal # recovery of containers refurbishmentiremanuti Management and operation activities and organisationa variation can be due tothe 2.1 Driving forces for R In this section, we highligh investment in RL by both r design of RL_ newworks ‘commitment, ethical standa influences for adoption of R buyers, and competitors, a primary themes related (0 ‘These themes, environmen ‘more detail in the following