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supply chain discussion question and need an explanation and answer to help me learn. I am in need of help with a discussion post involving reverse logistics and closed loop supply chain processes. I have attached the question and the reading that covers the question. If you have any questions or concerns, please let em know. Requirements: 250 + words Based on material from chapters 8 (Reverse Logistics and Closed Loop Supply Chain Processes). Answer CO 7 in a concise, yet inclusive manner.  Lengthy posts and answers do not correlate to better grades.  List the key issues in defining the secondary markets, returns, and final disposal. List the problem areas or trends concerning final disposal. CO7: Examine government and commercial applications of reverse logistics for service and manufacturing such as remanufacturing/overhaul operations. Response must be 250 word mininum 1678SECONDARY MARKETS AND FINAL DISPOSAL OF RETURNED PRODUCTS AND MATERIALSINTRODUCTIONWe discussed in previous chapters the return process through either aclosed loop supply chain (CLSC) or simple reverse logistics (RL) operation(Chapter 4 and Chapter 5). We have also discussed the role of the depotin repair, refurbishment, remanufacture, and decomposition of the returngoods (Chapter 6). Our analysis has also shown that products, goods, andmaterials can be returned for a variety of reasons, including:Parts or subassembly failures in the ÞeldProducts or materials damaged in shipping or transitProducts or materials returned to clear shelvesProducts or materials returned due to obsolescence, age, manu-facturing issues/recallsProducts or goods returned for other reasons, such as customerremorseIn the CLSC operation, a signiÞcant portion of these returns arerepaired, refurbished, and sent back to the end user. Some materials andproducts are simply disposed of as waste or trash leading to:Material recyclingDestruction by Þre or chemical meansBurial in land or sea deposits 168Reverse Logistics and Closed Loop Supply Chain ProcessesIn addition to these options, another return channel involves resellingto secondary markets. This chapter deals with the creation and use ofsecondary markets and mechanisms for disposal of returned products andmaterials, which continue to have value as is, or with refurbishment,repair, or remanufacture.As a direct result of the signiÞcant increase in CLSC and RL processes,a number of secondary markets have been created. It originally startedin certain speciÞc industries and product areas, including automobiles,building and housing materials, industrial machinery, furniture and house-hold goods, clothing, and personal computers. In general, these secondarymarket businesses operated nationally or regionally, and were primarilyinvolved in the purchase of unwanted returned goods at signiÞcantdiscounts, for purpose of resale. The automotive after market resultingfrom the reconditioning of automotive parts, components, and subassem-blies (engines, transmissions, etc.), as well as whole units is a perfectexample of this process.The increasing volume of RL and CLSC operations has also led to thedevelopment of new businesses* that provide the following services:Providing a buy/sell exchange increasingly supported through on-line Internet operations, such as e-Bay, and Wholesale HubOrganizations specializing in certain classes or types of productsand materials, such as Processoverskott AB, Railway Logistics Inter-national Company, Inc., and Liquidity Services, Inc.Firms like Recover-ITT offering full services including, purchase ofreturned products and goods, refurbishing, transportation anddelivery, and Þnal sale and return products management (RPM)A partial listing of these companies and Þrms representing secondarymarkets and disposal channels is outlined in Table 8.1.OFFSHORE SECONDARY MARKETSPrimary disposal channels usually involve purchase and sale of productsand goods in the same country or geographic region. Another alternativeis to dispose of these products offshore through international transfers.Particularly in the case of consumer goods to be returned from massmerchandisers, often restrictions are placed on the disposition channelsto avoid direct competition for the same products at discounted rates,which could compete with the mass merchandiser stores. This is usuallyresolved by remerchandising and marketing these goods in third world*See Appendix D for a broader list of third party service providers. Secondary Markets and Final Disposal of Returns169Table 8.1Organizations Providing Secondary