Consideration Factors of Retromovement Channel Design

Product Recall

Contingency planning for product recall involves nearly every function within a business. Logisticians become involved in product recall in three ways, a task force committee for recall, tracing the product and designing the reverse logistics channel.

Establish a task committee

• To pull the product back toward the manufacturer 
• Also responsible for stopping production, starting recall action and carry out the necessary steps to comply with appropriate regulatory agencies.
• Cannot be easily located within the distribution system can be very expensive operation and unnecessary. 

Tracing method using warranty card information

• It is confined to those products that use such cards, not all cards returned by customer. 
• One electronics equipment retailer requires all customers to fill out an identification card at the point of sale. 

Reverse Logistics

• Depend on the nature of the products defect and how the company plans to handle it 
• A portion of the distribution channel may be used. 
• Many small appliances and electronic goods are returned to the factory or regional service centers for repair or replacement. 
• The logisticians should be aware of the variety of channel designs available and should not necessarily confine recalled products to the existing distribution channel.

Service Breakdown

• No logistics operating system will run perfectly all of the time.

• None of this situations really require contingency plan since they are a normal part of business activity:
• Delayed purchase order.
• Handling seasonal ordering peak loads.
• Having redundant equipment to meet breakdown.

• The nature of event to indicate when contingency planning should undertaken:
• The probability of occurrence is considered lower than for events included in the regular process.
• The actual occurrence of such an event would cause serious damage, especially if not dealt quickly.
• It deals with subject about which the company can plan ahead to deal with swiftly if the event occurs.

Modelling the Sales-Service Relationship

Two Points Method

• Involves establishing two points on the diminishing return portion of the sales-service relationship through which a straight line can be drawn. 
• Involves setting logistics customer service at high level for a particular product and observed the sales that can be drawn. 
• Then the level is reduced to low level and sales are again noted. 

Before-After Experiments

• These types are subject to the same methodology problems as the two points method. 
• These experiments may be easier to implement because the current service level serves as the before data point. Only the "after" data point is then needed. 

Game Playing

• One approach is to set up a laboratory simulation, or gaming situation, participants make their decisions within a controlled environment. 
• The environment attempts to replicate the elements of demand uncertainty, competition, logistics strategy, and others that relevant to the situations. 
• Extensive data can be obtained to generate a sales-service curve. 

Buyer Surveys

• Mail questionnaire and personal interview frequently used because a large sample of information can be obtained at relatively low cost. 
• Some questions are designed to determine how buyers would change their patronage or purchase level among supplier if customer service changed. 
• The questions must be carefully designed so as not to lead the respondents or to bias their answers and yet capture the essance of service that the buyers find important.