Reverse logistics

Reverse logistics stands for all operations related to the reuse of products and materials. It is "the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics. The reverse logistics process includes the management and the sale of surplus as well as returned equipment and machines from the hardware leasing business. Normally, logistics deal with events that bring the product towards the customer. In the case of reverse, the resource goes at least one step back in the supply chain. For instance, goods move from the customer to the distributor or to the manufacturer

 Handling product returns back through the pipeline - in an effective and cost-efficient manner -helps manufacturers to enhance customer satisfaction, achieve greater cost reductions, and when possible, recover some of the products' value.

Reverse Logistics activities include:

•Transportation of returned product back to distribution centre

•Processing returned merchandise for reasons such as damage, seasonal, restock, salvage, recall, or excess inventory

•Disposing of returned goods

•Recycling packaging materials and reusing containers

•Reconditioning, remanufacturing, and refurbishing products

•Hazardous material programs

•Asset recovery

Transportation cross-docking(Part III)

Transportation cross-docking supports the consolidation of deliveries from different supplying warehouses into common shipments to a customer or to another receiving warehouse. This consolidation can take place at one or more intermediate warehouses along the route to the destination; you can forward the goods at intermediate warehouses without needing to store or pack them (in essence, moving the goods “across the dock” from receiving to shipping).

The following illustration shows the data flow for cross-docking of sales orders:

Implementation Considerations

In Customizing, you must:

·        Specify which plants can act as cross-docking warehouses

·        Assign storage locations to each supplying plant to represent the stock at each cross-docking warehouse

·        Assign MRP areas to cross-docking storage locations to prevent stock at intermediate warehouses from being considered as available for planning

SAP delivers preconfigured movement types for cross-docking. However, you can create additional movement types in Customizing for Materials Management.

You can define cross-docking partners in Customizing for Partner Master Data. This specifies the storage locations in the source warehouse to be used when cross-docking goods are posted to a cross-docking target warehouse. If the system detects such a partner in a delivery document, it assigns the appropriate cross-docking goods movement type to the document.

The decision as to whether a shipment requires cross-docking can be made in one of the following places:

·        SAP CRM system during transportation route determination

·        A BAdI in the ERP system

·        The warehouse system

The cross-docking information determined in SAP CRM and the ERP system is passed as a proposal to the warehouse system, which can make the final decision about the next cross-docking steps

Source SAP.com

Retail cross docking (Part II )

 

 In retail practice, cross-docking operations may utilize staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship.

• Streamlines the supply chain from point of origin to point of sale
• Reduces handling costs, operating costs, and the storage of inventory
• Products get to the distributor and consequently to the customer faster
• Reduces, or eliminates warehousing costs
• May increase available retail sales space.

• Potential partners don't have necessary storage-capacities
• or an adequate transport fleet to operate Cross-Docking
• Need of adequate IT-Systems
• Possibility of violation of secrecy

• Cross-docking is dependent on continuous communication between suppliers, distribution centers, and all points of sale.
• Customer and supplier geography—particularly when a single corporate customer has many multiple branches or using points
• Freight costs for the commodities being transported
• Cost of inventory in transit
• Complexity of loads
• Handling methods
• Logistics software integration between supplier(s), vendor, and shipper
• Tracking of inventory in transit

Source from wiki

Cross Docking in Warehouse (Part I)

The term cross docking refers to moving product from a manufacturing plant and delivers it directly to the customer with little or no material handling in between. Cross docking not only reduces material handling, but also reduces the need to store the products in the warehouse. In most cases the products sent from the manufacturing area to the loading dock has been allocated for outbound deliveries. In some instances the products will not arrive at the loading dock from the manufacturing area, but may arrive as a purchased product that is being re-sold or being delivered from another of the companies manufacturing plants for shipment from the warehouse.

Many companies have benefited from using cross docking. Some of the benefits include:

•Reduction in labor costs, as the products no longer requires picking and put away in the warehouse.

•Reduction in the time from production to the customer, which helps improve customer satisfaction.

•Reduction in the need for warehouse space, as there is no requirement to storage the products.

Types of Cross Docking

There are a number of cross docking scenarios that are available to the warehouse management. Companies will use the type of cross docking that is applicable to the type of products that they are shipping.

•Manufacturing Cross Docking – This procedure involves the receiving of purchased and inbound products that are required by manufacturing. The warehouse may receive the products and prepare sub-assemblies for the production orders.

•Distributor Cross Docking – This process consolidates inbound products from different vendors into a mixed product pallet, which is delivered to the customer when the final item is received. For example, computer parts distributors can source their components from various vendors and combine them into one shipment for the customer.

•Transportation Cross Docking – This operation combines shipments from a number of different carriers in the less-than-truckload (LTL) and small package industries to gain economies of scale.

•Retail Cross Docking – This process involves the receipt of products from multiple vendors and sorting onto outbound trucks for a number of retail stores. This method was used by Wal-Mart in the 1980's. They would procure two types of products, items they sell each day of the year, called staple stock, and large quantities products which is purchased once and sold by the stores and not usually stocked again. This second type of procurement is called direct freight and Wal-Mart minimize any warehouse costs with direct freight by using cross docking and keeping it in the warehouse for as little time as possible.

•Opportunistic Cross Docking – This can be used in any warehouse, transferring a product directly from the goods receiving dock to the outbound shipping dock to meet a known demand, i.e. a customer sales order.

Products Suitable for Cross Docking

There are materials that are better suited to cross docking than others. The list below shows a number of types of material that are more suited to cross docking.

•Perishable items that require immediate shipment

•High quality items that do not require quality inspections during goods receipt

•Products that are pre-tagged (bar coded, RFID), pre-ticketed, and ready for sale at the customer

•Promotional items and items that are being launched

•Staple retail products with a constant demand or low demand variance

•Pre-picked, pre-packaged customer orders from another production plant or warehouse

By Martin Murray