What are the key performance indicators and metrics for operational planning in reverse logistics?

I agree with the points in this article. I would add people to the list of considerations. From a manufacturing / remanufacturing perspective, using reclaimed parts helps alleviate supply chain shortfalls. A trained workforce capable of inspecting, classifying, and repairing returned items will make or break the reverse logistics process. Additionally, standardizing the reverse logistics will increase the quality of the returned items, increase return rates and ultimately increase revenue.

I concur with Jack Kredo’s comments on people (trained and ready workforce). What I would add to the discussion is the the use of technology—either as stand alone or hybrid; the integration of it into the reverse logistics process. The use of machines to both pick, clean and screen can enhance, quicken, standardize the process and reduce loss while increasing returns and revenue.

Reverse logistics is an activity, activity generates results. A firm and relevant stakeholders requires understanding the cost of returns, agrees on a clear return policy, and commit in performing the returns flow of goods from the customer going back to the upstream processes of the supply chain fulfilling the objective of recovering the value of products. When a truck carries product to a destination, and then returns empty to its starting point, the cost for transport is nearly double the cost of merely sending the product to its destination. Returns logistics need tracking of essential KPI considering returns and exchanges, reselling, repairs and replacement, and recycling and disposal contributing to the long term business growth.

In business practice, start with understanding reverse logistics operation, the activities carried out after the sale of a product to recover its value and end the life cycle of the product, when a truck carries product to a destination, and then returns empty to its starting point, the cost for transport is nearly double the cost of merely sending the product to its destination. Ensure timely and accurate monitoring of the cost of returns, the cost incurred of reverse shipping and tracking of returns and the cost of work hours spent managing returns—from taking calls to restocking products. Maintaining customer satisfaction with a good return policy is important.

Coming from a transportation perspective of reverse supply chain flow it is important to have an electronic data interchange (EDI) with all partners involved in the process. Trying to wing this process through word of mouth, emails, paper copies, or excel will prove to be faulty at some point. There is too much variation that can cause the process to fail when schedules change, orders are cancelled, or other disruptions occur. It’s too easy to simply forget to hit send or save with the processes mentioned above. By having a Transportation Management System (TMS) that feeds data to other partners there is reduced failure points. Communication and orders will be properly tendered and not forgotten. This will eliminate blame in the long run!

My experience with reverse logistics was mainly with the U.S. Army's Logistics Civil Augmentation Program (LOGCAP). When a LOGCAP contract ended, the Government had a real problem determining the disposition (reverse logistics) of U.S. Government procured equipment for the contract. The bottom line was cost! To retain the equipment (which was everything from fire trucks to individual weapons) required establishing a source for accountability. The Government would normally disposed of the excess equipment at the end of the contract, even though they may need to replace like items for a new contract? You must not be afraid to dispose of items in reverse logistics; remember, cost is always the driving factor.