Running head: REVERSE INVENTORY MANAGEMENT & FINANCIAL IMPLICATIONS REVERSE INVENTORY MANAGEMENT & FINANCIAL IMPLICATIONS 5 Reverse Inventory Management & Financial Implications Desmond K Sangbong Reverse Inventory Management & Financial Implications David Mkhanlall July 9, 2015 Reverse Inventory Management & Financial Implications Reverse logistics refers to the process by which a company recycles, refurbishes and resells products that are spoilt or old. Reverse logistics is advantageous to a company as it add them a competitive advantage over its competitors by adding them trust from their customers. Reverse Logistics is therefore a strategy that will be adopted by most companies in future as a way to add them profitability. The concept of reverse logistics began decades back the late 1800. Reverse logistics originated from the military sector at the end of the American Civil War. According to General William, the supply chain hindered the nature of his army campaigns and he had difficulties in supplying the soldiers into the hostile communities. Later in 1872, the concept of reverse logistics began its operations in the retail market. Later on in 1942, during the world war, countries began to experience shortages in the automobile industry whereby, there were shortages of the automobile parts. For this reason, there was need to create and rebuild the automotive parts then sell them to the consumers (Corrêa & Xavier, 2013). In 1984, McNeil Laboratories responded to the Tylenol scare by getting the tainted products off the shelves of shops and replaced them with new products. This action was all over the new and for this reason, it increased the use of reverse logistics by companies in America. The Tylenol scare was the period when the Tylenol capsules were filled with cyanide, which is highly poisonous, and the consumption of these products led to death of many people. it was after this in the year 1991 that the federal government of Germany made in a must for companies to look for ways to recycle products. The recycle program was meant to reduce the environmental reverse flows and the European Union supported this legislation. In the next decade starting from 2000, reverse logistics was more adopted by the business sector as a strategy to counter competition in various industries (Corrêa & Xavier, 2013). Until date, reverse logistics is used as a way to refurbish and remanufacture the unused products. It also acts as a corporate social responsibility by various companies. Reverse logistics consist of various elements that fall under the umbrella of reverse logistics. One of the elements is returns. A company such Dell Company that specializes in manufacturing of electronics may supply their electronics to the final consumer. However, in the mist of the supply, there may be breakages and the consumers will return the breakages to the company. In this case, the electronics that are taken back to the company are k.

1. Running head: REVERSE INVENTORY MANAGEMENT &
FINANCIAL IMPLICATIONS
REVERSE INVENTORY MANAGEMENT & FINANCIAL
IMPLICATIONS 5
Reverse Inventory Management & Financial Implications
Desmond K Sangbong
Reverse Inventory Management & Financial Implications
David Mkhanlall
July 9, 2015
Reverse Inventory Management & Financial Implications
Reverse logistics refers to the process by which a company
recycles, refurbishes and resells products that are spoilt or old.
Reverse logistics is advantageous to a company as it add them a
competitive advantage over its competitors by adding them trust
from their customers. Reverse Logistics is therefore a strategy
that will be adopted by most companies in future as a way to
add them profitability.
The concept of reverse logistics began decades back the late
1800. Reverse logistics originated from the military sector at
the end of the American Civil War. According to General
William, the supply chain hindered the nature of his army
campaigns and he had difficulties in supplying the soldiers into
the hostile communities. Later in 1872, the concept of reverse
logistics began its operations in the retail market. Later on in
1942, during the world war, countries began to experience
shortages in the automobile industry whereby, there were
shortages of the automobile parts. For this reason, there was
need to create and rebuild the automotive parts then sell them to
the consumers (Corrêa & Xavier, 2013).
In 1984, McNeil Laboratories responded to the Tylenol scare by
getting the tainted products off the shelves of shops and
replaced them with new products. This action was all over the
new and for this reason, it increased the use of reverse logistics