MarketsCompanyServicesBasic ProcessProduct or Technology FocusLiquidity Services, Inc.Management and sale of surplus assets¥Online auctions via Internet¥Sealed bids¥Military equipment and supplies¥Bulk product¥ElectronicsAAA Overstock728 S.E. 9th St.Algona, IA 50511Management and sale of overstock and department store returns¥Online ordering¥Drop shipping¥Consumer goods¥Department store returns¥Overstocks¥OverrunsWholesale HubActs as exchange broker using internet¥Buy-sell¥Exchange¥Consumer goodsProcessoverskott ABManagement and sale of excess and obsolete equipment¥Acquire at warehouse¥Sell based on requests¥Industrial equipment for process industriesRailway Logistics International Co., Inc.North 9986 Newport Highway #282Spokane, WA 99218Repair/remanufacture management and sale of used industrial equipment¥Buy-sell¥Exchange¥Railway and marine motive power¥Power generating systemsReturn Products Management (RPM)Equipment returns and dismantling core returns, parts/assembly collections¥Repair and refurbishment¥Scrap¥Industrial and commercial trucks and carsAssetsmarket.comOffers market for commercial and industrial equipment¥Online auction¥Second hand and excess business machinery 170Reverse Logistics and Closed Loop Supply Chain ProcessesTable 8.1Organizations Providing Secondary Markets (continued)CompanyServicesBasic ProcessProduct or Technology FocusPollution Prevention Information Resource for Industry Sectors (P2IRIS)Information exchange for surplus materialsCatalog listing¥Source and information clearing house¥Surplus materials and wasteRecover-ITT767 kenrick Ð Suite 120Houston, TX 77060Full serviceFor electronics technology includingÐ AcquisitionÐRelocation/transportationÐPackagingÐServices¥Asset liquidation, removal, and sales¥OfÞce equipment¥Computers¥Telecommunications equipment¥Furnituree-BayProvide market for buyers and sellers¥Buy-sell¥Exchange¥No specialization Secondary Markets and Final Disposal of Returns171countries. A signiÞcantly increasing ßow of goods and materials from onecountry to another to be resold at high discounts has been created. Thismay also require repackaging or minor modiÞcations relative to electricalconnections, power requirements, etc., in order to meet the regulationsor requirements of these countries of sale.Returned goods and products involving industrial/commercial, as wellas consumer goods, can often be sold in secondary markets within theoriginal country of origin or offshore, thus, turning valueless returns intoeconomic value and, in effect, extending the life cycle of the originalproduct. This ability to, in effect, recreate value from returns contributesto the increasing interest on the part of manufacturers, dealers, anddistributors in the full CLSC and RL process. By more effectively andefÞciently managing the entire logistics process, it is possible to recoversigniÞcant value from what was once regarded as obsolete or unusablematerial to be trashed or destroyed.USE OF THIRD PARTY SERVICE PROVIDERSAs indicated above, and in Table 8.1, a third party logistics organizationalready exists that is prepared to take responsibility for unwanted productsand resell them, and also provide RL services. Because of the growinginterest in RL as a business opportunity and as a result of the applicationof green law directives in Europe, it is clear that there will be a continuinggrowth in third party organizations focusing on the provision of RLservices, including the ability to resell unwanted products into secondarymarkets. Organizations established for depot repair and RL support in freetrade zones on the Mexican/U.S. border and in South America, the MiddleEast, South Africa, and Asia/PaciÞc (Hong Kong, Singapore, Malaysia, etc.)are now beginning to grow and expand as a result of recognition of themarket opportunities available to it. In addition, the major global distri-bution organizations including UPS, FedEx, DHL, and others are alsoaggressively moving to expand their array of services and portfolio inorder to make use of their worldwide distribution and support capabilities.Finally, third party maintenance organizations that currently operate theirown depot repair and CLSC services to support their Þeld operations arealso in an excellent position to offer their closed loop services as anindependent strategic line of business. It therefore seems very clear thatall organizations interested in signiÞcantly improving the efÞciency andeffectiveness and ultimate distribution and delivery processes in RL willÞnd available a broad array of third party contractors and service providersoffering an expanded portfolio of service