CONTENTS

OVERVIEW OF THE TOOLKIT

OBJECTIVE

REVERSE LOGISTICS

REVERSE LOGISTICS SERVICES

STRATEGIC ORIENTATIONS TO OFFER REVERSE LOGISTICS

SERVICES

REPUTATION-BASED STRATEGY

EFFICIENCY-BASED STRATEGY

REVERSE LOGISTICS SERVICE OFFERINGS BY LARGE 3PLS IN

THE WORLD

11

TOOLKIT WITH REVSV MODEL FOR REVERSE LOGISTICS SERVICE OFFERINGS

OVERVIEW OF THE TOOLKIT

This project aims to develop a toolkit with strategic REVSV Model to aid third-party logistics
(3PLs) provider in providing the reverse logistics services. The model with toolkit serves as
a strategic management guide to assist 3PLs in offering several effective reverse logistics
solutions that can best serve to their customers. Among the services include dismantling the
finished goods, returns management, receiving, sorting and verifying the product returns
from their customers. Such services can be derived from the utilisation of strategic green
orientation, which encompasses of innovation-based strategy, efficiency-based strategy
and reputation-based strategy, which can be applied by the 3PLs management in order to
enhance the existing value-added services offered to their customers. On the basis of the
theoretical foundation of the strategic REVSV Model, this could suggest that 3PLs respond
to Institutional Theory (INT) by incorporating the three isomorphisms (normative, coercive
and mimetic) in drawing up the service offerings in reverse supply chains. The present 3PLs
reverse logistics service provider, as well as the non-provider, are expected to benefit by
acquiring the strategic REVSV Model with toolkit as a source for future reference. This could
give a clear insight of the right strategies for a better reverse logistics service offerings to
their existing and new potential market.
OBJECTIVE
To aid third-party logistics (3PLs) provider by developing an appropriate reverse logistics
services, tap the market and subsequently increase the 3PLs provider revenue and profits.
REVERSE LOGISTICS
Can be defined as all activity associated with a product/serviceafterthe point of sale, the
ultimate goal to optimize or make more efficient aftermarket activity, thus saving money and
environmental resources. It is a flow of surplus or unwanted material, goods, or equipment
back to the firm, through its logistics chain, for reuse, recycling, or disposal.
How it Works?
Figure 1. The Flow of the Reverse Logistics

As shown in Figure 1, reverse logistics are responsible for moving product backwards, from primary
consumers to retailers and all the way back to suppliers and manufacturers. These products are
recovered through reuse, recycle, remanufacturing activities depending on the type and quality of the
returns. The recovered products are then re-deliver to the secondary consumer in forward logistics
to the wholesaler and reseller.

Invention, Innovation & Design Exposition 2016

Figure 2. Reverse Logistics Model

Source: Reverse Logistics Association

Figure 3. Reverse Logistics Management

Source: Cullen et al. (2013)

TOOLKIT WITH REVSV MODEL FOR REVERSE LOGISTICS SERVICE OFFERINGS

Figure 4. General Forward And Reverse Logistics

Source:Reverse Logistics Association

Ten Reasons for the Increase of Reverse Logistics Activity
1) Demand variability.
2) Promotional activity.
3) New product introduction.
4) Product lifecycles.
5) Logistics trade-offs.
6) Purchasing policies.
7) High on-shelf availability.
8) Legislative factors.
9) Liberal returns policies
10) Customer returns
REVERSE LOGISTICS SERVICES
It is relates to the service of movinggoodsfrom their typical final destination for the purpose
of capturing value, or proper disposal. The services include activities related to returns
avoidance, gatekeeping, disposal and all otherafter-marketsupply chain issues.

Invention, Innovation & Design Exposition 2016

The Importance to Offer Reverse Logistics Services by 3PLs

In Malaysia, reverse logistics services is one of the top ten value added services outsourced
to 3PLs in 2010 (Frost & Sullivan, 2011). In fact, a survey conducted in 2009 indicated
that reverse logistics services were one of the prime services that shippers are looking for
in the future (Langley & Capgemini, 2010), which emphasises the need for 3PLs to offer
more valuable services in this area. In relation to this, 3PLs is seen as a tool to achieve
environmental sustainability objectives, as they are capable of playing a critical role in
organising, managing and creating more sustainable supply chain services to the customers
(Evangelista et al., 2010; Anttonen et al., 2013).
Figure 5 and Figure 6 shows that, overall, the outsourcing of the reverse supply chains is
placed in sixth position behind the 3PLs traditional services of transportation, warehousing,
freight forwarding and customer brokerage. In addition, reverse logistics services were
recorded as the highest demanded services compared to the other five types of value added
services offered by 3PLs, which are cross docking, freight bill auditing and payment, final
product finishing services, transportation planning/management and consultancy services
(Langley & Capgemini, 2014, 2015, 2016). This clearly indicates that although the shippers
continue to rely on the traditional forward logistics services, such as transportation and
warehousing services, the demand for reverse logistics services over the years from 3PLs
is increasing (M. R. Shaharudin, Zailani, & Ismail, 2014).
Figure 5. Demand for Forward and Reverse Logistics from 2006-2015

