Contribution of the Reverse Logistics Systems in Business Sustainability: a Study In

POMS Abstract Acceptance - 020-0863

Contribution of the reverse logistics systems in business sustainability: a study in supermarkets Dourados-MS.

Antonio Carlos Vaz Lopes (UFGD/UNINOVE)

Danielly Saruwatari (UFSC)

Sergio Adelar Brun (UFGD/UFSC)

Jouliana Jordan Nohara (UNINOVE)

Rolf Hermann Erdmann (UFSC)

Abstract: This article aims to analyze the adoption of the practice of Reverse Logistics System (RLS) in the supermarket and its contribution to corporate sustainability. The research strategy used to perform the work was the study of multiple cases in supermarkets in mid-size city of Dourados, Mato Grosso do Sul – Brazil. Data were collected through semi-structured interviews with logistics managers and employees in logistics, document analysis and observation visits by the organizations surveyed. It was verified that although companies have not institutionalized a Department of reverse logistics practices they adopt the reverse logistics of post-sale and post-consumption as separation and classification and proper disposal of solid waste of various categories of products like food packaging, reuse of materials for recycling and the fate given to the remains of the food packaging container among others. It was concluded that waste management provides environmental gains, generated by social and economic processes in place for company employees and the community at large and can be operated by other organizations in retail through this practice.

Keywords: Reverse Logistics Systems, retail, Supply Chain.

1. Introduction

Society in general has become increasingly concerned with the "environmental matters" one of the most discussed topics in the world scenery because of the many encourage actions to the preservation of the environment, that eventually become laws, with the aim to reach an sustainable environment and to solve the growing problems related to pollution and scarcity of natural resources.

In this new context and facing consumers who are becoming more demanding and conscious regarding to the environmental issues when making the decision of purchasing, the companies have sought with higher frequencymeans to fit the environmental patterns set by the society and to the new profile of theconsumers in order to minimize the engender of waste and manage them within environmental standards, replaying also the demands of the consumers.

According to Lacerda (2002), in recent years the increased of activities related to recycling, reusing products and packaging. This way we perceive that there is a continuous search for new solutions to avoid waste and to provide increased profits, besides building a correct ecological image to the organization.

In this respect the reverse logistics emerges as an alternative to soften the impacts of the post-sale and post-consumer products, adding economical, legal and of corporative image value. This issue stands out as appropriate, for, according to Leite (2003), this area of business knowledge emerges as something recently in the business scenery, and its implementation depends of considerable logistic changes within the company, particularly relating to the environment, aiming a sustainable development.

Barbieri and Dias (2002) affirm that the reverse logistics in the retail sector can became an alternative of earnings, with the process of reusing leftovers and packaging discarded materials. This way, a question appears, is the practice of reverse logistics within the organizations stimulated by profit or merely to acquire an environmental police that avoids punishment by environmental laws? The aim of this paper is to analyze the process of reverse logistics of four supermarkets located in the city of Dourados-MS and demonstrate what the earning and how this has contributed to environmental sustainability of the company. aiming to evaluate the reverse logistics of the supermarkets it has been prepared a questionnaire with open questions to perform a research in the logistic sectors of each company chosen with the view to identify where are the remnants of packaging, stale products, wooden boxes, cardboard boxes, fruit and vegetables rejected taking.

2. Theoretical Referential

2.1 Logistics Business

According to Wood (2004) several authors attribute the different origins to the word logistic. Some believe it comes from the French verb loger (to accommodate, to house). Others say it is derived from the Greek word logo (reason) that means "the art of calculating" or the manipulation of the details of an operation.

Historically the logistic was not perceived in the companies as an activity that could add value to their products or services. Nowadays this perception is changing due to a series of factors, among which are: more efficient systems of information, improvement in the technology of movement and of storage of materials, efficiency in the production control and stock. Gradually the image-generating costs, as it was the logistic seen came to be a competitive difference to the companies.

Christopher (1997), points out that logistics “is a process with which it leads as a strategic way the transference and storage of materials,components and finished products, starting from the suppliers, passing through the companies up to reach the consumers. "According to the logistic definition prepared by Rogers & Tibben-Lembke (1999, p, l) is outlined as logistics.

The process of planning, implementation and flux control and efficient storage and of low cost of raw materials, stock in process, final product and related information, since the point of origin to the point of consume, with the aim to fit the clients demand.

In this way, it is clear that the logistics business consists of a series of sequential activities which aims to ensure the satisfaction of the client, having the products and services available at the right time and place and at appropriate conditions, through its efficiency. To Ballou (2006) the business logistic aims to generate improvements in the profitability level in the services of distribution to the clients and consumers. For this, the author ponders that the logistics has the functionto plan, organize and control all processes of movement and storage, with the aim to facilitate the flux of products to provide to their customers the goods and services they want.