and support. Since so manyorganizations in this market already have large national, regional, or globaltransportation distribution warehousing and depot repair capabilities, it is 172Reverse Logistics and Closed Loop Supply Chain Processesclear that additional economies of scale will prevail in reducing the actualoperating costs of RL processes.E-commerce is a very hot topic with respect to the creation of efÞcientnew secondary markets. Is it, however, simply a matter of building it andthey will come? Apparently success in e-commerce is not a Òslam dunk,Ósays Tom Peck, president of Clinton, New JerseyÐbased PowersourceOnline, an electronic trading hub for the procurement of spare parts, ÒIttakes time and money to build a trading hub, it has taken us 8 years.Ó Where do you Þnd the right place to build an e-marketplace? In theold, old economy, a successful business depended on real estate. It is allabout Òlocation, location, location,Ó a successful entrepreneur would tellyou. The concept of location also applies to the new economy, but thereal estate is not a physical presence. The best locations for building e-commerce is in industries where there are fragmented markets consistingof many buyers and sellers who must contend with inefÞciencies in themarket and in basic business processes. Given this formula for success,it seems that e-commerce has a good future in the service and supportindustry. Two areas with the most inefÞciency and fragmentation are spareparts procurement and warranty claims processing. These have becomenew hot beds for e-commerce development. According to Alain Miquelon,CFO of Mediagrif, a leading developer and operator of business to businessvertical marketplaces on the Internet, ÒService industries have a lot ofbuilt-in inefÞciency especially in the area of spare parts procurement.Open market systems also are a good place to look for market inefÞciency.The ease of entry and encouragement of competition among participantscharacterize open markets. The multivendor IT services market is a goodexample of an open market system with much inefÞciency, particularlyin the area of warranty claims processing.Ó Organizations that service andsupport products from multiple manufacturers must have a system in placeto deal with each manufacturerÕs unique warranty claims processing pro-cedures. According to Jack Smyth, director of planning and strategy forcustomer service at Compaq Corp., warranty claims processing is still avery manual process for most computer dealers/service providers. ÒWar-ranty claims processing is a very time consuming and costly process. Largedealers must have a different warranty team for each OEM because eachwarranty system is handled differently. There can be anywhere from 4 to10 people on the team,Ó notes Smyth who is also chairman of ComptiaÕselectronic warranty claims initiative. Comptia, a consortium of over 5000computer dealers and OEMs, is responding to these inefÞciencies bycreating a common electronic exchange standard for processing warrantyclaims. ÒWe believe that Comptia can create one common standard forprocessing claims via the Internet. This standard will enable e-commercevendors to create uniform electronic exchanges.Ó The exchange that Secondary Markets and Final Disposal of Returns173Comptia is envisioning would function as a transfer station and worksomewhat like airline booking systems such as Apollo and Sabre, whichenable users to share and access data from multiple airlines. Now warrantyclaims processing has become a big opportunity for Internet Þrms. Moreimportantly, warranty claims processing exchanges, such as those envi-sioned by Smyth, will help to improve the overall costs associated withÞeld service dispatch and spare parts procurement, particularly during thewarranty and extended warranty phases of the product life cycle.Parts trading hubs and warranty exchanges are certainly a hot oppor-tunity. The market for e-commerce based spare parts procurement andwarranty claims processing is estimated to be a $12 billion and $2 billionmarket, respectively, by the year 2004. Over the last year, a number ofÞrms have launched trading hubs and e-marketplaces to secure a largeslice of the high tech service parts market. Traditional parts providers anddepot repair vendors are using electronic trading hubs as a means ofreinventing themselves as Òclicks and mortarÓ Þrms.An important key to success is the ability of trading hubs to differentiatethemselves by adding value. All successful trading hubs agree on onething, the best way to add value is by addressing critical business issuesvis-ˆ-vis the provision