Source: Langley and Capgemini (2006); (2007); (2008); (2009); (2010); (2012); (2013); (2014); (2015)

Source: Shaharudin, Zailani, & Ismail (2015)

TOOLKIT WITH REVSV MODEL FOR REVERSE LOGISTICS SERVICE OFFERINGS

Figure 6. Demand for Forward and Reverse Logistics in the Year 2015

Source: 2016 Third Party Logistics Study

The Identified Nine Key Domain in Reverse Logistics Services

1) Cost and performance measurement
2) Avoidance of product returns
3) Process management
4) Physical network
5) Inventory management
6) Information and communication technology
7) Material handling containers
8) Sustainable distribution
9) Compliance with legislation

Invention, Innovation & Design Exposition 2016

3PLS Type of Reverse Logistics Services

Product recovery

Advance / retrieval services

Product return services

Product labelling

Return Center

Warehouse / PUDO / Depot

Management

Screening and Scanning Returns

Web visibility and Reporting Return

Merchandise Authorization (RMA)

Transportation Management

Customer Service Management

No fault found testing and

refurbishment

Repair services

Order management & Call Centre

METHOD
Figure 7. The Method of the Strategic
REVSV Model Development
Problem
Identification

3PLs Reports

Problem
Objective

Data Research
-Secondary
Data

Initial Model

Pulau Pinang
& Selangor

Data Research
-Primary Data
(Interview-5)

Variable
Confirmation

Institutional
Theory

Model
Confirmation

Final Model

STRATEGIC ORIENTATIONS TO OFFER

REVERSE LOGISTICS SERVICES
Strategic green orientation is related to
a firms long-term commitment through
the continuous adoption of environmental
programs
in
order
to
produce
environmentally friendly products and
services. These products and services are
important to alleviate the firms performance
through the internal integration and
external coordination with the suppliers
and customers. Literature has suggested
three strategic approaches mostly favoured
by firms (including 3PLs) reputation-led,
efficiency-led and innovation-led and have
been utilised to represent the strategic
orientations of the proposed Strategic
REVSV Model.

As shown in Figure 7, the project objective

is derived from the issue published through
the statistical findings and reports of the
previous study. The Strategic REVSV
Model was developed using an exploratory
as well as explanatory technique. It utilized
the primary data through in-depth interviews
with five 3PLs companies in Selangor
and Pulau Pinang, and the support of
secondary data from the literature. The
basis of variables determination is from the
primary data research. The secondary data
research is used to verify the developed
initial model. The model is subsequently
confirmed through the underlying principles
of the Institutional Theory.

TOOLKIT WITH REVSV MODEL FOR REVERSE LOGISTICS SERVICE OFFERINGS

THE MODEL
Figure 8. Proposed Strategic REVSV Model for Management Guide in Offering Reverse
Logistics Services by Third Party Logistics (3PLs) Provider

Source: Shaharudin, Zailani, & Ismail (2015)

As shown in Figure 8, the model serves as a strategic management guide to assist 3PLs in
offering several effective reverse logistics solutions that can best serve to their customers.
Such solutions can be derived from the utilisation of strategic green orientation, which
encompasses of innovation-based strategy, efficiency-based strategy and reputationbased strategy. The 3PLs respond to Institutional Theory (INT) by incorporating the three
isomorphisms (normative, coercive and mimetic) in drawing up the service offerings in
reverse supply chains to their new as well as the existing customers.
REPUTATION-BASED STRATEGY
The reputation-based strategy facilitates the aim of firms to achieve market differentiation
by portraying positive environmental image and trustworthiness in the market. For instance,
the lessen of pollution via reducing transport emissions, the entire corporate image of the

