c o v e r

s t o r y

Reverse logistics

A FAST TRACK FOR

RECYCLING

p r i y a

r a o

As an efficient    
supply chain    
management    
is the answer    
to many of the    
current woes    
of the    
manufacturing    
sector, many    
players are    
gainfully    
using reverse    
logistics as an    
important part ast year, Starbucks, the most major factors behind this is the ineffective
for cost
famous coffee chain in the world, way of handling products that have reached
  in its responsibility report stated their end-of-life stage. An answer to this
optimization Lcups reusablethatandits goalrecyclableto makeby100%2015 hasof itsmet could be an efficient logistics system.
and helping
them reduce with a few challenges. One of the limitations Return 'gift'
was due to operational impasses, such as min- When electronic appliances such as a
carbon
imal store space or lack of commercial recy- washing machine reach end of its service life,
emissions cling services. It is interesting that something the customer often wonders what to do with
as seemingly simple as recycling a cup can be it? Many items that are sold contain toxic
 
  a bit complicated. But one can find similar components, such as heavy metals.
  cases from other industries. One of the Companies, like Samsung, Wipro, Nokia,

20 | RECYCLE NOW / AUGUST 2011

Motorola, etc, have launched recycling pro- gramme where consumers can send items back when their service life has ended. Recycling of these items can lead to a small revenue stream for these companies, especial- ly in recycling certain metals. Although this may not be a major source of revenue, it may offset the cost of disposing of toxic items, and the company can also gain customer's goodwill.

"Proper arrangement of assets and trans- portation of them not only secures chain of custody of assets but also protects the value of them which is an important beginning of full spectrum of disposition process. Hi-Tech Recycling helps transportation needs with own vehicle and driver and with authorised contracted carriers by providing the most effective and efficient transportation solu- tions. When the security of assets is of a high concern, we also help provide a secure and safe transport mode," says Manish Patil, Director, Hi-Tech Recycling India Pvt Ltd - which is aiming to become a trusted IT asset management company for retiring IT asset equipment.

A company that does not have effective logistics system in place for products coming back from customer often faces the challenge of inadequate warehouse and storage space as it could take hours, days or months before it decides to scrap or recycle the returned items. Not only does it uses precious ware- house space, but it also fails to address the potential benefits of repairing items for cus- tomers or recycling for potential resale. K V Nair, Customer Relations, Total Logistics (India) Pvt Ltd, says, "The greatest curse on mankind today is the increasing quantum of waste being generated globally. The perennial problem faced by the authorities is the dis- posal of this menace. Disposal can be either by recycling or by destruction in an environ- ment friendly manner. However, disposal by recycling wherever possible is the best option as it reduces the consumption of virgin resources which are becoming scarce day by day."

In reverse gear

The value added processes that are per- formed on customer returns, as well as the whole return process, have been described by the term 'Reverse Logistics'. Besides, it

includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls, and excess inventory. Reverse logistics also includes recycling programmes, hazardous material programmes, obsolete equipment disposition, and asset recovery.

Mr Nair elaborates, "Logistics is the process of moving the raw materials to the manufacturing point and/or moving the fin- ished goods to the market or customer. In case of reverse logistics, the process includes the management of returned goods, whether it is for sale or disposal. The problem faced by the market/retailers is the absence of a process that allows cost-effective and hassle- free method of returning the goods to the originating sources. This often results in the delay of return of the goods resulting in accumulation and deterioration. Imagine the situation wherein the e-waste is accumulated and kept unattended. The Logistic Service Provider (LSP) can enter into a reverse logis- tics contract with such agencies and arrange to move the waste to the disposal site at a very reasonable cost to the client. The process will work systematically and efficient- ly."

The returns process has now become an important part of the processing that takes place in the warehouse. "Almost all products can be recycled efficiently by using reverse logistics services as there is a return/defect in every product made on earth," says Hitendra Chaturvedi, MD and CEO, Reverse Logistics Company, which offers end-to-end reverse supply chain services - from customer pick- up anywhere in the country to repair, refur- bish and final disposition.

A facet of the reverse logistics process is

Due to lack of registered logistic providers, collecting

e-waste from various organisa- tions in different states is a challenging task

- Mr Patil

AUGUST 2011 / RECYCLE NOW | 21

c o v e r

s t o r y

Rather than just helping recycling, we help the 4 R's that are core to Green - reduce, reuse, repair, recycle

- Mr Chaturvedi

that companies can offer end of life recycling for items they sell. "Rather than just helping recycling, we help the 4 R's that are core to Green - reduce, reuse, repair, recycle. That is - we reduce waste that would otherwise go into the environment by repairing defective products for reuse. Any product that is not economically repairable gets either canni- balised or recycled according to e-waste norms of the country," adds Mr Chaturvedi.

The first link

The recycling industry is likely to grow in importance and scope both as an economic activity and as a guarantor of proper environ- mental stewardship. Hence, it is worth think- ing about this from a supply chain perspec- tive. Reverse logistics systems for recycling begin with the consumer and finishes with the end market. These systems can be more or less complex depending on whether they possess intermediate levels, such as, the col- lection level, the transfer level and the pro- cessing level. "Due to lack of registered logis- tic providers, collecting e-waste from various organisations in different states is a challeng- ing task. So there is a vast scope of increas- ing number of registered logistic service providers, else it could turn into a monopoly kind of situation which in turn will increase the logistic cost," opines Mr Patil.

