Waste management in the context of reverse logistics
Reverse logistics has been defined as ‘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 proper disposal’ (Rogers and Tibben-Lembke, 1999). ‘Reverse logistics’ differs from waste management as the latter is mainly concerned with the efficient and effective collection and processing of waste: that is, products for which there is no longer any reuse potential (De Brito and Dekker, 2003). The definition of ‘waste’ in this context is important from a legal perspective as the act of ‘importing’ waste is often forbidden (Fleischmann, 2001). However, there are similarities between some of the processes used by product recovery networks and waste disposal networks, especially in an urban setting (Shakantu, Tookey and Bowen, 2002). These are most evident in the ‘supply’ side where used products are collected from many, possibly widespread sources and need to be consolidated for further processing and transportation. Major differences do exist between these network types on the ‘demand’ side however. While a flow of recovered products would be directed towards a reuse market, waste streams eventually end at landfill sites or incineration plants (Figure 12.1) after various treatment processes (Fleischmann et al, 2000).
Depending on the type of reverse process employed, products may not necessarily be returned to their point of origin, but to a different point for recovery (De Brito and Dekker, 2003), and as the level of complexity in reverse logistics operations has increased, there is an increasing need to address issues of sustainability and integration within the overall supply chain (DfT, 2004). The shipment of materials back to disposal sites and treatment centres is a natural extension of reverse logistics, and better integrating waste management processes within the overall reverse process could help reduce the negative transport impacts.
Within the retail sector, two main mechanisms of returns management have been identified (Halldórsson and Skjøtt-Larsen, 2007). In the centralized reverse supply chain, one organization has responsibility for the collection, inspection, disposition and redistribution of returned items that could be originating from many different retailers. In the decentralized reverse supply chain, multiple organizations could be involved in this process, where individual sales outlets act as their own ‘gatekeepers’, checking returned product and deciding which reuse/disposition paths items should take. Where the gatekeeping function is taken on at the individual store level, local skills will be needed in product inspection and testing. This is not a trivial undertaking and is a process that could lead to increased waste generation if not tightly managed and coordinated. Four physical network structures for handling retail returns have been identified (DfT, 2004), as outlined below.
Type A: Integrated outbound and returns network
Using a company’s own fleet or its logistics providers’ vehicles, returns are ‘back hauled’ from the retail outlets to a regional distribution centre (RDC). The gatekeeper function associated with sorting, checking and deciding the ultimate fate of the returned items (potentially including certain refurbishment processes) is carried out at the RDC. This system works well in a supply chain where the frequency of delivery to stores is high, and the volume of returns is also high.
Type B: Non-integrated outbound and returns network
In this case, a separate network is used for managing returns, typically operated by a third-party logistics provider (3PL) that takes returns (on an ‘as and when required’ basis) from stores to a separate location where the gatekeeper activities are undertaken by the retail organization. This system works well if the level of returns varies in volume but is generally low.
Type C: Third-party returns management
Where the total management of product returns is outsourced to a thirdparty contractor, the retailer benefits in that no gatekeeping expertise is required at the individual store level. The 3PL provides this functionality along with a complete returns management process, including supporting technologies, refurbishment and disposition programmes. Centralized gatekeeping processes have the potential to better manage the waste generated during the returns process and maximize reuse potential, as they have greater visibility of the various refurbishment options. This has seen the emergence of 4PLs that undertake ‘business process outsourcing’ to deliver fully comprehensive forward and reverse supply chain solutions, including refurbishment and disposition management (Mukhopadhyay and Setaputra, 2006).
Type D: Return to suppliers
In this case, goods are returned direct to the suppliers and exchanged for credit. Under these circumstances, retailers may have no gatekeeping responsibilities and little responsibility for returns. Such systems may have additional transport cost implications as the goods have to return to the individual supplier for the gatekeeping function before potential further travel related to refurbishment or disposition. Waste and recyclate management should be seen as a key component in all reverse logistics processes but should be considered in the context of initial source reduction strategies to minimize waste production (Wu and Dunn, 1994; Marien, 1998). Carter and Ellram (1998) proposed a hierarchy of disposition that suggested that resource reduction (minimizing the amount of materials used in a product, and reducing the waste produced and energy spent through designing more environmentally efficient products) ought to be the ultimate goal of the reverse logistics process. Building on this concept, a simple hierarchy of product disposition ‘reduce, reuse, recycle’ has been suggested to minimize the impact of product returns (DfT, 2004). Reduction of returns can be attained through better management of the supply chain, particularly where closer collaboration between gatekeeping processes can be realized. Reuse of returns will maximize their asset value through the utilization of effective refurbishment programmes, and where reuse is no longer an option recycling refers to the best route for material recovery of products that cannot be re-sold. Returns that cannot be managed through these three elements will enter the waste stream (Figure 12.1).
To effectively utilize this hierarchy of disposition, businesses need to integrate their current supply chain and process management strategies, and consider collaborating with potential rivals to better utilize existing assets and generate critical mass to make use of specialist service providers. As legislation such as the WEEE directive and the Directive on Distance Contract start to impact on retailers in terms of increasing the volumes and variety of returns, so opportunities for the small to mediumsized enterprise (SME) to cooperate with other organizations in collaborative ‘reduce, reuse and recycle’ initiatives increase (Shih, 2001).