Invention, Innovation & Design Exposition 2016

firms can be improved as the following

strategies:
1)
Communicate expectations to
customers
3PLs need to focus on reverse logistics
service by communicating on the corporate
values and culture to customers. Establishing
and communicating expectations through
customers is a critical step in involving
customers in their companys green efforts.
2) Sharing the Best Practice in Reverse
Logistics
3PLs can share knowledge about
approaches and tools that companies have
found to be successful in their individual
reverse
logistics
programmes
with
customers, partners, association as well as
another industry player.
3) Develop Green Programmes
Green programme is an important step in
offering reverse logistics to the customers.
It drives behavioural changes of the
3PLs, workers, members and society. The
programs should involve the participation
of non-governmental organisation (NGO),
environmental association and customers.
Many activities can be done, for examples
are talk on green process, services and
products.
4) Advertise Green Practices in Official
Websites
A very tiny effort to cultivate the green image
of the 3PLs is by advertising daily, monthly
and yearly practices on the company
official website, association, partner as well
as another potential business platform.
5) 3PLs Partnership with NGOs
In order to move towards offering reverse
logistics services, 3PLs can work with NGOs
in order to understand environmentally

responsible public image more deeply. 3PLs

that engage in continuous dialogue with
NGO often gain broader understandings
and, in consequence, stronger and more
durable environmental communications.
6) Support the Government Green
Efforts
3PLs can support the government green
efforts by providing assistance to the
government in terms of financial, ideas
and support the related programme and
policy. This indirectly promoting the 3PLs
green image and leverage the beneficial
relationship with the government in terms
of the policy and incentives in reverse
logistics services.
EFFICIENCY-BASED STRATEGY
Efficiency-based strategy permits efficient
service offerings through choosing an
effective mode of transport and charge
at the lower rates for overall customers
cost savings. This include the following
strategies:
1)

Internal Communications

Cross-functional meetings and interactive

internal communications can foster
enthusiasm and align departments
on reverse logistics issues. Aligning
departments can help companies avoid
greenwash that results from a discrepancy
between what one group is communicating
and another group is doing.
2)

Green Service Logistics System

In this system, the main goal is to create

and establish many models of green
service logistics, so that 3PLs can optimise
the decision-making and choices on the
reverse logistics service operations.
3)

Repair And Return Operations

Repair and return operations are to reduce

turnaround time (TAT) with the lowest cost

TOOLKIT WITH REVSV MODEL FOR REVERSE LOGISTICS SERVICE OFFERINGS

and keeping an acceptable quality level is

the achievement 3PLs. The right metric
needed, such as a closer relationship
with the customer, so visibility of on-hand
inventory can be provided and also being
able to track stock out situations. Besides,
reorganising, such as returned items, types
and processes can lead to efficient reverse
logistics.
4)

Link Business Processes

3PLs reverse logistics services process

should be built with a system that is
streamlined through each action and
through each group with one touch and
automated handoffs for the components
and the relevant data. When adapting these
parts, it will generate the largest processing
savings and also reduces issues or errors
and finally it will significantly reduce
reconciliation time between groups

returns, and gaining economies of scale of

the returns.
INNOVATION-BASED STRATEGY
The innovation-based strategy offers
environmental beneficial innovations type
of service, which could assist to create
value for the 3PLs customers and achieve
competitive advantage in the market. This
include the following strategies:
1) Integrating Knowledge Management
And Innovation
The transfer and integration of knowledge
to innovation are important for 3PLs.
Knowledge management is to create
value from organisational and individual
knowledge. This value could then be a part
of the offering reverse logistics services
and growth strategy adopted by the
organisation.
2)

5) Practise Gate-Keeper And TimeBased Strategies

Gate-keeper helps 3PLs to get specific
guidelines to determine the condition of
the product, also local skills, so that initial
inspections can be performed, and lastly
a logistics infrastructure to pass on the
items or products further into the refurbish
activities. An advantage with this is that the
products and items can be sent directly to
the correct form of the value of reclamation.
6) Measure The Performance Of 3PLS
It is valuable to measure the performance
of 3PLs that is specifically related to the
reverse supply chain. In this context, an
appropriate measurement is needed to
measure the performance of 3PLs reverse
logistics services.
7) Centralised Return Centres
By centralised return centres, it can give
greater impacts on 3PLs efficiency in. In
fact, there are opportunities to reduce the
cost of reverse logistics throughout specific
lanes, such as consolidating early to
reduce transportation costs. Other includes
understanding the complete picture of

10

Process Improvement

The identification of the proper area for

process improvement in the return process,
as well as innovation can significantly
enhance the 3PLs chances of success in
offering reverse logistics services. This can
help to analyse the existing implementation
of reverse logistics process and service to
customers.
3)

Relationships And Networking

Relationships and network is important

to manage the high return rate. Thus,
an innovative collaborative planning,
forecasting and replenishment (CPFR) are
encouraged to be adopted by 3PLs in ways
to serve their customers in reverse logistics
in order to provide a better forecasting
mechanism, synchronise returned products
demand, and provide real-time information.
4)

Reverse Logistics Skill

Employees who are innovative and who

have the skill and vision in reverse logistics
processes and business models (who
understand the business context) should
get involved to contribute the ideas in the
reverse logistics processes and service to
customers.