of content and information. For service parts thismeans the provision of accurate information on pricing and inventoryavailability. It could also be the provision of ancillary services such asquality testing and a 6-month warranty on all parts procured through itsInternet-based reverse auction service. A reverse auction differs fromtraditional internet based auctions (such as e-Bay), by creating a forumwhereby the sellers of parts bid on the lot speciÞcations (e.g., part) andprice requirements established by the buyer. For warranty claims process-ing exchange providers such as ServiceBench.com, this includes the pro-vision of technical documentation and parts ordering capabilities into theirexchange. For I-Service this means offering a broad array of systemfunctionality in managing the warranty process from entitlement, to orderentry, to reporting.Despite the beneÞts of e-marketplaces and trading hubs, it has beenan uphill battle in terms of persuading buyers and sellers to participate.The most obvious reason, when it comes to spare parts trading hubs, isuncertainty over the reliability and quality of participants. Most buyingorganizations have strict quality requirements for spare parts. They donÕtwant to deal with thousands of nonqualiÞed vendors. However, the mostsigniÞcant challenges facing e-marketplaces is the old NIH or ÒNotInvented HereÓ syndrome of the larger manufacturers and service provid-ers. While managers and executives in these large companies may notnecessarily be driving change, or championing the use of e-markets, thisis not to say that they are not willing to contribute to their success. The 174Reverse Logistics and Closed Loop Supply Chain Processesreality is simply that e-marketplaces require organizations to reengineeror rethink the way they have traditionally done business. Managers andexecutives in the larger companies need to fully consider the implicationsof change on their day-to-day operations. Unfortunately, this does notoccur overnight. However, this perceived reluctance does create a realcatch-22; while the smaller Þrms are often the most anxious to utilize thee-marketplaces, it is the larger Þrms that have the most control andinßuence over the long term viability. It is not that the larger companiesfear change. It is that they have so much invested in their existing systemsand procedures for spare parts procurement and warranty processing thatis often based on complex business rules and requirements. It is wishfulthinking to presume that large companies are going to just toss out theircurrent ways of doing business in favor of the newest new thing withoutgiving it some careful consideration, particularly if this means relinquishingsome control of their operations to a virtual third party.Once the bigger Þrms get past this issue and make a decision to adoptthe e-marketplace, the next challenge they run into is establishing inter-faces with internal corporate information systems. Most Þrms want morethen the ability to merely electronically bolt on the e-marketplace to theirexisting systems. What the larger Þrms are looking for is to actually havethe trading hub embedded in their internal systems and processes. Theirgoal is to create a seamless interface, which permits online, real-timeaccess to the trading hub, and eliminates human intervention. While mosttrading hub suppliers are delighted to provide this level of customizationand integration, even on a pro bono basis, end user organizations oftenlack the internal IT resources to commit to these projects. The issue is amatter of prioritization and competition with other e-commerce initiativesthat are going on within the organization. As a result, the use of tradinghubs and warranty exchanges is becoming much more of a strategicoutsourcing decision then many e-commerce entrepreneurs may haveoriginally believed.Many lessons must be learned from these early ventures into tradinghubs and e-marketplaces. The Þrst is that the creation of e-marketplacestakes time, effort, and commitment. It is a mistake to think that by simplyßicking a switch the business will just ßow. To work effectively, e-marketplaces must resolve inefÞciencies shared by all market participantsand demonstrate quantiÞable beneÞts to users. Second, e-marketplacesmust add value to end users and do more then simply bring buyers andsellers together in an electronic exchange. Third, e-marketplaces are anextension of the userÕs systemic infrastructure. As such, the e-marketplacevendor must be prepared to adapt its system to the needs of the user vis-ˆ-vis consulting, integration, and customization services.