2. by companies in America. The Tylenol scare was the period
when the Tylenol capsules were filled with cyanide, which is
highly poisonous, and the consumption of these products led to
death of many people. it was after this in the year 1991 that the
federal government of Germany made in a must for companies
to look for ways to recycle products. The recycle program was
meant to reduce the environmental reverse flows and the
European Union supported this legislation. In the next decade
starting from 2000, reverse logistics was more adopted by the
business sector as a strategy to counter competition in various
industries (Corrêa & Xavier, 2013). Until date, reverse logistics
is used as a way to refurbish and remanufacture the unused
products. It also acts as a corporate social responsibility by
various companies.
Reverse logistics consist of various elements that fall under the
umbrella of reverse logistics. One of the elements is returns. A
company such Dell Company that specializes in manufacturing
of electronics may supply their electronics to the final
consumer. However, in the mist of the supply, there may be
breakages and the consumers will return the breakages to the
company. In this case, the electronics that are taken back to the
company are known as returns. Another element in the
umbrella of reverse logistics is recycling. Recycling is whereby
a company buys back the old products from the consumers and
then resells the product to final consumers. Recycling is a way
that a company shows its sense of corporate social
responsibility, as it will reduce environmental degradation.
The third element under umbrella of reverse logistics is buying
of seasonal inventory. Sometimes the demand of the product
may too low in that there will be excess inventory in the market.
For this reason, the company will buy the excess inventory so
that the customers will not make losses. In this case, the
company will be trying to make the customers loyal. The last
element is the marketing and reselling. This refers to creating
secondary markets for the recovered products and remarketing
them in order to create and exploit markets for refurbishing and

3. distributing them (do Valle, et. al, 2009).
Reverse logistics has been adopted by many companies from
2000 as it acts as a way of increasing their profitability and
market share (do Valle, et. al, 2009). 20years from now, reverse
logistics will be a strategy that will be implemented by most
companies to add them a competitive advantage. For instance,
the recycling project will show the society that they consider
them before making the company’s decisions on the
manufacturing processes. For this reason, the society will
embrace the company and this will increase the company’s
profits. It will involve mostly, the buying back of old inventory
as well as recycling the old products. Companies will be buying
back items that are spoilt and then recycles after which they
will resell the products. Moreover, with the innovation of
technology, new methods of reverse logistics will be invented
as well as strategies of inventory management. Companies will
have better ways to manage their returns to avoid making
losses.
In conclusion, reverse logistics has evolved since the 18th
century and has been adopted more in business in the 20th
century. Companies today adopt the strategy that enables them
overcome stiff competition from their competitors. Reverse
logistics is a way that companies sometimes buy or collect the
old broken products they produce. They then remanufacture or
refurbish the product and look for market whereby, they resell
them at affordable prices. For this reason, over the next
20years, most companies will adopt this technique due to the
rapid improvement of technology. Moreover, there will be new
technologies that will be adopted for use in the recycling
process as well as reverse inventory management.
References
Corrêa, H. L., & Xavier, L. H. (2013). Concepts, design and
implementation of Reverse Logistics Systems for sustainable
supply chains in Brazil. Journal of Operations and Supply Chain

4. Management, 6(1), 1-25.
do Valle, P. O., Menezes, J., Reis, E., & Rebelo, E. (2009).
Reverse logistics for recycling: The customer service
determinants. International Journal of Business Science and
Applied Management, 4(1), 1-17.
Running head: LOGISTICS AND LIFE-CYCLE OF PRODUCTS
1
LOGISTICS AND LIFE-CYCLE OF PRODUCTS 7
Logistics and Life-Cycle of Products
Desmond K Sangbong
LOG670
David Makhanlall
July 8, 2015
Introduction
Consumer behavior and increased competition are factors that
are forcing companies to develop new products and change their
supply logistics faster that ever before. Reducing the product
life cycle causes significant changes in the supply chain of a
business. The company needs to adjust various processes for

