The decision regarding outsourcing of activities in reverse supply chain is considered a
strategic decision. The focus of the research is on the development of a decision model
to help manufacturers make more informed decisions regarding their supply chain
policies. In particular, remanufacturing process is chosen to illustrate the application of
the model. However, the model can be used for any of the activities in the reverse
supply chain. The proposed model starts with strategic analysis to determine if it is
strategically sound to outsource an activity (process) in the reverse supply chain. If the activity is determined to be among core competencies of the organization, then no
further analysis is required and the activity is performed in-house.
Activities in the reverse supply chain that are identified as peripherals will be
contracted out to a third party. Activities that cannot be identified as core competency
or peripheral by strategic analysis alone will be tested against several other significant
factors. The activities that are identified as highly significant to the success of the
organization will be performed in house. On the other hand, activities that have low
significance are candidates for being contracted out to a third party. The economic
evaluation phase of the model tests the financial feasibility of such actions. Thus, the
result is a decision that is both strategically sound and economically plausible.
The present research can be enhanced by expanding the economic evaluation phase
of the model. This can be achieved by identifying specific individual costs associated
with outsourcing a reverse logistics function as well as costs of performing the function
in-house. One way to solicit this information is to get feedback from the professionals
in the field. The experts who are dealing with logistics issues on daily basis are the best
source for providing such information. By complementing the academic findings with
expert opinions, the delta cost function will be a much better representation of the gap
between the cost of performing a function in-house and outsourcing it to a third party.
In addition, the significance analysis performed here is based on the findings from
academic research alone. This analysis can be enriched by adding the expertise of the
practitioners and professionals to the academic findings. The experts in the field can
provide feedback on what factors are used to determine the significance of a logistics
activity. Such feedbacks can be used to modify the questions that were considered in
the significance analysis phase of the model to reflect the real world experience of the
practitioners.
Finally, it is recommended that the process proposed in this research be
implemented into a software or internet based tool. This will make calculations in the
economic analysis phase more accurate, and will allow easier access by the decision
makers who wish to use the model.