Invention, Innovation & Design Exposition 2016

5)

Innovation-Centred Strategy

Specialised skills are essential to enhance

innovative product return development, in
order to keep abreast with fast-changing
environmental regulations. Investment
into product return process technologies
may pose a great challenge in a dynamic
innovative environment, as managers seek
to maintain their competitive position in
process of innovation.
REVERSE
LOGISTICS
SERVICE
OFFERINGS BY LARGE 3PLS IN THE
WORLD

The key to a successful supply chain is not

only planning how to distribute your product,
but how to bring back both customer returns
and obsolete products. Managing returns
effectively lets you recapture value, reduce
write-offs and keep your customers happy.
Amoung our services include de-installation
of finished goods at the customers site,
returns management, receiving, sorting,
verifying and managing returned products,
express delivery and exchange of dead on
arrival products.

At FedEx, our customers in numerous

market segments especially retailers
and e-tailers have been requesting a
more robust portfolio of dedicated reverse
logistics capabilities to complement our
forward-facing supply chain solutions.
While our portfolio includes several
solutions to help our customers more
efficiently manage their returns in-house,
we have been receiving an increasing
number of requests to offer outsourced
dedicated reverse logistics services to
operate return centers and provide custom
solutions to maximum recovery efforts.
With the percentage of product returns
continuing to rise, it was clear that we
needed to offer our customers true cradleto-grave capabilities that can reduce their
total cost of product ownership.

Kuehne + Nagel also manages companies

commercial returns, repair, recycling
and E-Waste (WEEE) flows through a
configurable returns order management
system and a customized collection
network. Reverse Logistics Services
include web-enabled processes and full
end-to-end visibility.All processes are
audited to ensure high standards of service
and the necessary compliance.

We want to have all our reverse logistics

operations under one roof. In particular
with regard to new markets, we need a
strong partner with a global network and a
wealth of experience. For manufacturers,
reverse logistics are often troublesome
and problematic. The process involves
organizing the return, repair, and disposal
of equipment and it explains why AirTies
and DB Schenker first established contact
at a trade fair in the Netherlands. Since
then, Set-Top boxes from AirTies have been
collected in Ridderkerk near Rotterdam. In
a second phase, DB Schenker employees
screen the casing for damage and dirt,
and check whether all necessary cables,
remote control devices and adapters are
included. The device is then tested and
opened, defective parts are replaced and
the latest software is installed. The casings
receive a new coat of varnish at an adjacent
workshop and are then refitted to the
device. Finally, these refurbished devices
are repackaged with all the necessary
accessories and transported to their next
point of use.

UPS Solutions
Returns will always be a part of business,
but be sure youre not limiting them to being
a cost of business. A good reverse logistics
process can bring great value to your
bottom line. Better manage and re-integrate

11

TOOLKIT WITH REVSV MODEL FOR REVERSE LOGISTICS SERVICE OFFERINGS

your returned materials for streamlined

practices, reduced waste, and continuing
profits from your existing products. Dont let
goods sit in technicians vehicles; get your
products serviced, repaired, and back into
inventory as fast as possible. Our advanced
technology and Web-enabled return labels
extend your supply chain visibility and let
you ensure that returned parts arrive at
their designated locations.

See the opportunities in your returns Reverse logistics should be more than an
afterthought. A proper returns management
strategy can help you maximize value,
reduce spend, and efficiently coordinate
your reverse supply chain. Turn your
reverse logistics strategy into a competitive
advantage with better visibility, a
streamlined process, and quality execution
when you need it.
References
2016 Third Party Logistics Study. http://
www.3plstudy.com/downloads/downloadthe-2016-3rd-party-logistics-study/
Cullen, J., Tsamenyi, M., Bernon, M. and
Gorst, J. (2013). Reverse logistics in the
UK retail sector: A case study of the role
of management accounting in driving
organisational change. Management
Accounting Research, 24(3), 212227.
Reverse Logistics Association. http://rla.
org/
Shaharudin, M. R., Zailani, S., & Ismail,
M. (2015). Third-party logistics strategic
orientation towards the reverse logistics
service offerings. International Journal of
Management Practice, 8(4), 356374.

12

Invention, Innovation & Design Exposition 2016

13