5. them to maintain the demand forces, stream line their supply
networks and also improve reverse logistics. Some changes in
demand may also require a company to clear the inventory of
unwanted goods. Monitoring the inventory level provides
insight into how a company can reduce the costs at the different
phases of a product life cycle. Most importantly, the company is
able to save costs as the product moves through different stages
in its lifecycle that the manufacturing of raw material,
production of the product, packaging and transportation, the in-
use stage and finally the disposal, re-use and recycle stage
(Dyckhoff, 2013). Coca Cola Company indicates cost savings
and improvement in its reverse inventory management process
at the corporate and other single units’ level during the life
cycle of their products.
Product’s Life-cycle flow-chart
A product life cycle refers to a form of business analysis that
helps in identifying the set of phases in the life of a commercial
product. It is normally used to map a lifespan of a product in
the phases through which it goes through from when it was first
developed until after it is used or eliminate from the market.
Life cycles includes the idea that particular products have
different an interrelated logistical actions during their economic
life-time. The figure below shows the different stages of the life
time of a product that relates to the supply chain partners
according to the current ecological and economic criteria. It
includes the coordination, the support and the management
activities of the company that ensures there is an efficient use
of a product as well as an intelligent use of resources during the
planning, initiation, production, operations and final phases of a
product’s economic life time.
Stages Coca-Cola Products Life Cycle
Raw Materials Extraction

6. Production of Raw Materials, Components, Packaging
Materials, chemicals etc
Disposal Recycling
Production, Bottling and Packing,
Disposal, Re-use and Recycling
Re-use
Transportation and Unpacking
In-use Period
Summary of both the forward and backward stages of the
product life cycle
Complexity in the supply chain can lead to increased input in
resources, time and effort. This increases result to high costs
and also high impacts on the environment that will also harm
the company financially. Product life cycle logistics treats both
the forwards and backward logistic processes involved in the
products economic life-time. Actions in one phase provide an
insight in the better management of the downstream phases
(Dekker, 2013). This approach will enable the company to
avoid supply chains that are fragmented and also enable the
make prompt decisions that will reduce the handling costs,
increase the movement of its products and also improve the
performance of its supply chain both in long term and in short
term. Resources are utilized efficiently and products will move
easily through their economic life-cycle. The forward logistics
in the life cycle of the products include the production of the
product by the company. a company needs to understand he
needs of their customers together with the demand of their

7. products and make the decisions on the level of output to
produce. The next stage is bottling and packaging.
Organizations need to ensure optimum efficiency when
packaging. Packaging material is subject to environmental
pollution. It is important to use material that can be recycled
when packing. The next stage involved transportation to
warehouses, retailer or customers depending on the most
effective distribution channel. After the transportation the
products are used by the customers and finally, they are
disposed. End products may be reused while some materials
such as the packaging materials can be recycled. Organizations
must implement the best strategy to deal with the product at its
end of life stage. Damaged products can be returned for repair.
This increase customer loyalty and the company will benefits in
terms of profit and sales. Recycling also reduces packaging
costs and the costs relative to environmental pollution by the
packaging materials (Dyckhoff, 2013).
How the stages of the product life cycle relate to Coca Cola
company.
In the coca cola company, the company produces brands and
flavors that are preferred by their customers. They produce in
response to the tastes and preferences in the beverages category.
Customers’ demands are constantly evolving and for the
company to maintain profitability, they need to constantly
evolve with the market by establishing and producing relevant
brand priorities. During the packaging phase, the company uses
the packaging that is important in meeting the needs of their
consumers. In the company, packages comprise 22% of the total
cost of goods sold. This percentage can be reduced through
reducing raw material used and this can be through the reverse
logistics of re-use and recycling of packaging materials
(Dekker, 2013). The company also ensures that the containers
used guarantee safety and quality. They work closely with their
supplier to determine the new ways that will improve packaging
and create mutual value. The company aims at increasing the
renewable and recycled content of bottles and cans. In the

