Reverse Logistics in Transportation

Authors: Dr. José Antonio Valles Romero Ph.D. in Logistics and Transportation,
Dr.Ing. Javier García Gutiérrez, faculty researchers at the Autonomous University
of Mexico State, Academic Unit Netzahualcoyotl, Transportation Engineering.
avallesdoc@gmail.com, Av Xochiaca s/n Col. Benito Juarez, CP 5700
Netzahualcoyotl, Estado de Mexico, Mexico, Tel.0155-511263772.

Summary
This paper describes the state of the art of Reverse Logistics (RL), highlighting the
importance for the development of communities where there is no other possibility;
highlights the importance of quantitative methods applied to assess the current
situation on the implementation of the RL, and finally point transport applications.

The concept of recovered product management, which aims to "recover both

economic and ecological value as possible, thereby reducing the final amounts of
waste", In order to develop a policy for administration of recovered products (spare
parts, tires, complete vehicles) resulting from their activities, allowing its use in
areas where economic conditions do not exist to solve it through direct logistics.

Are classified and analyzed, the options apply effectively the cycle of RL.
To efficiently develop recovery activities of life products, it requires the
implementation of logistics systems able to put in the hands of companies and
governments to organize from the collection of disused products, so implement the
best option either reuse, recycling or remanufacturing total or partial freight service.

We define a classification of systems RL in response to this function who develops

and presents the most relevant characteristics of each, carriers can support
organizations in this classification to determine the most appropriate to their needs,
depending the characteristics of local society, the type of product transported, the
production process in the area, the market is addressed or of the possibilities of
economic recovery, taking into account than only in the United States, RL
represents about 4% of the total costs of a company and 0.5% of gross national
product.

Keywords
ecological value, waste reduction, cycle of RL, product recovery and spare parts,
product recycling, reconstruction of transport units.
Introduction
The recovery of used or discarded products is not new and certainly as old as man
himself already in the Stone Age used the fragments obtained in the manufacture
of tools and tips for their arrows. The ancient Mesopotamian cultures, Inca, Aztec,
Greek or Roman and recycling techniques routinely used in their daily activities.
For example, the local currency of the conquered cities were merged into new
coins, but occasionally, such coins were not even subject to a recycling process to
be put back into service once stamped on them the stamp of the new regent. Other
examples can be found in the weapons used in battle to be reconverted into
agricultural implements or melted to manufacture new weapons. We are not
inventing anything new; simply try again to raise part of this common sense.

With the Industrial Revolution began the process of economic growth based on
technology. The Industrial Revolution broke out, not only the economic boom,
scientific and technical, but, with it, was passed the intensive, extensive and
irrational use of natural resources for models of economic growth.

For many years and before the Industrial Revolution forever mark the development
of mankind, the early industry was not an important factor of environmental
deterioration.

The first industries using coal as the main energy source and even caused large
amounts of gases were not significant. Similarly, the traditional processes of
production and exploitation of soil and subsoil, allowing the renovation and
conservation of their natural, since such processes were extremely rudimentary,
and did not cause devastation and destruction of resources.

With the Industrial Revolution, new mechanisms and forms of production,

combined with intensive and systematic exploitation of natural resources, they
were widespread without providing the same effects on the environment. For many
years the image of hundreds of chimneys spewing smoke has represented the
symbol of progress and consolidation of economic power.

Although the late 50's and early 60's began to manifest an environmental
conscience, it is not until the 70's when the processes of environmental
degradation and depletion of natural resources are evident and associated costs.

In this way, we begin to look, firstly, alternative forms of economic growth and
avoid further environmental degradation processes, and on the other hand,
mechanisms for recovery and environmental sanitation. RL is a very novel concept,
not only for society as a whole but also within the fields of business, government,
academia and research.
Logistics processes related to recovery of products from consumer to producer,
recycling, reuse of materials and components, waste disposal and restoration
operations, repair and remanufacturing.

These methods are increasingly applied in an important way in RL, in response to

the search for improved competitiveness.

The concept of recovered product management, which aims to "recover both

economic and ecological value as possible, thereby reducing the final amounts of
waste." In order to justify the idea that "companies should develop a policy for
administration of products recalled," derived from their activities.

