Key Activities, Decision Variables and Performance Indicators of Reverse Logistics

Abstract

Reverse logistics is a great enabler for sustainable production and resource circulation. Its definition and scope are still evolving since early 1980s. But, collection, sorting/testing, recovery and redistribution are assumed as the basic four activities in reverse logistics. Unfortunately, many researchers assume reverse logistics by its literary meaning and plan the reverse logistic activities and take decisions based on the forward logistics or supply chain principles. There is hardly any academic research on the performance evaluation and decision variables for reverse logistics. This paper aims at developing the various activities, decision variables and performance indicators based on the four basic activities under reverse logistics. The three basic questions – who will collect from the customer, what is to be done on the collected products and where to send after recovery – interlinked with the activities at collection, sorting/testing and recovery centres will provide the basic activities, decision variables and key performance indicators of the reverse logistics. The location and capacity of various centres, types of networks, various recovery options, various methods of collection, and seamless integration with the forward logistics are the key decision variables. The performance indicators will be developed based on the activities and actions between the activities so that the performance indicators can be associated with the reverse logistics. It is expected that this conceptual framework of activities, decision variables and performance indicators will help the managers working in reverse logistics to take better and informed decisions.