Academic journal article International Journal of Business and Information

The Impact of Logistics Management on Reverse Logistics in Thailand's Electronics Industry

Academic journal article International Journal of Business and Information

The Impact of Logistics Management on Reverse Logistics in Thailand's Electronics Industry

Article excerpt

1. INTRODUCTION

'Green' logistics is a new concept [1] [2] in which the ecological environment is considered in every procedure and activity of an organization [3]. The concept has spread worldwide and is especially prevalent in developed countries and multinational corporations (MNCs) [4] [5]. Many companies take the new concept into consideration when defining their vision and mission [6]. The European Union (EU) and the government of many other developed countries have enacted green or environmental laws that strictly apply to all companies [7] that export products to the EU or to those countries with such laws. Companies that want to conform to these green laws must emphasize reverse flow [8] because reverse logistics is a dimension of green logistics. Reverse logistics consist of return policy, product return, backhaul, remanufacturing, refurbishment, and waste disposal.

Stock [9] found that companies that want to succeed in reverse logistics management need to emphasize forward flow (forward logistics), including such elements as inbound, manufacturer, and outbound, because every forward logistics activity affects reverse logistics activities [10]. For example, some companies do not design products that can be reused or recycled; therefore, when a product is returned to the company, the material cannot be used for remanufacturing and is fit only for waste disposal. Such an event means that the company will lose opportunity costs such as reductions in long-term cost and will suffer loss of organization image. Companies using reverse logistics management need to consider cause and effect because upstream activities always affect downstream activities.

Green laws pose a complex situation for export businesses because they involve the regulations not only of the receiving country (to which goods are exported), but also the home country (from which goods are exported). In Thailand, green laws have a major impact on the economy because the country's export sector is more important than any other. For years, Thailand has been one of the best choices for foreign direct investment (FDI) because it has more production value factors than any other country in southeast Asia (SEA); namely, a highly skilled labor force, low labor cost, land, infrastructure, purchasing power [11], and high potential market. Through foreign direct investment in its manufacturing sector, Thailand has developed factories that build products that are acceptable to any country in the world, especially the member states of the European Union, the United States of America, and Japan. In its ASEAN Economic Community (AEC) case study [12], McKinsey & Company, an American global management consulting firm, found that the electronics industry is a high potential business sector that will support economic growth in the AEC countries. This situation is true in Thailand, where electronics products rank first among exports. Thailand aims to be the world hub of the electronics industry. This study will help Thai managers to understand the relation between logistics activities and reverse logistics management and thus increase their efficiency and effectiveness without increasing long-term costs.

2. LITERATURE REVIEW

The literature review focuses on issues relating to logistics management and reverse logistics management.

2.1. Logistics Management

For many decades, the definition of logistics management covered only product movement and distribution [13], [14], [15], [16]. In 1986, the Council of Logistics Management (CLM), the leading global association for supply chain management professionals [later renamed the Council of Supply Chain Management Professionals (CSCMP)], defined logistics management as that part of supply chain management that plans, implements, and controls the effective, efficient forward and reverse flow and storage of goods, services, and related information between the point of origin (manufacturer) and the point of consumption (consumer). …

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