Are classified and analyzed, the available options for management companies to
efficiently organize the RL cycle.

To efficiently develop recovery activities out-of-use, it requires the implementation

of logistics systems able to put in the hands of companies that organize from the
collection of disused products, and implement the most appropriate management
option and the reuse, recycling or remanufacturing.

We define a classification of RL systems that develops in response to this function

and presents the most relevant characteristics of each.

Any company can build on this classification to determine the most appropriate to
their needs, depending on the company characteristics, the type of product
involved, the production process, the market is addressed or of the potential
economic recovery, given that only in America, RL represents about 4% of the total
company costs and 0.5% of gross national product.

The aim of this paper is to describe the state of the art of reverse logistics, and
highlight the importance for the development of models applicable to RL and
assess the situation on the development of it and finally point applications in the
transportation application.

In literature, several authors have defined Reverse Logistics:

Carter and Ellram (2009) conducted a comprehensive review of the literature on

RL to date, analyzing the main contributions made in three distinct themes:

1.-General and theoretical developments.

2.-Transport and packaging.

3.-Final Markets.
They point out that most of the studies analyzed are "descriptive and anecdotal,"
and published in trade journals, detecting the absence of theoretical developments
that build a framework for research.

Stock (2002) recovers the topic of RL in what purports to be a White Paper on this
subject.

The author analyzes the role of logistics in areas such as product returns, reduced
waste generation, recycling, repair and remanufacturing through developing
management models that combine engineering and logistics business decision
models in order to increase the return flow of life products.

Dowlatshahi (2006) says "a process in which a manufacturer systematically

accepts previously shipped products or parts from the point of consumption for
possible recycling, reuse or disposal, brings together the studies and work done on
RL in five categories:

1. - General Concepts.

2. - Quantitative Models.

3. - Distribution, Storage and Transportation.

4. - Business Profiles.

5. - Industrial Applications.

This author identifies certain deficiencies in the work, mainly with regard to the
existence of a common structure which support it, i.e. has not developed a theory
of RL which gives substance to the various elements that compose it.

The author takes a step in this direction, identifying strategic and operational
factors considered essential for effective development of RL systems.

Among the strategic factors indicates the cost of these systems, the quality of
recovered products, customer service, environmental and legal constraints.

Among the operational aspects of Dowlatshahi identifies the functions of logistics

systems, transportation, storage, production (remanufacturing and recycling),
packaging, etc.

Along with the theoretical development of the concept of Reverse Logistics, there
have been few empirical studies that have allowed building a framework and
analysis of the issue much more appropriate. These case studies are characterized
by the use, design and resolution of the models, different techniques of operations
research.

Bloemhof-Ruwaard, Van Beek, Hordijk and Van Wassenhove (2001), first analyzed
the relationships and interactions between operations research and environmental
management from two perspectives:

1.-The impact on the supply chain, analyzing how aspects

environmental affect production planning, distribution, inventory, location and
generally to all logistics activities.

2.-The impact on environmental chain, studying how the techniques

operations research can contribute to a better formulation and
resolution of environmental issues.

In this pioneering work, concluded on the importance that the recovery is in

managing the supply chain.

Fleischmann, Bloemhof-Ruwaard, Dekker, Van der Laan, van Nunen and Van
Vassenhove (1997) compiled a set of quantitative models designed for the analysis
of the inverse function of logistics, grouped into three distinct categories:

1.-Distribution Systems.

2.-Inventory Management and Control.

3.-Cuantitative models for Production Planning.

It refers to more than 30 quantitative models, mostly designed and solved by

operations research techniques.

The authors conclude that RL is a young scientific field in which the contributions
are still too biased. Indicate that there is a huge imbalance between the large
number of empirical studies related to the reuse or recycling of products and the
few, for the moment, theoretical developments that provide a comprehensive
overview of this issue.

Recently, Fleischmann (2001) studies, among other things, how can describe the
characteristics of RL systems through quantitative models and, thus, improve the
decision making process.

Companies are giving more importance to reverse logistics, mainly due to 3

reasons:

1.-The growing importance of environmental issues and their impact.

2.-The benefits achieved by organizations improve their return processes.

