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This small study related to the green logistics and its components has its reason of putting light on the concepts of 'Green Logistics' and to give an overview as to how Green Logistics can be managed in an effective way.
Green Logistics with its different aspects is a new subject undertaken by the researchers and therefore not much has been written on it. It is an emerging branch of Supply Chain. In this study we will learn about the major theories of Green Logistics and the most attraction gaining topic these days, "Reverse Logistics"
Reverse Logistics, a completely new subject in term of Supply Chain is getting a lot of attention because of its advantages and the image it creates in the minds on consumers. Companies are putting a big amount of investments in maintaining their reverse logistics effectively and efficiently.
Introduction: The Green Logistics
The interesting title of Green Logistics has two words; both of the words have their own meanings and concepts. But when joined and called together they form a complete new subject related to transport system, Green Logistics. When the term 'Logistics' is under discussion, it is the foremost thing to be said that Logistics is one of the chief components of any transport system of business. As described by a lot of critics and researchers, it refers to the management of freight movements with a bit control and organization with the assistance of modern technology and systems. When the topic of "Green" or "Greenness" is under spotlight, it is common knowledge for every one that it has become a symbol related to environment and ecological concerns which have a positive impact. When the words said together they imply to the meaning of a distribution and transportation system which is environment friendly and is also effective at its functions. A lot of companies have started to follow this strategy but when seen and experienced practically it is not so simple, many complexities and hurdles are involved in it (Brewer, Button and Hensher, 2001).
In 1990's a sudden interest in environmental factors in logistics took a surge and the decade was termed as "decade of the environment" (Kirkpatrick, 1990). The conventional logistics is related to more forward distribution like packaging, inventory management, transport, and warehousing from the manufacturer to the end user, concerns for the environment started up entirely a new dimension of recycling and proper disposal of the product, a new sub-sector of Logistics was introduced, "Reverse Logistics" (Byrne and Deeb, 1993).
Logistics is defined as "the process of scheduling, executing, and controlling the flow of raw material efficiently in a cost effective way, in-process stock, finished goods and linked information from the place of source to the point of utilization for the purpose of catering to customer requirements and needs" (Rogers and Ronald, 1998 ).
Reverse Logistics covers all the activities that are stated above in the definition of Logistics; the only difference in Reverse Logistics is that all of these activities are in reverse order in Reverse Logistics. So the definition of Reverse Logistics is compiled as "the process of scheduling, executing, and controlling the flow of raw material efficiently in a cost effective way, in-process stock, finished goods and linked information from the place of utilization to the place of source for the purpose of recycling or proper disposal" (Rogers and Ronald, 1998 ).
Reverse Logistics is about recycling or reusing packaging material, activities which tend to benefir the environment, damaged products, excess inventory etc. people think that activities like designing the packaging in such a way that it consumes least possible raw material, disposition of the old assets are also a part of reverse Logistics, it is a misconception, they can be titled under Green Logistics but until or unless something is returned back to the point of origin, Reverse Logistics is not present in that activity (Muller, 1991; Tanja, 1991).
Figure: Reverse Logistic process (Retrieved from le Blanc, 2006)
Reasons for Reverse Logistics
Companies follow Reverse Logistics for one reason that is getting some cost back from the reusable material or saving the environment from the hazardous material produced on the decomposition of a product. A number of firms are capitalizing by following reverse logistics in their Supply Chain. Businesses like Eastman Kodak (reusable cameras) & the famous Hewlett-Packard where they get the refills, toners and cartridges for reuse and refills, have put into practice successful reuse and recycling strategies. These proposals not only have condensed the amount of ravage and waste materials added into the supply chain and also to the landfills, but also have decreased the operating costs for such big businesses and companies.
A lot of companies have been successful to recover their incurred cost funds from one or even more of the following departments: packaging procurement, manufacturing, raw material and waste disposal, also they have been able to cut down their costs in respect to present as well as future regulatory compliance (Cooper, Black, and Peters, 1998).
Not only the companies save the cost of investments, through reverse Logistics, companies can even work for the betterment of the community at the level of Corporate Social Responsibility. This is beneficial for the firm, because it creates a positive image in the consumer's mind, when they do charity work and help people who are not their target customers (Rogers and Ronald, 1998).
