Supply Chain Assignment - Reverse Logistics Assignment

Construction sites consist of large amount of demolition waste. As a business that has access to scrap at construction sites, I would believe there are other materials that are worth looking into. For example, items such as: mantles, lumber, insulation, brick, copper wirings, windows, doors, bathtubs, faucets, and plumbing fittings are potential items that can be found on sites with a salvage value if managed properly. This reverse logistics not only can bring monetary value to the business, but also gain market recognition for being sustainable and environmentally friendly through reducing the amount of waste out of landfills. Moreover, it saves energy and resources that would normally be used for the production of new products.

With the rise in lumber and metal costs, scraps are worth more than before; as a result, it is certainly important for the owner to look into the reverse logistics business model.

Although we can easily conclude that the owner’s profit is $550 per load, there are other costs that have not been considered and they are the following:

1) Inbound shipping and storage costs – these are the costs associated to transporting the scrap and storing before determining next actions (i.e. refurbishing, recycling, or scraping). For example: if the company has arranged with the construction sites to pick up several refrigerators, he will need to find space to store them before they are resold or scraped for scrap metal.

2) Additional labour costs – the owner would have to consider additional costs to turn scrap into something of value (e.g. metal). Duties would include: collection, inspection/sorting, reprocessing, and reselling/refurbishing. In addition, Finance and accounting department will need to have visibility to the costs and revenue generated to realize the benefit/loss. Additional support from the customer service and sales will need to be considered factored as well to ensure steady inflow of material and to resale back to the secondary market. Lastly, workers are required to take the scrap, examine, and convert it to material that is of value to buyers.

3) Additional costs for disposition – once the item has been disassembled, the obsolete and excess products will need to be disposed; this will bear additional cost to the company.

There are many challenges that the owner could face and will require a discussion with the management team. First of all, reverse logistics involves many-to-one transportation point – this means that the company will require an application in place to manage the communication flow of information between the construction site to the company and then to the potential buyers. For example: it is important to have an efficient way to invoice construction sites and to receive payment once the scrap is sold to secondary buyers.

Another challenge the company will face is the introduction and setup