3.-The new and stricter environmental regulations.

All this raises a challenge that must be related to the consolidation of orderly and
transparent markets for secondary materials from consumer products at the end of
its useful life (scrapping) that requires commitment and cooperation of
governments in North America, that is, the internationalization of the administration
costs associated with reverse logistics.

The literature review, guiding the choice of a model that reflects the factors that
enable organizations to carriers, competitive advantage of the RL and provide
greater flexibility and improved organizational performance.

The importance of RL is increasing (Dowlatshahi, 2000), which is reflected in the

gradual increase of research on it, in increasing returns of products that require
solutions to the major problems of organization, uncertainty of localization of
products and components, and also the benefits for the organization.

The attached table summarizes the major definitions of RL that have set the
guidelines to their study, reflection and analysis that allows its application to social
and business context.

The results provide evidence supporting the theoretical arguments about the
importance of RL to improve the impact on the ROI, obtained by RL processes, the
return on investment improves when the degree of involvement to RL is proactive.
Valles, (2008)
 Reverse Logistics Definition According to Several Authors

AUTHOR DEFINITION
Kroon and Vrijens (1995) Logistics Management and the activities involved in
the reduction, management and waste disposal and
not disposed waste (packaging and products).
Implies that goods and services flowing in the
opposite direction to normal logistic activities.
Fleischmann et al. (1997) The process by which logistics activities through the
used products short-lived move to new usable
products in a market.
Carter and Ellram (1998) RL is the process through which companies can
reach to be more environmentally efficient through
recycling, reuse and reduce the amount of materials
used.
Krikke (1998) Collection, transport, storage and processing of
products discarded.
Ross (1998) Involves the transfer of goods from their typical final
destination to another, captured the value of the
product that would normally be lost by this move.
Rogers and Tibben- Designing, implementing and controlling a flow of raw
Lembke (1999) material inventory process, finished goods and
related information from point consumption to the
point of origin in an efficient and most
economically as possible in order to recover its
value.
Stock (1998) The term refers to the role of logistics in the returns
product, origin, reduction, recycling, material
substitution, reuse of materials, repair and
remanufacturing, and is a model systematic business
that provides the best logistics and
engineering better methods of management in the
company to profit this flow.
Rogers and Tibben- Is the process of planning, implementing and
Lembke (2001) efficiently control the flow raw materials, inventory in
progress, finished goods and related information,
from the point of consumption towards the
point of origin in order to recapture, create value, or
disposal.
Dowlatshahi (2006) Process in which the manufacturer agrees to
systematically products or parts previously retrofitted
products from the point of consumption for
recycling, remanufacturing or new provision.
Guide et al (2000) The task of recovering discarded products, including
packing and shipping to a central point for recycling
or reconstruction.
Tibben-Lembke (2002) RL manages the return of the goods in the supply
chain supply, the most effective and economical
manner.
Council of Logistics Role of logistics in recycling, waste disposal and
Management (2003) management hazardous materials, a broader
perspective includes all related to logistics activities
carried out in reducing input, recycling, substitution
and reuse of materials and their disposal
final.
Stock (2004) RL is a term often used to refer to
role of logistics in product returns, reduced
supplies, recycling, and reuse of materials
substitution, elimination waste, reprocessing, repair
and remanufacturing.
Soto (2005) Is a process adapted to the objectives of the reverse
flow of products.

Development
The establishment of mechanisms for the recovery and use of products discarded
by consumers give rise to RL, as the competitiveness of business drives
companies to improve their competitive strategies.

The reuse of materials, remanufacturing processes, policies such as design for

disassembly, efficient systems for the return of products, among others are part of
her generation of resources.

Public waste collection aims to reduce, during the gathering in the garbage trucks
and street carts (cardboard, paper, glass and iron), by 20% the amount of waste
for disposal, therefore, not recoverable.

To achieve this goal, we use a fundamental principle that establishes a hierarchy

for the administration and collection of waste, giving preference first to prevention
(through waste separation), followed by recovery of waste (with priority reuse and
recycling front of it off the recovery or energy recovery of waste).

The theme makes the possibilities for future research in the field of RL are very
different and in some cases would still be determined.