Mr Nair adds, "Recycling sector in India is not only highly fragmented but also most dis- organised. If we are to mention about e- waste recycling, the agencies responsible for the same are not fully aware of the hazards or the right method of disposal. There are no proper regulatory bodies as a result devel- oped nations dumps their e-waste in our country. There is however some control on the collection, transportation and disposal of medical waste."

If the industry is so fragmented, what's the solution? "Technology companies like us, which offer a one-stop shop to manufactur- ers to outsource their entire reverse logistics just like it is done by companies in the devel- oped worlds," answers Mr Chaturvedi.

Consumers have a particularly important role in this reverse logistics system since they are the first link in the overall logistics chain. Without consumer participation (through the sorting and disposing of recyclable materials),

this system would not be possible. By provid- ing a convenient system, customer service becomes the touchstone in creating value for consumers as well as in securing their partici- pation.

"The mantra here is optimising the space on the vehicle and planning for the best route before moving the material from one place to another. Recycling involves lots of logistics - starting from origin to our warehouse, from warehouse to dismantling station to refining station and finally to metal buyers. This needs to be planned well before to avoid repetitive movement of material from one place to another without any purpose," observes Mr Patil.

Cost optimisation

Environmental concerns and waste dispos- al legislation are the main motivations under- lying reverse logistics. Contrary to this notion are private reverse logistics networks that handle residues or end-of-life products in which recycling is economically more attrac- tive. "The amount of energy required to pre- pare a metal for certain use is definitely larger than preparing a reused metal for the same purpose. So this actually reduces financials at the raw material end whereas the finished product is still at the normal price helping companies to increase their profits without making significant changes. Reusing metals requires very less energy as compared to refining metals from its raw form. So instead of using expensive raw materials every time, cheaper recycled material is always cost effec- tive," says Mr Patil.

While recycling is good for the environ- ment, one has to think about the environ- mental costs of the entire process, especially in the supply chain from a transportation and logistics. Private processors finance the trans- portation of these materials as well as the recycling process itself. For recycling to be economically viable, a significant amount of discarded products (or parts) need to be processed.

The logistics industry contributes around 13% of India's $ 1 trillion gross domestic product (GDP), while aftermarket returns that form part of the reverse logistics indus- try are estimated at $ 10-15 billion in India. However, reverse logistics has the potential to

22 | RECYCLE NOW / AUGUST 2011

become a key route to cost optimisation as Back to basics  
the Indian economy grows.  
According to Mr Chaturvedi, proper  
   
reverse logistics can offer following benefits Reverse logistics is the continuous logistic process through
to companies:
which shipped products move from the consumer back to the
X Reducing leakage in reverse supply chain
producer for possible reuse, recycling, remanufacturing or dis-
by 80%
posal. The purpose of a reverse logistics process is to regain
X Clearing warehouse space by 20%
the value of returned materials or provide the means for proper
X Increasing profit margin by 5% on sales by
disposal. Forward logistics, in contrast to reverse logistics,
reducing downward pressure
focuses on the flow of goods from the producer to the con-
X Higher asset recovery from timely and
sumer.  
appropriate disposition    
X Reducing returns processing costs by 25%    
X Using return data for better decision mak- use of alternate fuels for transportation is  
ing, improving productivity by over 10% one of the prime focuses as it helps econom-  
  ically and environmentally. One of the ideas  
Green logistics is to ship products together, rather than in  
Government is taking active ini- smaller batches. For this purpose, we com-  
tiative to reduce e-waste waste pickups of at least two  
is slowly piling up as in a single day probably Reverse
panies and consumers from the same area. We at Hi-
logistics is
replace products rang- tech Recycling always think
ing from mobile about recycling without dis- more than
phones to comput- turbing the environmental
reusing
ers that are becom- balance, that is the reason
ing obsolete more we also employ people who containers
rapidly. This is likely understands environment
and recycling
to give impetus to concerns rather than just
reverse logistics. recycling process," says Mr packaging
"When proper statutory Patil.
materials.
regulations are enforced,  
there will be strict rules point It can pro-
govern the handling, storage, Companies are facing the challenge of
vide green
transportation and disposal of the wastes of increasing their recycling capability and
all types. It is at this juncture that the LSPs improving the efficiency and compliance of solution for
can be of help to the waste generating indus- their reverse logistics processes. One can
re-designing
tries. Due to their expertise in handling all expect these factors to have an impact on
sorts of material for their clients LSPs are how companies use 3PLs (Third party logis- packaging to
fully equipped for this job. They can offer a tics providers). While LSPs would point to
use less
single window solution to the needy, as the customer service advantages that result from
LSP will be collecting the waste from the using their services, it will be important for material, or
source, transporting it to the disposal site, companies to consider the compliance, sus-
reducing the
coordinating with the disposal agency for tainability and general efficiency benefits.
appropriate disposal as also the statutory Though, as an industry it is still evolving, energy and
bodies to complete the process," avers Mr reverse logistics is a sunrise sector within
pollution
Nair. logistics. "If e-waste regulations and green
Reverse logistics is more than reusing con- corporate policies get enforced by the gov- from trans-
tainers and recycling packaging materials. It ernment and companies are held accountable
portation
can provide green solution for redesigning for the lifecycle of the products they create
packaging to use less material, or reducing and sell, reverse logistics will become a stan-  
the energy & pollution from transportation. dard business discipline like in all developed  
"We consider environment first. Reducing countries," concludes Mr Chaturvedi on a  
fuel consumption along with simultaneous green note. RN  
  AUGUST 2011 / RECYCLE NOW | 23
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