Supporting return flows in the supply chain

R eturn flows, which consist of products at the end of their economic life cycle, or that have become obsolete in the forward supply chain, are gaining importance. Due to shortening of economic life cycles for products like consumer electronics, the recovery of value from products after use is becoming a necessity. In addition , the shift from buying products to buying sets of services makes the reuse of recovered materials, parts, and products desirable. Besides such economic factors, the depletion of natural resources and environmental considerations also provide arguments to reuse materials, parts, and even complete products. The logistics of return flows, called reverse logistics , aims at executing product recovery efficiently. One must design optimal take-back and collection strategies, as well as recovery processes, which may range between the reuse of the whole product (cleaning and repair) and the recovery of materials from products by reducing the products to small pieces. The incorporation of return flows in supply chain management is easier said than done, as the behavior of consumers introduces uncertainties in the quality, quantity, and timing of product returns. Effective information and communication technology (ICT) support is needed to manage return flows, but surprisingly, the information systems field has paid little attention to reverse logistics. Enterprise resource planning (ERP) packages and advanced planning systems (APS) concerned with the forward flows in the supply chain have only addressed this topic incidentally. Here, we examine return flows in more detail and present required extensions to ERP and APS-based reverse logistics theory. We further explore e-commerce opportunities for managing return flows and present a case study of a company that has set up advanced ICT support for recovery processes. The management of return flows appears on the strategic agenda of a growing number of organizations. Several factors motivate this development. Governmental policy and legislation, especially in Europe, have recently forced manufacturers to take responsibility for the take-back of used goods from customer markets. These developments were preceded by environmental regulations restricting the disposal of (hazardous) product and packaging materials. Besides governmental constraints, customer awareness is creating opportunities for " green branding " and new markets for returned goods. Moreover, return flows can reduce production costs by replacing raw materials. For many companies, the recovery of value from used products may provide a good return on investments. Another trend contributing to the growth of return flows is the growing perception …