It is necessary to supplement the theoretical investigation of the different systems

of RL case studies on companies that have adopted any of the proposed systems,
as well as deeper into the strategic considerations of RL through the resource-
based approach. This not only would qualitatively contrast results but could also
illustrate the potential of the concept of RL in obtaining sustainable competitive
advantages.
Approaching a little closer to the problem of inventory management with product
return flow out of use through, for example, consideration of other models of
inventory management (including periodic review models), the use of demand
functions for tradable closer to the real or including more structure (eg,
autoregressive stochastic processes) that we have defined for this model, the
design of a mechanism of correction of expectations about the return of products
out of use or generating return processes of life products more elaborate
(distributed lag processes, for example). The debate about the concept of inventory
position remains open.

The idea of an inevitable battle between ecology and economy of a static view of
environmental regulation in which technology, products, processes and consumer
needs displayed default.

Due to the dynamic nature of competitiveness, which is based on innovation, the

authors argue that environmental legislation, properly designed; it will generate
innovations that offset the cost of complying with those laws. These "innovation
offsets" not only decrease the net cost to complement the legislation but could
generate sustainable competitive advantages through reductions in the total
manufacturing costs in the time-to-market or increasing product value for
consumers .

In examining the concept of resource productivity, indicating that there are

inefficiencies and thus losses in competitiveness when there is a failure to use
productive resources and/or when used inappropriate control systems that
generate unnecessary waste, defects and stocks materials. In addition there will be
inefficiencies and hidden costs of waste products by distributors and consumers,
as they represent a poor use of resources and an additional source of costs,
Consumers bear additional costs when they use products that pollute or waste
energy.

In this sense, Mohr (2002) constructs a general equilibrium model that supports the
hypothesis of Porter (1990) on the establishment of an environmental regulation
can lead to benefits for the company concerned to offset, in whole or in part, the
costs of supplementing those rules. Although the economic literature there other
ways to support this hypothesis, this general equilibrium model is the least
restrictive and assumes most of the assumptions made by Porter in his
formulation. In this way, "Porter hypothesis" would be consistent with the
fundamentals of economic theory.

In addition to a legal or policy reason, the ability to achieve competitive advantage

through the implementation of such legislation may be considered as an additional
reason for adopting sound environmental policies by businesses, including the
implementation of systems recovery and use of life products.

The company will seek the implementation of value-added activities and a

business opportunity.

The economic reasons that drive companies toward recovery and use of life
products can be analyzed from two viewpoints, from the point of view of demand,
the recovery of life products and their reintroduction into the production process of
the company, can be used by it as a marketing tool and,
Indeed, it is one of the aspects that make up the so-called marketing
ecology.

The company could generate competitive advantages through a positioning

strategy seeking an environmentally responsible corporate image, which makes
recyclable products from recovered materials, in minimizing waste generation and
use of raw materials non-renewable, using clean technologies and integrating the
supply chain in its environmental strategy (providers, suppliers, distributors and
customers).

On the supply side, the recovery of materials and products outside

use, would replace raw materials and components
these original articles retrieved, which could lead to a decrease in manufacturing
costs and selling price of these products.

The companies would not be considering the administration of life products only as
a necessity driven by legislative pressures, but these activities would find ways to
achieve sustainable competitive advantage and thus achieve their business goals.

We define the concept of economic recovery as the process of recovery of the life
products which aims to exploit the added value they have built through appropriate
management option, so as to obtain an economic return to it or will cause the
achievement of competitive advantages of sustainability.

The economic recovery of the life products requires the design, development and
efficient control of a logistics system capable of collecting the product from use and
lead to the collector, which apply the most appropriate management option for
optimal use.

This logistics system flowing in the opposite direction to that in traditional logistics
systems, from the producer to the consumer, for the consideration of this flow of
materials, products and byproducts from the consumer to the producer or collector
should be named RL system.
The development of RL systems is facing a complex problem that must make
decisions regarding, inter alia, the number and location of the recovery center out-
of-use, means of transport for these products whether they will own or other,
incentives for product recovery, new challenges posed logistical (inspection of
returned products, control of the quality of life products, their classification, removal
of non- satisfactory, etc.).

