With returned items costing the UK retail sector £6.75 billion annually, we developed a Reverse Logistics Toolkit in collaboration with the University of Sheffield which has reduced returns to companies in the UK retail sector by up to 40%.
The Reverse Logistics Toolkit was developed through intensive interaction at 13 workshops and industrial forums held on campus between 2005 and 2007. An average of 20 managers, from 40 companies connected to the UK retail sector including Halfords, VAX and O2, attended each event.
Published in 2009, the electronic diagnostic and performance improvement tool enables companies to use a traffic light system to audit returns and identify opportunities to reduce costs and waste and to improve customer service.
To understand costs and value creation across the supply chain, the toolkit incorporated management accounting techniques such as quality costing, opportunity costing, activity-based costing, and the balanced scorecard approach to improve both diagnosis and performance management.
- Funded by Department for Transport (DfT) and the Chartered Institute of Management Accounting (CIMA).
Impact of our research
The Department for Transport (DfT) and the Chartered Institute of Management Accounting (CIMA) used the research findings to inform and encourage best practice within retail organisations.
In 2008, the DfT put the completed toolkit on its website on ‘freight best practice’. This site, archived in 2010 on completion of the DfT’s funding, was highly regarded in the freight industry. It provided essential information on topics such as saving fuel, developing skills, equipment and systems, and performance management. All materials were available to download free of charge.
The CIMA also published the toolkit on its website in 2009 and held follow-up workshops for its members. In 2012, the CIMA and the American Institute of Certified Public Accountants (AICPA) launched a global joint venture called Chartered Global Management Accountants (CGMA), a new professional designation for management accountants. This was one of the first toolkits to feature on its website.
Managers from 40 organisations who co-created the toolkit through the industrial forums and workshops also benefited significantly. They took ideas back to their organisations, sharing good practices, identifying benchmarks, and implementing new processes.
Why the research was commissioned
Returned items – due to liberal customer return policies, a product being no longer wanted, quality failures, and the advent of multi-channel retailing – cost the UK retail sector £6.75 billion each year.
Reverse logistics has become increasingly recognised by academics and practitioners as an important discipline within supply chain management and is an important focus of our logistics research. A decade ago, there was limited reference to managerial processes for reverse logistics and even less on the possibilities of using strategic management accounting techniques alongside other disciplines to improve its management.
We are one of Europe’s largest centres dedicated to research into logistics and supply chain management. We attract annual funding in excess of £500,000 through research council, government and industrial sources. We perform a variety of research from long-term, research council-funded projects which focus on the generation of new knowledge to dedicated, industrially-funded work that addresses specific needs. We were recently voted number one for expertise outside of the US by a SCM World survey.
Industrial partners who supported the development of the toolkit included Avon, Christian Salvesen, Consilium, Dale C Rockell, DHL, Entertainment UK, Fuel Champ, Halfords, LCP Consulting, Linpac, Menzies Distribution, O2, PC World, Stiller Group, Vivendi Universal Games and Wincanton.