Reverse Logistics: Automobile Recalls and Other Conditions

Reverse Logistics: Automobile Recalls and Other Conditions

Yasin Galip Gencer (Bogazici University, Turkey) and Ulas Akkucuk (Bogazici University, Turkey)
DOI: 10.4018/978-1-4666-9723-2.ch007
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Abstract

Reverse Logistics has become an important concept in today's supply chain operations. Besides being an old concept, it was hard to find in literature a precise differentiation from some recycling terminology. This chapter starts with a detailed explanation of Logistics and Reverse Logistics concepts, and then continues with the processes carried out in reverse logistics systems, and also the effects on marketing of the products that are subject to the reverse logistics. With all that, the case of automobile recalls will be included in the research scope of this chapter as an exploratory example. Precisely, the literature shows valid examples of direct relationship between recall of automobiles and their demand. In light of the literature, and real-world examples automobile recalls are examined to better explain the concept of reverse logistics.
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Logistics

Definition and Scope

According to the Council of Logistics Management, logistics includes the integrated planning, control, realization, and monitoring of all internal and network-wide material, part, and product flow, including the necessary information flow, industrial and trading companies along the complete value-added chain (and product life cycle) for the purpose of conforming to customer requirements.

When we examine the historical roots of the word, the prevalent view is that the term logistics comes from the late 19th century: from French logistique (loger means to lodge). Also, others attribute a combination of two Greek origin words, which the first one means reason or speech and the second means accountant or responsible for counting (Tepic et al., 2011). Here, it is obvious that logistics is a combination of reasonable and countable tasks. In other words, logistics is the management of the flow of goods between the point of origin and the point of consumption in order to meet some requirements, of customers or corporations. The resources managed in logistics can include physical items, such as food, materials, animals, equipment and liquids, as well as abstract items, such as time, information, particles, and energy.

The logistics of physical items usually involves the integration of information flow, material handling, production, packaging, inventory, transportation, warehousing, and often security. The complexity of logistics can be modeled, analyzed, visualized, and optimized by dedicated simulation software. The minimization of the use of resources is a common motivation in logistics for import and export.

The Oxford English Dictionary defines logistics as “the branch of military science relating to procuring, maintaining and transporting material, personnel and facilities.” However, the New Oxford American Dictionary defines logistics as “the detailed coordination of a complex operation involving many people, facilities, or supplies,” and the Oxford Dictionary on-line defines it as “the detailed organization and implementation of a complex operation.” As such, logistics is commonly seen as a branch of engineering that creates “people systems” rather than “machine systems.” Another definition comes from Council of Supply Chain Management Professionals (CSCMP), which defines Logistics as the process of planning, implementing, and controlling the effective and efficient flow of goods and services from the point of origin to the point of consumption.

Business Logistics

Besides the army forces, the logistics is mostly used in business activities. Business Logistics may be defined as the management of the flow of commodities from the location of origin to the location of consumption on behalf of the needs of customers or companies. One other definition of business logistics speaks of “having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer”. (Malik, 2010) Business logistics incorporates all industry sectors and aims to manage the fruition of project life cycles, supply chains, and resultant efficiencies. McGinnis (1992) argues that the term “business logistics” has evolved since the 1960s due to the increasing complexity of supplying businesses with materials and shipping out products in an increasingly globalized supply chain, leading to a call for professionals called “supply chain logisticians”. The complexity of the terminology also exists in terms of logistics. It is hard to precisely differentiate logistics, so operations or production management concepts are usually confused with the logistics.

Academics and practitioners traditionally refer to the terms operations or production management when referring to physical transformations taking place in a single business location (factory, restaurant or even bank clerking) and reserve the term logistics for activities related to distribution, that is, moving products on the territory. For better understanding the concept, let’s examine the nodes of a logistic network.

Key Terms in this Chapter

Inbound Logistics: One of the primary processes of logistics, concentrating on purchasing and arranging the inbound movement of materials, parts, and/or finished inventory from suppliers to manufacturing or assembly plants, warehouses, or retail stores.

Logistics: Includes the integrated planning, control, realization, and monitoring of all internal and network-wide material, part, and product flow, including the necessary information flow.

Outbound Logistics: The process related to the storage and movement of the final product and the related information flows from the end of the production line to the end user.

Auto Recall: A product recall involving an automobile.

Reverse Logistics: The term often used to refer to the role of logistics in recycling, waste disposal, and management of hazardous materials; a broader perspective includes all relating to logistics activities carried out in source reduction, recycling, substitution, reuse of materials and disposal.

Product Recall: A request to return a product after the discovery of safety issues or product defects that might endanger the consumer or put the maker/seller at risk of legal action.

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