8. distribution phase, the company uses its well established
distribution network to sell their products across the world.
After the customers use the products, the containers and bottles
are renewed and recycled by the company as shown in the figure
above.
Reverse life cycle of coca-cola products is well established.
This has been beneficial to the company. The recycling of glass
and metal bottles is well established in the company with the
recycled content accounting for half the material in their bottled
and cans (Jain, 2012). They also use refillable packaging. This
enables the company to save on the cost of packaging materials.
The company is also able to prove that it is environmentally
friendly and this has created a positive image for the company.
The company has in turn benefited by gaining more customers
who have made the company very profitable. The company has
also partnered with its suppliers and distributors in each region
of operations to ensure that unwanted goods, damaged goods
and packaging material are collected back from the end users
(Jain, 2012).
Conclusion
Reverse logistics promote efficient and effective management of
a supply chain. It includes activities such as physical movement
of products, supplier partnership, supply chain information
sharing and meeting customer demands. All these activities are
found in the product life cycle. During the lifecycle, a company
needs to estimate customer needs, establish effective and
efficient deliveries, collaborate with suppliers in the supply
chain and share relevant information. This will help a company
in the planning, implementation and control a cost effective and
efficient flow of raw material, inventory, finished goods and the
related information from the company to the consumption point.
Companies also engage in reverse logistics which involves
moving goods from the end of life cycle for proper disposal, re-
use or capturing value (Dekker, 2013). The revere logistic
includes activities such as collecting unwanted or damaged
stock to improve their quality and also the packaging material

9. for the purpose of proper disposal, maximizing liquidation
values, re-use them or to recycle them.
References
Dekker, R., Fleischmann, M., Inderfurth, K., & van
Wassenhove, L. N. (Eds.). (2013). Reverse logistics:
quantitative models for closed-loop supply chains. Springer
Science & Business Media.
Dyckhoff, H., Lackes, R., & Reese, J. (Eds.). (2013). Supply
chain management and reverse logistics. Springer Science &
Business Media.
Jain, V. (2012). Special issue on sustainable supply chain
management and reverse logistics. International Journal of
Production Research, 50(5), 1239-1242.
Running head: COCA-COLA DISTRIBUTION PROCESSES 1
DISTRIBUTION PROCESSES 6

10. Coca-Cola Distribution Processes
Desmond K Sangbong
Revers Inventory Management & Financial Implications
David Makhanlall
July 10, 2015
Introduction
An organization that has a strong focus on distribution is Coca
Cola Company. The Company has one of the best planned and
executed distribution system compared to any other company in
the beverages category. This has made it to have a big impact
on consumers and hence a greater impact on distributers and
wholesalers since the product has taken an essential part in the
mind of the consumer. Their high visibility has made the
company to achieve its goal by making the product available
across the whole world even to the most remote places. The
company has made its branded beverage products to be
available to customer in over 200 countries through an effective
distribution system. Coca cola puts a strong focus on
distribution to expand its marketing presence. Their stable and
strong distribution system helps them to capture growth by
distributing enhance and innovative products to its consumers
around the world.
Coca Cola’s Forward and Reverse Distribution Processes
Coca Cola Company has both forward and reverse distribution
processes. Their conventional forward freight distribution