According to Lambert et al (1998), the logistic can represent a competitive advantageto the company, by means of sales strategies, prices, product quality, reduced delivery time, product delivered in good conditions and effective treatment of problems to satisfy the clients.

Bowersox and Closs (2001, p.20) complement this definition stating that "'the logistics involve the integration of information, transportation, material handling and packaging and position itself within the company as one of the competencies that help creation process of value to the customer. "

This way it is noticeable that the logistics business has been standing out as being a strategic area, which has been streamlining its operations aiming to improve and leverage competitive advantages. The logistic is an instrument capable of adding value through its services, always looking to improve all stages of its process. Once its efficient management system provides a logistical reducing costs and maximizing profits to the organizations.

Fuller & Allen (l995), emphasize that the logistic business must also consider the reverse logistics as a strategic area of great importance, for it is the field responsible for the returning of the “rejected” goods to the productive cycle adding economical, environmental and legal value.

Facingthis context and with an increase of worries and legal pressures about the themes concerning the environment, the reverse logistic has getting increasingly more credibility in the organizations, for some companies already are able to visualize the reverse logistic in an interesting way of financial return, not counting the reduction of waste and, consequently,the environmental impacts. Next it will be contextualized the reverse logistic to a better understanding of the activity developed in this process.

2.2 Reverse Logistic

The reverse logistic had its early studies found in the 70s and its main approach was related to the waste management and recycling. In the '80s, the reverse logistic was still limited to a concept of opposite movement to the direct flux of products in the supply chain. In the 1990s, there was an evolution inthe concept of reverse logistic driven mainly by the reduction of the life cycle of products, increase of the legal pressures about the environmental issues, besides the search by the companies to reduce lossesin the production process (Clark et al, 2005).

According to the stipulated definition by Rogers & Tibben-Lembke(1999, p 2) Reverse Logistic is:

The process of planning, implementation and control of the efficient flux and of low cost of raw materials, stock in process, finished goods and information related to the consumption point to the point of origin, with the purpose of recuperation of the value or appropriate disposal to the collect and garbage treatment.

To Leite (2003, p. 16-17) "to reverse logistic is an area of the logistic business that plans, operates and controls the flux and the logistical information corresponding of the return of after-sales and post-consumergoods to the productive cycle through the canals of reverses distribution, adding values of various kinds; economical, ecological, legal, logistical and of corporative image, among others.”

According to Byrne & Deep (2006), the reverse logistics is responsible to “take back” products or packaging materials to prevent accumulation of trash in landfill and energy costs in incineration processes. Ribeiro & Gomes (2004), state that reverse logistic seeks to recover the products in order to reduce and manage the toxic and no-toxic waste, since there is a greater ecological worry by the consumers, besides new environmental laws imposed with the purpose to solve problems related to products disposal in the environment.

In general, the reverse logistic has as its function making sure that the products of post-sale and post-consumption at the end of their useful life, return to the production cycle so that we can aggregate the maximum of value.Making possible the reuse of goods that would be disposal, and in last case, where there is no way to recover that good, the reverse logistic is responsible for the right disposal to be made.

Guide (2002), the authors already cited explain while stating that the role of the reverse logistic can be highlighted as a set of necessary activities in order to rescue a product used by a particular client and reused or discard it properly within the environmental regulations.

In this aspect becomes visible that the inclusion of reverse logistic in companies can become a differentiated strategy and of great importance, being it as for its economical or environmental potential. From the logistical point of view, the life of the products does not end with their delivery to the customers. The damaged, spoiled or staled products return to their point of origin, where they will be managed so that they can be replaced or repaired. The cycle of supply chain only ends when the products are discarded (Ballou 2006).

There are several reasons why some products and materials return to their productive chain, the process of reintroduction is made by the reverse logistic, which has as function somehow adding value to products and materials that would be discarded. When there is not a possibility of recuperation, there is a process for disposal to be made in a way that it does not cause damage to the environment.

The concept of reverse logistic is still a new subject, no one has a consolidated definition. Rogers and Tibben-Lembe (1998) consider reverse logistic the return of products made by different paths or channels of flow. But authors such as Dowlatshahi apud Campus (2006) state that the term "reverse” should only be applied when the meaning is exactly opposite to the original flow.

According Krumwiede and Sheu (2006), the reverse logistic definition depends on the organization where it is inset it is the organization itself that defines its concept. In the case of the retailers the reverse logistic is understood as a return of a product returned from the consumer to the provider. From the producers point of view the reverse logistic is the act of getting back defective products or of reusable packaging.