Companies Following Reverse Logistics and their Contributions
Hanna Anderson Garments
In the Hannadowns program, which is developed by the Famous toddler clothes dealer, Hanna Anderson, consumers are asked to return back their children's' nicely handled and worn Hanna Andersson's bought clothes. The firm then will give such customers 20% (twenty percent) off on the purchase price of new clothes from Hanna Andersson. Hanna Andersson, in this program has been very triumphant and successful. In 1996, 133,000 clothing and accessories were mailed back to the firm by the parents. These returned clothes were then distributed to homeless shelters, schools and other charities (Rogers and Ronald, 1998).
In the second example, a manufacturer and retailer of shoes, Kenneth Cole Productions, supports and persuades customers to return the shoes that are old to Kenneth Cole retail stores in the month of February. For this return and giving in an old shoe pair, the buyer receives a 20% (twenty percent) discount when they buy a new pair of shoes from Kenneth Cole (Rogers and Ronald, 1998).
Nike, world famous shoe manufacturers, especially in sports runner shoes, also followed the reverse Logistics strategy, they asked their customers to return the used and old shoes, and they from them they get ragged and converted into basket ball courts. They unlike the two stated examples above do not give discounts to the customers, they believe in the community service through Reverse Logistics.
Model for Reverse Logistic
Environmental friendly production and logistic has now become an important area of study as evident from cited examples above it has been supporting the customer base, positive feedback to positive investors and environmental NGO's.
Jayaraman et al. (1999) worked and provided a model integral to the recoverable manufacturing system that focuses on recovering the product and extending product's life by remanufacturing and repair. The model in detail provides solution to the placement of distribution and remanufacture and all other allied activities. Reversing the used units that has some defect, remanufacturing it has the impact that customer gets it at lower cost, satisfying the needs of customers with same quality and standards.
Jayaraman et al. (1999) closed loop model helps manager to decide set of distribution, manufacturing, collection, shipment, quantities to store, ship and service centre to serve the customer with optimal efficiency with the sample of optimal solution as given in the figure given below
(Figure: retrieved from Reverse Logistics: a review of case studies, 2002)
A product is produced and it goes into production flow following the logistics system of the supply chain with reaching a customer as their main purpose and target. On the other hand, at any moment, the product may enter back into the chain. From this point on, the flow does not handle or deal any further with the supply alone, rather with the recovery-connected activities as well. We call it simply as the Supply Chain loop. This loop defines the complete flow of the product from the origin to the customer and back into the flow again. This denomination emphasizes the probable incorporation of forward and reverse chains of flow. In addition, it holds both the loops of supply chains, closed and open, where evidently the reverse flow starts to go back to the initial and original user or functions (Matthew and Ammons, 2000).
Case Study of Sustainable Logistics Scheme
The Environmental Zone marked in Stockholm, Sweden
The major four cities of Sweden have created environmental zones with rules and restriction in order to implement a Logistics system concerning environmental factors. These four cities are Lund, Malmo, Gothenburg and Stockholm. These regulations include rules for heavy vehicles, related to the weight and age. The regulation for the heavy engine vehicles driven by diesel is that the weight of the vehicle can not exceed 3500 kilo and that the vehicle should not be older than eight (8) years. The age of the transport will be calculated from the day when it got registered. These rules can be negated in only condition that permission has been taken before hand. But all this is done with checking and inspection of the vehicle.
The adherence to these rules and regulations is controlled by Police department, if they see a heavy vehicle entering an environmental zone, without one of the exception reasons, they charge a fine. Statistics records show that 93% of the public adhere to this restriction (Trendsetter Report No 2002, Stockholm).
This case study clearly explains that now, even countries and governments have started seeking after the concepts and implications of Green Logistics because of its advantages.
Implementation of Green Logistics
The implementation of a green logistics in an area can be achieved in three ways and they are discussed in three approaches that are discussed below:
Top down approach is the implementation of the Green Logistics when it is imposed by the governmental agencies. The strict rules and penalties are applied on the industry to follow the green logistics.
Bottom up approach
This is the Green Logistics concept when it is established itself in the industry, due to the benefits awareness or due to the companies being involved in the Corporate Social Responsibility.
A Compromise Approach
A comprise approach is the one where the governmental agencies and the companies come into a mutual contract and decide to work on the concept of Green Logistics protecting the environment (Brewer, Button and Hensher, 2001).
In the competitive environment like todays, companies tend to follow and imitate what other big giants do to survive and maintain their market share. This concept and an a sudden interest shown in the Green Logistics and its Components like Reverse Logistics which is designed to give benefit to the community in shape of healthy atmosphere and balance ecology, has its own advantages for the companies as well. The above mentioned reason clearly state that along with getting the company benefitted them is getting the community services simultaneously.