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Gyöngyi Kovács, Pall Rikhardsson



Traditional logistics systems aim at minimising total (logistics) costs. At the same time, these systems focus on forward material flows in the supply chain. Concerns for the environment, and warrantyrelated product returns have led to both end-of-life and commercial product take-backs, introducing the question of reverse material flows in these systems. These are backward moving inventories that have to be (re-)processed and show several coupling points to the forward materials flows in the logistics system. We argue that modern accounting systems are challenged with the phases of remanufacturing and refurbishment in the reverse supply chain. Many reverse logistics and reprocessing activities are integrated in other corporate processes, and their costs are difficult to separate from other cost objects, hindering the correct costing of reverse flows. By an analogy to safety
management accounting, this paper proposes an activity-based method to account for the costs of reverse material flows. Accounting for these costs will help to take a more holistic view on total logistics costs and improve management control of logistical flows.

Keywords: management accounting, reverse logistics, activity based costing

How to cite this paper: Kovács, G., & Rikhardsson, P. (2006). Accounting for reverse logistics activities. Corporate Ownership & Control, 4(1-2), 309-316.