¶ … Sustainable Rules Drake Nash

RLMT 307 Food and Beverage Reverse Logistics -- Fall 2015

Ayers

The implementation of sustainable rules and regulations as well as constraints in the markets across the world, have compelled international industries, in this case, the food and beverage industry, to establish reverse logistics, which is the backflow management of the supply chain system. Reverse logistics encompasses the waste management of products and merchandises in the backward supply chain. There has been a gap or limitation in research studies on the implementation of reverse logistics on the food and beverage industry. Due to the fact that food and beverage products are delicate in nature, the backward flow of packing and food supplies compel the formation of a free-flowing reverse logistics system throughout the supply chain. The development of an efficacious reverse supply chain practice for the food retail industry necessitates the conduction of studies on prevailing reverse procedures, and their enactment across the diverse retail set-ups.

Introduction

The food and beverage industry experiences plenty of difficulties and challenges with regard to the supply chain. This is largely because of the underlying fact that the industry trades easily perishable food products. Retailers, in this industry, across the globe, face a number of issues in waste management, the estimation of available stock, quality management and consistency in the supply of food (Vijayan et al., 2014). This implies that there is not just the necessity for quick and effective movement of the food and beverage products in the supply chain, but also the need for onward supply chain management, in addition to the establishment of a recessive flow management system for the products (Vijayan et al., 2014). The use of reverse logistics can offer great solutions to these issues. Reverse logistics encompasses the management of waste resulting from the products and merchandises in the backward supply chain. The purpose of this paper is to analyze and perceive the contemporary practices in the application of reverse logistics to the production sale, returns and resale and waste management operations within the food and beverage industry. It will encompass a literature review on the same, with reference to different studies that have analyzed the aspect of reverse logistics in different industries (Vijayan et al., 2014).

Literature Review

There is a limitation in the number of research studies, which are focused on the implementation of reverse logistics in the food and beverage industry. This may be deemed to be as a result of the intricacy in tracking and locating food and beverage products along the supply chain channels, as well as other elements. According to Rogers and Tibben-Lembke (1998), reverse logistics is commonly defined as the procedure and practice that involves the preparation and management of information and product in a backward manner, from the customer to the source of origin. This occurs with the main objective of disposal or recreating value (Rogers and Tibben-Lembke, 1998).

The common emphasis is placed on forward supply chain movement, at all times. Nonetheless, a number of particular factors, such as expiration of the products, recalls on the products, inaccuracies in orders, and also damage on products during transportation or delivery, result into the backward movement of the products (Kabir, 2013). This brings about the reliance of reverse logistics on goods and supplies. Product returns can be coarsely classified into returns from the consumers and those due to overstocking; and, products recalled and returns due to products being harmful to the environment. A number of general causes of returns include: poor quality of the products, overstocking of goods, and slow business operations. Other causes include: poor management of inventories and recurrent product promotions (Kabir, 2013).

According to Sharma et al. (2011), the returns of products are associated to the competitive string suit of a company. This is perceived particularly in the case of the food and beverage industry, owing to the high level of intricacy and perishability of products. The competition existing amongst corporations, lawful constraints, and consumer wants, in conjunction with the environmental obligation of businesses, play key roles in the decision making processes regarding reverse logistic procedures and practices across sectors and industries. Hawks (2006) asserts that the environmental aspect of reverse logistics emanates from the fact that its undertakings can bring about the conservation of energy, and reduction of pollution, among other advantages that are environmental-friendly. Owing to this fact, reverse logistics should be included in sustainable processes, and green logistic practices (Vijayan, 2014).

The retail industry is well-renowned and acknowledged for its ground-breaking product return...

Retailers in the grocery sector have been among the first to put emphasis on product returns, and the establishment of reverse logistic practices in their supply chain. There is a high likelihood of retailers in the food and beverage industry deploying the use of advanced technologies, such as radio frequency identification (RFID), computerized returns entry, electronic data interchange (EDI) and computerized return tracking, so as to improve the management of reverse logistics (Vijayan, 2014). One of the most significant and determinant factors of reverse logistics is expense, or cost. The expense or outlay in the management of reverse logistics is reliant on the storage period and quality of returns.
According to Petersen and Kumar (2009), the resilient impetus for reverse logistics is powered by the prevailing patterns of consumer behavior, which give rise to shorter product life cycles and volatile food markets. Away from returns of defective merchandises, open-minded return procedures fashion competition in several markets as well as online retailing, which is an additional sign of an increasing demand for reverse logistics (Petersen and Kumar, 2009). The importance of reverse logistics in the food industry is apparent in the obligation to provide quality and safe food to consumers, devoid of posing any danger on human health, welfare and the environment. More so, the food and beverage industry is a long way from being effectual. For instance, according to a study undertaken by Gustavsson and Otterdijk (2011), statistics indicate that there is projected worldwide food losses and waste, to the tune of over 1 billion tons of food every year. Gustavsson and Otterdijk (2011) point out that food wastes can be credited to several factors, for instance, surplus buying, untimely harvesting, insufficient labeling and storage directions, trial runs, deprived storage amenities and transportation, manufacturing mistakes, packaging flaws, and incorrect weights and dimensions. Additional statistics indicate that in 2010, household wastes got to about 14-26% of total food sales. In the United Kingdom, this figure was as high as 27%. In the same year, the returns for food products were about 1.2-1.8% of total food sales. This indicates the growing need and demand for reverse logistics.

According to Vlachos (2014), in spite of the significance of reverse logistics in handling increasing amount of food product returns, reverse operations in the course of the product life cycle have attained minimal consideration. The research study undertaken by Vlachos (2014) examined reverse logistics carried out all through the diverse stages of food product life cycle. It is pointed that reverse food logistics performance indicators include: sustainability, speed, reliability, flexibility and quality. On the other hand, the food life cycle stages are introduction, growth, maturity, and decline, respectively. Vlachos (2014) sheds light on how these indicators fluctuate during the course of the life cycle. The results of the study indicated that consumer expectations are more substantial in the course of the introduction and growth life stages. The efficiency of the return process in the introduction life cycle stage determines the future of the product, and businesses must manage quality difficulties successfully. The reason to adopt this research study lies in the fact that it provides distinctive managerial inferences and recommendations aimed at managing reverse food logistics, which in turn, aids in reducing waste, all-through the food supply chain, and upturn value from returned products (Vlachos, 2014).

Reverse logistics enhance analytical reporting and status perceptibility for business partners and the end users. In particular, Umer and Afzal (2012) analyzed reverse logistics in the beverage industry, with a focus on Pakistan. According to Umer and Afzal (2012), for each order of beverages, the retailer recompensates the bottler the related deposits, and thereafter, charges them to consumers. In turn, the consumers return empty bottles to depots, and the bottlers repossess them for refilling. Whereas shops and depots might retain a minimum percentage of the deposit to compensate themselves for handling and storage expenses, a great deal of stores completely reimburse the deposits to consumers. Umer and Afzal (2012) demonstrate that the soft drink and beverage bottling industries are the key forerunners of reverse logistics in Pakistan. The unfilled bottles are returned, from the point of drinking to the depots, for refilling and reusability purposes. Therefore, this shows that executing reverse logistics facilitates the quality improvement of products, and modifies it to the needs of the consumer. This indicates that reverse logistics play a great part in the food and beverage industry (Umer and Afzal, 2012).

Findings

The practices of reverse logistics differ on the basis of the industry of operation, and the position…