Decision Support System for Managing Reverse Supply Chain

Abstract

Reverse logistics are becoming more and more important in the overall Industry area because of the environment and business factors. Planning and implementing a suitable reverse logistics network could bring more profit, customer satisfaction, and an excellent social picture for companies. But, most of the logistics networks are not equipped to handle the return products in reverse channels. Reverse logistics processes and plans rely heavily on reversing the supply chain so that companies can correctly identify and categorize returned products for disposition, an area that offers many opportunities for additional revenue. The science of reverse logistics includes return policy administration, product recall protocols, repairs processing, product repackaging, parts management, recycling, product disposition management, maximizing liquidation values and much more. The focus of this project is to develop a reverse logistics management system/ tools (RLMS). The proposed tools are demonstrated in the following order. First, we identify the risks involved in the reverse supply chain. Survey tool is used to collect data and information required for analysis. The methodologies that are used to identify key risks are the six sigma tools, namely Define, Measure, Analyse, Improve and Control (DMAIC), SWOT analysis, cause and effect, and Risk Mapping. An improved decision-making method using fuzzy set theory for converting linguistic data into numeric risk ratings has been attempted. In this study, the concept of ‘Left and Right dominance approach’(Chen and Liu, 2001) and Method of ‘In center of centroids’ (Thoran et al., 2012a,b) for generalized trapezoidal fuzzy numbers has been used to quantify the ‘degree of risk’ in terms of crisp ratings. After the analysis, the key risks are identified are categorized, and an action requirement plan suggested for providing guidelines for the managers to manage the risk successfully in the context of reverse logistics. Next, from risk assessment findings, information technology risk presents the highest risk impact on the performance of the reverse logistics, especially lack of use of a decision support system (DSS). We propose a novel multi-attribute decision (MADM) support tool that can categorizes return products and make the best alternative selection of recovery and disposal option using carefully considered criteria using MADM decision making methodologies such as fuzzy MOORA and VIKOR. The project can be applied to all types of industries. Once the returned products are collected and categorized at the retailers/ Points of return (PoR), an optimized network is required to determine the number of reprocessing centres to be opened and the optimized optimum material flow between retailers, reprocessing, recycling and disposal centers at minimum costs. The research develops a mixed integer linear programming model for two scenarios, namely considering direct shipping from retailer/ PoR to the respective reprocessing centers and considering the use of centralized return centers (CRC). The models are solved using LINGO 15 software and excel solver tools respectively. The advantage of the implementation of our solution is that it will help improve performance and reduce time. This benefits the company by having a reduction in their cost due to uncertainties and also contributes to better customer satisfaction. Implementation of these tools at ABZ computer distributing company demonstrates how the reverse logistics management tools can used in order to be beneficial to the organization. The tool is designed to be easily implemented at minimal cost and serves as a valuable tool for personnel faced with significant and costly decisions regarding risk assessment, decision making and network optimization in the reverse supply chain practices.