The reverse logistic represents an area of the business logistic which has gained moreand more opportunity in the companies, because the reverse process makes the waste have their proper disposal or are managed so that there is recycling of packaging and products, giving the possibility to obtain profitability and business opportunity, and contribute to environmental sustainability. The management of reverse logistics is done through the channels of reverses distribution of post-sales and post-consumption which has as function to capture and add value to the materials and products that for any reason would be discarded. Below this subject is discussed in detail.

2.3 Canals of reverses distribution of post-consumption goods

The channels of reverses distributions, post-consumer goods are "the reverse flow ofa portion of the constituent materials and products originating in the discarding of products after finalized its original usefulness and taking over the production cycle of some way "(LElTE, 2003, p. 5)

The reverse logistic of post-consumption refers to the goods that have useful lives ranging ofsome days to years. The Reverse Logistic of post-consumer will be responsible for planning andcontrolling the disposition of goods at the end of its useful life so that they are intended to incineration or sanitary landfills. In some cases it happens of those goods get back to the productive cycle through channels of dismantling, recycling and reuse of its useful life (Liva et al apud Nhan, and Souza Aguiar).

The post-consumer goods discarded by the society for various reasons such as; end of their useful life,get back into the productive cycle and are taking to the secondary market, remanufacturing, dismantling, recycling where they will be reused, disposed in sanitary landfill or suffer incineration. The main objective of the reverse logistic of post-consumer is of adding value throughout the logistic chain to a useless product to the original owner, or that still has use conditions or that it has been disposed after the end of its useful life (LEITE, 2003). After the use of the final consumerthe product can goto three different destination; an appropriate a place of disposal, being disposed in the nature, polluting the environment or then gettingback to a chain of reverse distribution. See in the figure:

Figure l. Reverse logistics flowchart of the post-consume.

This reverse distribution channel aims to capture the products that have already been used by the consumers to add value in order to reuse them. The products of post-consumption to be reused are collected and sent to reverse retail which resend them to the reverse distribution, where they are dismantled, recycled and reused in the secondary market or as raw material for the secondary markets. This raw material can also return to the manufacturing where a new cycle of the production chain will happen (MILK, 2003).

2.4 Canals of reverses distribution of post-sales goods

According to Leite (2003, p 8) the canals of reverses distribution of post-consumption goods are:

returned products by a variety of reasons, as: by terminating their validity, for having excessive stocks in the distribution canals, by being in consignation, by presenting quality problems and defects, etc.

The reverse logistic of after-sales is responsible for planning and controlling the goods that for different reasons return to the manufacturers or distributors. When returning to the cycle of production the reverse logistic of post-sales gets the responsibility to add value to these goods, throughout reform, dismantling, where there will be cannibalization of the product of recycling (Leite, 2003).

The reverse logistic of post-sale is responsible for handling the goods that are without use or of little use and that due to errors of expedition, consigned goods, overstock, low turnover, seasonal products, or products that are defective during the transportation re sending back to the production cycle to add them commercial value, being sent to recycling or give them an adequate final destination where there is no possibility of reuse (Liva et al apud Nhan, and Souza Aguiar). See Figure 2.

There are several reasons that lead to returning of a product,the post-sale returned products are collected, sent to the reverse distribution where they can be dismantled, recycled and reused in the secondary market or yet returning to the manufacturing and the retail.

The reverse logistic of post-sales positions the company in such a way to be efficient in respect to its customers and partners leading the company to meet the requirements and demands of its customers. This relationship between company and client generates trust to both sides, thereby adding a competitive edge to the company (LEITE, 2003).

2.5 Some reasons to the companies join the reverse logistic

According to the group Revlog apud Daher, Silva and Fonseca (2005) (a group of international work for the study of Reverse Logistic, under the coordination of Erasmus University Rotterdam, in Holland), concluded that a major reason to the companies adhering to reverse logistic is related to the following factors:

Environmental Legislation: the society is increasingly imposing a series of legislations and concepts of corporate responsibility aiming to reduce the impacts of the products in the environment. Looking at this, the business organizations have shown great worry regarding the administrative and judicial penalties imposed by the environmental legislation (Leite, 2003). This way, the reverse logistic as it has already been elucidated can be presented as a preventive action to the threats of fines, indemnifications because of ecological harms provided by law.

Economical Benefits:the reuse of materials and packaging through reverse process of the production chain generates some economies and gains that stimulate new efforts and initiatives in developing and improving of the reverse logistic process (LEITE, 2003).