ASSIGNMENTS

MK0001
(2 credits)
Set 2
Marks 30
SALES, DISTRIBUTION AND SUPPLY CHAIN MANAGEMENT

1. Explain the reverse logistics with examples.

Ans: When considering any area of business as an opportunity for improvement, begin with having an understanding of just
what you are trying to change. What is Reverse Logistics? The broader concept of logistics is described by The Council of
Supply Chain Management Professionals (CSCMP) 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 origin to the point of consumption for the purpose of
conforming to customer requirements.

Reverse logistics is the logistics process of removing new or used products from their initial point in a supply chain, such as
returns from consumers, over stocked inventory, or outdated merchandise and redistributing them using disposition
management rules that will result in maximized value at the end of the item’s useful life.

For our purposes, reverse logistics includes all the activities that are mentioned in the definition above, with the difference
that reverse logistics encompasses all of these activities as they operate in reverse. Therefore, according to authorities Dr.
Dale S. Rogers and Dr. Ronald S Tibben-Lembke, reverse logistics becomes:

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.

To settle on a specific definition, reverse logistics is the process of moving goods from their typical final destination for the
purpose of capturing value, or achieving proper disposal to the satisfaction of the customer or consumer. Remanufacturing
and refurbishment activities may be part of the procedure. Reverse logistics 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.

For a practitioner, the disposition choice is determined by the most profitable alternative:

• Reconditioning – when a product is cleaned and repaired to return it to a “like new” state

• Refurbishing – similar to reconditioning, except with perhaps more work involved in repairing the product.

• Remanufacturing – similar to refurbishing, but requiring more extensive work; often requires completely
disassembling the product
 • Resell – when a returned product may be sold again as new

• Recycle – when a product is reduced to its basic elements, which are reused – also referred to as asset recovery.

Case Examples
A business printer field service and reverse logistics model helps explain how an operating system works. The process for
such a firm starts when a business customer with a problem calls an original equipment manufacturer (OEM) or third party
customer support contact, both of which are used in an attempt to diagnose the problem and provide problem resolution
instructions if applicable. An OEM field technician or third party certified technician attempts to repair the equipment on-
site. If unable to make the repair, the unit is sent to the OEM or certified third party repair facility, where a regional-based
loaner or exchange program may be available. The unit is then repaired at the OEM or third party repair facility. The OEM
then ships the returned unit or comparable unit back to the customer, or places the unit in used stock if an exchange is
previously provided. A field technician is then scheduled to install the loaner unit, exchange units, or repair equipment at the
customer site

As an example, consider firms involved in the aftermarket sales and services business, and how reverse logistics plays a
role. Products in this business can include accessories, replacement parts, and repair and service parts. The services could
include: product and technical support, training, product documentation, warranty and claims management, and field service
repairs. As an adjunct to these products and services, reverse logistics fits the definition by providing for: exchanges and in-
warranty repair, out-of-warranty repair, maintenance, upgrades and retrofits, remanufacturing, and end-of-life asset recovery
and hazardous material disposal.

In the aftermarket business, field services and reverse logistics are generally considered one of the harder areas to manage,
coordinate and operate efficiently. The area is often forgotten or given little consideration regarding launch of new products,
importance to overall customer satisfaction and loyalty, and company profits.

In a specific case example of how complex the situation can become and how allowances are made to assure proper services
are provided, we can take a look at what Microsoft did when it decided to introduce its XBOX. The details help make the
point about the importance of paying attention to the full supply spectrum, including reverse logistics. Microsoft decided to
have the main product manufactured by Flextronics. Accessories would be produced by a variety of manufacturers.
Distributors and electronics retailers were to perform the warehousing, distribution, and end customer sales functions.
Solectron was used for aftermarket warranty and customer repair services. Microsoft took the time to ensure the above
capabilities were fully operational before the first XBOX was sold to an end consumer and that any returns would be
processed effectively by the designated party.

In another example, a cell phone reverse logistics model proved very beneficial for a firm selling such products under their
brand name. This firm had the cell phones manufactured by LG Industries, Samsung, Motorola and others. Accessories
were again manufactured by a variety of firms. Order taking and initial end consumer billing was performed by Amazon.
Forward logistics, including warehousing, carrier service programming and order fulfillment were performed by CellStar.
Cellular carriers such as Verizon and Sprint provided the monthly service. Extended warranty and product protection
insurance was provided by lock/line. The customer call center service and reverse logistics was performed by CellStar.
 1. Discuss the components of supply chain with examples.

Ans: The management components of SCM

The SCM components are the third element of the four-square circulation framework. The level of integration and
management of a business process link is a function of the number and level, ranging from low to high, of
components added to the link (Ellram and Cooper, 1990; Houlihan, 1985). Consequently, adding more management
components or increasing the level of each component can increase the level of integration of the business process
link. The literature on business process re-engineering,[6] buyer-supplier relationships,[7] and SCM[8] suggests various
possible components that must receive managerial attention when managing supply relationships. Lambert and
Cooper (2000) identified the following components:
• Planning and control
• Work structure
• Organization structure
• Product flow facility structure
• Information flow facility structure
• Management methods
• Power and leadership structure
• Risk and reward structure
• Culture and attitude
However, a more careful examination of the existing literature[9] leads to a more comprehensive understanding of
what should be the key critical supply chain components, the "branches" of the previous identified supply chain
business processes, that is, what kind of relationship the components may have that are related to suppliers and
customers. Bowersox and Closs states that the emphasis on cooperation represents the synergism leading to the
highest level of joint achievement (Bowersox and Closs, 1996). A primary level channel participant is a business
that is willing to participate in the inventory ownership responsibility or assume other aspects of financial risk, thus
including primary level components (Bowersox and Closs, 1996). A secondary level participant (specialized) is a
business that participates in channel relationships by performing essential services for primary participants,
including secondary level components, which support primary participants. Third level channel participants and
components that support the primary level channel participants and are the fundamental branches of the secondary
level components may also be included.
Consequently, Lambert and Cooper's framework of supply chain components does not lead to any conclusion about
what are the primary or secondary (specialized) level supply chain components (see Bowersox and Closs, 1996,
p. 93). That is, what supply chain components should be viewed as primary or secondary, how should these
components be structured in order to have a more comprehensive supply chain structure, and how to examine the
supply chain as an integrative one (See above sections 2.1 and 3.1).
Reverse Supply Chain Reverse logistics is the process of managing the return of goods. Reverse logistics is also
referred to as "Aftermarket Customer Services". In other words, any time money is taken from a company's warranty
reserve or service logistics budget one can speak of a reverse logistics operation.

6. Write a note on IT enabled supply chain.

Ans: we seek to better understand the value of information technology (IT) in supply chain contexts. Grounded in
the resource-based theory in conjunction with transaction cost economics, we develop a conceptual model that links
three IT-related resources (backend integration, managerial skills, and partner support) to firm performance
improvement. The model differs from previous studies by proposing a moderating effect of competition on the
resource-performance relationships. Using data of 743 manufacturing firms, our analysis indicates significant
contribution of IT to supply chains, which is generated through development of the digitally enabled integration
capability and manifested at the process level along the supply chain. The technological resource alone, however,
does not hold the answer to IT value creation. In fact, managerial skills, which enable adaptations on supply chain
processes and corporate strategy to accommodate the use of IT, are shown to play the strongest role in IT value
creation. Furthermore, backend integration and managerial skills are found to be more valuable in more competitive
environments. While commodity-like resources have diminishing value under competition, integrational and
managerial resources become even stronger. Overall, our results shed light on the key drivers of IT-enabled supply
chains, and provide insights into how competition shapes IT value.