The design, development and control of RL systems have implications at the

strategic, tactical and operational affecting all functional systems of the company
and society.

Proposals
1) The design of the company's logistics function should include both direct
producer-consumer flow, reverse flow as consumer-producer (collector), so that,
through this integrated approach to amplify the competitive opportunities offered
the logistic function, in Mexico the scrappage program implemented by the
Mexican government in 2003, is already an approach to this proposal, this program
comes from the need to renew / upgrade obsolete units circulating in the Mexican
territory product placement of motor vehicles from abroad, mainly in the northern
border, used in both public transport and private, aims to Mexican carriers have a
modern vehicle fleet, and thus be more competitive and productive, likewise
partake of a better ecology, lowering the accident rate, and be prepared for the
challenges of international trade liberalization, Valles, (2008).

2) The inverse function of logistics, in order to efficiently generate these

competitive opportunities, requires a process of planning, development and control
similar to that for the direct role of logistics. Ie, RL has inherently strategic. The
initiatives that the Mexican government has shown respect is still not enough, were
published in the Official Journal of the Federation at the end of the extension
program borders used car for urban zones of the states of the U.S. border, mainly
in Ciudad Juárez and Tijuana, with this measure, the Mexican government grants
as a term for the regularization of cars "crooked" a term, even without warning if
after this period will be up to the confiscation of unregistered units and no license
plates.

3) This strategic approach is transferred to the field, tactical and operational in

consolidating the logistics activities, which should be developed for logistics
systems capable of exploiting the economic opportunities of this feature, RL
systems enable both economic recovery of life products, such as enforcement of
existing legislation in this area, Thus, these recovery activities are not subject to
taxation legislation but merely represent an economic opportunity in areas where
direct logistics is not feasible, not forget that in some states the public transport is
mainly chocolate units (Tijuana for example).
4) The design and development of RL systems carries a heavy burden of
uncertainty about the quantity and quality of life products or depreciated, as well as
the time at which to retrieve the products. It is necessary to further the design of
quantitative models for RL systems that help to clear these unknowns associated
with the physical recovery of the life products, such as spare parts, tires, complete
vehicles, etc.

5) The use of operations research techniques is a method to soften the impact of

this uncertainty in the design of RL systems. These techniques should be primarily
a way to improve the decision making process and achieve the goals set by the
organization, and should never become their own in the defining criterion of our
decisions.

Limitations that arise:

1) The scientific treatment of the subject is scarce, which can be determined with
few references, and who have a bias, a qualitative approach to modeling and
problem solving techniques, i.e. to operations research. In this way, aspects of the
organization and administration of the inverse function of logistics is still a rarity in
the literature of operations management.

2) In the business and professional RL is still a little concept known as qualitative

analysis (through case studies, surveys or visits to companies) is difficult and in
any case, not representative.

3) The limited use of simulators that allow the simulation as a technique to use
quantitative analysis does not allow testing of models to particular settings (public
transport cargo and passengers) that may occur in specific areas.

Conclusion
Has been defined and analyzed the concept of RL within the framework of logistics
activities directly, through a comprehensive vision that allows us to consider
together, the traditional direct flow of materials, products and information, and the
return flow of life products transport. It raised the inverse analysis of the logistics
through a focus of resources and capabilities (reuse of tires, spare parts, engines,
complete units), making a classification of combinations of assets and skills that
enable sustainable competitive advantage through this function in areas where
transport otherwise would be unfeasible, the consideration of this reverse flow has
effects on the operations management system for carriers through a process of
making strategic decisions, tactical and operational.
Glossary
Scrapping: disjointed
I.e.: that is to say
Crooked: dishonest
RL: Reverse Logistics
Scrappage: Break up
Renew/upgrade: Update
ROI: Return on Investment

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Semblance
José Antonio Valles Romero is a Civil Engineer, Master in Science with emphasis
in computing and engineering, teacher at the Universidad Iberoamericana, a PhD
in Logistics and Transport. Full-time Research Professor attached to the
Transportation Engineering in the Academic Unit Netzahualcoyotl Autonomous
University of Mexico State. National Award on Logistics, by the Secretaria de
Economía and Secretaria de Comunicaciones y Transportes, in Mexico City.