Time value of commercial product returns

V. Daniel R. Guide, Gilvan C. Souza, Luk N. Van Wassenhove, Joseph D. Blackburn

Research output: Contribution to journalArticle

242 Citations (Scopus)

Abstract

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.

Original languageEnglish (US)
Pages (from-to)1200-1214
Number of pages15
JournalManagement Science
Volume52
Issue number8
DOIs
StatePublished - Sep 11 2006

Fingerprint

Reverse supply chain
Product returns
Value of time
Supply chain design
Industry
Distributor
Assets
Network flow
Proportion
Product value
Marginal value
Competitive advantage

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research

Cite this

Guide, V. D. R., Souza, G. C., Van Wassenhove, L. N., & Blackburn, J. D. (2006). Time value of commercial product returns. Management Science, 52(8), 1200-1214. https://doi.org/10.1287/mnsc.1060.0522
Guide, V. Daniel R. ; Souza, Gilvan C. ; Van Wassenhove, Luk N. ; Blackburn, Joseph D. / Time value of commercial product returns. In: Management Science. 2006 ; Vol. 52, No. 8. pp. 1200-1214.
@article{d18f645cf3d3473abd255e9df1928c31,
title = "Time value of commercial product returns",
abstract = "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.",
author = "Guide, {V. Daniel R.} and Souza, {Gilvan C.} and {Van Wassenhove}, {Luk N.} and Blackburn, {Joseph D.}",
year = "2006",
month = "9",
day = "11",
doi = "10.1287/mnsc.1060.0522",
language = "English (US)",
volume = "52",
pages = "1200--1214",
journal = "Management Science",
issn = "0025-1909",
publisher = "INFORMS Inst.for Operations Res.and the Management Sciences",
number = "8",

}

Guide, VDR, Souza, GC, Van Wassenhove, LN & Blackburn, JD 2006, 'Time value of commercial product returns', Management Science, vol. 52, no. 8, pp. 1200-1214. https://doi.org/10.1287/mnsc.1060.0522

Time value of commercial product returns. / Guide, V. Daniel R.; Souza, Gilvan C.; Van Wassenhove, Luk N.; Blackburn, Joseph D.

In: Management Science, Vol. 52, No. 8, 11.09.2006, p. 1200-1214.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Time value of commercial product returns

AU - Guide, V. Daniel R.

AU - Souza, Gilvan C.

AU - Van Wassenhove, Luk N.

AU - Blackburn, Joseph D.

PY - 2006/9/11

Y1 - 2006/9/11

N2 - 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.

AB - 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.

UR - http://www.scopus.com/inward/record.url?scp=33748309117&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=33748309117&partnerID=8YFLogxK

U2 - 10.1287/mnsc.1060.0522

DO - 10.1287/mnsc.1060.0522

M3 - Article

AN - SCOPUS:33748309117

VL - 52

SP - 1200

EP - 1214

JO - Management Science

JF - Management Science

SN - 0025-1909

IS - 8

ER -

Guide VDR, Souza GC, Van Wassenhove LN, Blackburn JD. Time value of commercial product returns. Management Science. 2006 Sep 11;52(8):1200-1214. https://doi.org/10.1287/mnsc.1060.0522