11. involves the distribution of the syrup and finished products to
suppliers, bottlers wholesalers and customers. Coca Cola
Company sells about 1.8 billion Coca cola products in a day
across the world. They ensure that every customer gets their
product at the right place and time through their supply chain.
Coca cola reverse distribution process is also a common activity
of the company. Most of its packages are brought back in the
supply chain for refilling. In some cases like when their product
is defective the distributor will take back the products. Other
packages such as the plastic packages are collected and
recycled. The reverse distribution is mainly concerned with the
movement of goods that were previously shipped from the
customers to the distribution centers or the manufacture for
recycling, replacement, returns or for refilling (Lee, 2012).
These processes have changed greatly over the last 20 years.
The company has entered into partnerships with companies
across the world to recycle its waste products like the packaging
material and make other products such as brushes from them. It
has also intensified its forward distribution processes by
establishing many distribution channels to reach customer
across the world.
Company Financials Relating To Distribution Costs and Volume
Coca cola products are distributed and sold via different
channels. They include direct sales to retail stores and outlets
across the country such as institutional accounts, vending
machine outlets and food markets. In the financial year 2014,
68% of Coca cola’s bottle volume was sold to be consumed in
the future and 32% was sold to be consumed immediately. The
largest customer for Coca Cola is Walmart store who account
for about 22% of the total bottle volumes of the company and
about 15% of the total net sales of Coca Cola in 2014. The
second largest customer is Food Lion who accounted for about
9% of the total volume of the company product. Distribution
fees recorded by the company in net sales amounted to $6.2
million. The distribution costs that include transportation of
finished goods t customer outlet amounted to $ 211.6 million

12. (Coca-Cola, 2015). The company has been focusing on
converting the distribution system to the predictive distribution
system from a conventional routing system. This willhelp the
company to handle the number of products that have been
increasing year by year. To reduce its sixed warehouse costs,
the company has closed down some small sales distribution
centers.
The Overall Health of the Coca Cola Company
The coca cola company overall health is good. The company has
a well planned distribution system that has enabled them to
succeed in availing their products to over 200 countries across
the world. This has made them to earn good revenues. the net
income of the company in 2014 attributable to shareholders was
$7,098 million. The company also has a good management
system that has maintained a very healthy cash flow in the
company. The total cash flow from the company’s operations
was $8,958 (Coca-Cola, 2015). This has enable the company
reduce its debt, raise its dividends and also buy back some
stock. The company is therefore doing very well and its health
attracts a lot of investors.
Opportunities That Lie in the Company’s Supply Chain
Coca Cola Company has many opportunities lying in its supply
chain. The company can partner with organization providing
supply chain data to access the supply chain data. This will help
it to identify the risks that lie in the supply chain and drive
improvements from the sourcing. Coca Cola’s responsible and
sustainable growth depends on its open and positive relationship
with its suppliers. This partnership will increase the visibility
throughout its supply chain. A company that has data regarding
the supply chain in drinks industry will help coca cola
collaborate with its suppliers and ensure long-term
sustainability of it products and hence its business (Bozarth,
2015).
Coca Cola Company can also develop a distribution system that
has many segments. This will help them get their products to
the broad customer base through different outlets. The company

13. should consider a direct-to-store delivery to the larger outlets
and the key customers. They should also establish local
distribution nodes to reach their products to the small rural
outlets that are located in areas with poor roads. This
opportunity will increase the sales of the company and also
enables it reach a wide range of target customers (Bozarth,
2015).
Conclusion
From doing this research, I have learned a lot about the
importance of a well established distribution network to
companies. A company that has put strong focus on distribution
is able to reach its target customers more easily. Companies will
also in most cases use both the forward and the reverse
distribution processes. Companies that use the reverse model to
recycle their packaging material save a lot of money used in
packaging. They also tend to be environmentally friendly and
this creates a good public image. A good supply management
system is essential for the success of any business.
References
Bozarth, C. C., & Handfield, R. B. (2015). Introduction to

14. operations and supply chain management. Prentice Hall.
Lee, Y. J., Baker, T., & Jayaraman, V. (2012). Redesigning an
integrated forward–reverse logistics system for a third party
service provider: an empirical study. International Journal of
Production Research, 50(19), 5615-5634.
United States Securities and Exchange Commission, (2015):
Retrieved from: http://assets.coca-
colacompany.com/d2/78/7d7cad454f3fbd033d55d786b890/2014-
annual-report-on-form-10-k.pdf