Tapping product returns through efficient Reverse supply chains: Opportunities and issues

Abstract

Increase in competition is forcing firms in the developed economies to increasingly look at product returns as business opportunities.Firms are discovering that product returns can be tapped commercially through efficient reverse supply chains.The strategic value of product returns varies for different product categories.Balram Avittathur and Janat Shah propose a product returns potential - product returns timing matrix that categorises products and describes the business opportunities arising from organised product returns for different returns potential and returns timing.The product returns potential for early or new product returns is classified on the basis of the time since the product launch into two product categories - established products and innovative products.That for late or used product returns is classified on the basis of the product life-cycle into two product categories - long life--cycle products and short life-cycle products.

The matrix identifies used long life-cycle products as a product category with low business opportunity and classifies new established products ,new innovative products and used short life-cycle products as product categories with business opportunities from product returns.The reverse supply chain requirements differ for these categories as also the managerial issues. Economies of scale in reverse supply chain activities, the role of information technology and tariff issues are important managerial challenges to efficient reverse supply chains.

Product returns and reverse supply chains are business concepts that are still at the nascent stage in India. However,they have immense business potential. Product returns,in addition to being a tool to get closer to the customer,is a valuable means of expanding the markets and raising living standards,and a critical means to reduce environmental pollution.