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Abstract
Due to the increasing value of reverse logistics in recent years, many enterprises pay more attention to their reverse supply chain. Performance measurement is one of the most important tools that help them identify problems and improve their existing reverse logistics strategies. In this article, the authors apply the concept of Balanced Scorecard (BSC), Analytic Hierarchy Process (AHP) and Data Envelopment Analysis (DEA) together to create a new performance measurement framework to analyze the performance of reverse channels. This research applies this new methodology with real reverse logistics data from electronics companies proposed in the form of a case study.
Keywords
Performance evaluation, Performance measurement, Reverse Logistics, Data Envelopment Analysis
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1. Introduction
Nowadays, the role of reverse logistics (RL) or reverse supply chain (used interchangeably) is increasing in many industries such as the automobile industry, consumer electronics, book publishers, catalog retail and so on. The value of product returns in the U.S. has increased every year from $40 billion per year in 1992 to over $100 billion in 2002 [1]. Many companies pay more attention to their reverse logistics strategies because they realize that a good reverse supply chain can lead to significant cost saving. Reverse logistics is defined as "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 of proper disposal" [2]. Reverse logistics also includes processing returned merchandise due to damage, seasonal inventory, restock, salvage, recalls, and excess inventory. It also includes recycling programs, hazardous material programs, obsolete equipment disposition, and asset recovery [3]. A well organized reverse logistics not only reduces costs but also increases customer satisfaction. Many companies try to improve their reverse logistics strategies to gain competitive advantages. Kodak sells remanufactured single-use photo cameras for more than a decade. Coca-cola uses refillable bottles. These companies gain more profit from their reverse logistics strategies. The products in the reverse flow can come from different players in each supply chain, not necessary to be end user or customers only. Sometimes retailers need to return their goods to the manufacturer due to those products are out...