This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Download to citation manager Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Google Scholar Articles by Guide, V. D. R. Articles by Blackburn, J. D. Search for Related Content

Time Value of Commercial Product Returns

Smeal College of Business, The Pennsylvania State University, University Park, Pennsylvania 16802
Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742
INSEAD, Boulevard de Constance, 77305 Fontainebleau, France
Owen School of Management, Vanderbilt University, Nashville, Tennessee 37203
dguide{at}psu.edu
gsouza{at}rhsmith.umd.edu
luk.van-wassenhove{at}insead.edu
joe.blackburn{at}owen.vanderbilt.edu

Manufacturers and their distributors must cope with an increased flow of returned products from their customers. The value of commercial product returns, which we define as products returned for any reason within 90 days of sale, now exceeds $100 billion annually in the United States. Although the reverse supply chain of returned products represents a sizeable flow of potentially recoverable assets, only a relatively small fraction of the value is currently extracted by manufacturers; a large proportion of the product value erodes away because of long processing delays. Thus, there are significant opportunities to build competitive advantage from making the appropriate reverse supply chain design choices. In this paper, we present a network flow with delay models that includes the marginal value of time to identify the drivers of reverse supply chain design. We illustrate our approach with specific examples from two companies in different industries and then examine how industry clockspeed generally affects the choice between an efficient and a responsive returns network.

Key Words: reverse supply chain design; commercial product returns; closed-loop supply chains; time value; queueing models
History: Received: June 23, 2003;

This article has been cited by other articles:

				X. Su Consumer Returns Policies and Supply Chain Performance MSOM, October 1, 2009; 11(4): 595 - 612. [Abstract] [PDF]

				V. D. R. Guide Jr. and L. N. Van Wassenhove OR FORUM--The Evolution of Closed-Loop Supply Chain Research Operations Research, January 1, 2009; 57(1): 10 - 18. [Abstract] [PDF]

				A. Atasu, M. Sarvary, and L. N. Van Wassenhove Remanufacturing as a Marketing Strategy Management Science, October 1, 2008; 54(10): 1731 - 1746. [Abstract] [PDF]