The boomerang returns? Accounting for the impact of uncertainties on the dynamics of remanufacturing systems

Recent years have witnessed companies abandon traditional open-loop supply chain structures in favour of closed-loop variants, in a bid to mitigate environmental impacts and exploit economic opportunities. Central to the closed-loop paradigm is remanufacturing: the restoration of used products to useful life. While this operational model has huge potential to extend product life-cycles, the collection and recovery processes diminish the effectiveness of existing control mechanisms for open-loop systems. We systematically review the literature in the field of closed-loop supply chain dynamics, which explores the time-varying interactions of material and information flows in the different elements of remanufacturing supply chains. We supplement this with further reviews of what we call the three ‘pillars’ of such systems, i.e. forecasting, collection, and inventory and production control. This provides us with an interdisciplinary lens to investigate how a ‘boomerang’ effect (i.e. sale, consumption, and return processes) impacts on the behaviour of the closed-loop system and to understand how it can be controlled. To facilitate this, we contrast closed-loop supply chain dynamics research to the well-developed research in each pillar; explore how different disciplines have accommodated the supply, process, demand, and control uncertainties; and provide insights for future research on the dynamics of remanufacturing systems

Myopic Versus Farsighted Behaviors in a Low-Carbon Supply Chain with Reference Emission Effects

The increased carbon emissions cause relatively climate deterioration and attract more attention of governments, consumers, and enterprises to the low-carbon manufacturing. This paper considers a dynamic supply chain, which is composed of a manufacturer and a retailer, in the presence of the cap-and-trade regulation and the consumers’ reference emission effects. To investigate the manufacturer’s behavior choice and its impacts on the emission reduction and pricing strategies together with the profits of both the channel members, we develop a Stackelberg differential game model in which the manufacturer acts in both myopic and farsighted manners. By comparing the equilibrium strategies, it can be found that the farsighted manufacturer always prefers to keep a lower level of emission reduction. When the emission permit price is relatively high, the wholesale/retail price is lower if the manufacturer is myopic and hence benefits consumers. In addition, there exists a dilemma that the manufacturer is willing to act in a farsighted manner but the retailer looks forward to a partnership with the myopic manufacturer. For a relatively high price of emission permit, adopting myopic strategies results in a better performance of the whole supply chain

One and Two Way Packaging in the Dairy Sector

Choosing packaging material for dairy products and soft drinks is an interesting issue at the moment. Discussions arise on the costs impacts and environmental impacts of both one way packaging and reusable packaging. The aim of this article is to develop an evaluation tool providing costs and environmental impacts of the PC-bottle and the GT-packs in the dairy sector, considering forward and return flows. The evaluation tool enables the user to analyse the costs and environmental impacts of a supply chain with and without return flows using scenario analyses with respect to the use of various carrier types and the number of return loops. It appears that costs differences between PC-bottles and GT-pack are quite small. The PC bottle has a better environmental profile than the GT-pack. Scenario analysis on the carriers results in the advice to use preferably roll-in-containers with direct delivery, secondly roll-in-containers with delivery via distribution centers, thirdly in case of direct delivery either cartons or crates and cartons in case of delivery via distribution centers.pricing;supply chain management;reverse logistics;environment;life cycle assessment

Applying Revenue Management to the Reverse Supply Chain

We study the disposition decision for product returns in a closed-loop supply chain. Motivated by the asset recovery process at IBM, we consider two disposition alternatives. Returns may be either refurbished for reselling or dismantled for spare parts. Reselling a refurbished unit typically yields higher unit margins. However, demand is uncertain. A common policy in many firms is to rank disposition alternatives by unit margins. We show that a revenue management approach to the disposition decision which explicitly incorporates demand uncertainty can increase profits significantly. We discuss analogies between the disposition problem and the classical airline revenue management problem. We then develop single period and multi-period stochastic optimization models for the disposition problem. Analyzing these models, we show that the optimal allocation balances expected marginal profits across the disposition alternatives. A detailed numerical study reveals that a revenue management approach to the disposition problem significantly outperforms the current practice of focusing exclusively on high-margin options, and we identify conditions under which this improvement is the highest. We also show that the value recovered from the returned products critically depends on the coordination between forward and reverse supply chain decisions.remanufacturing;revenue management;onderdelen;revenues;spare parts inventory

Internal Supply-chain Competition In Remanufacturing: Operations Strategies, Performance And Environmental Effects

This paper investigates the competitive and environmental effects of different operations strategies of original equipment manufacturers (OEMs) and semi-independent remanufacturers, which simultaneously cooperate and compete in different stages of a closed-loop supply chain. In particular, a co-opetitive situation, in which remanufacturing is undertaken only by retailers while the OEMs' role is restricted to recycling is considered. After adopting a resource-based perspective of competition, investigations are accomplished using system dynamics simulation modelling. The results of simulations indicate that, in the long run, OEMs, regardless of the operation strategy they adopt, are unable to (re)capture the market gained by the remanufacturers. However, some of these strategies contribute to the improvement of the environmental performance of the entire supply chain

Integrating Closed-loop Supply Chains and Spare Parts Management at IBM

Ever more companies are recognizing the benefits of closed-loop supplychains that integrate product returns into business operations. IBMhas been among the pioneers seeking to unlock the value dormant inthese resources. We report on a project exploiting product returns asa source of spare parts. Key decisions include the choice of recoveryopportunities to use, the channel design, and the coordination ofalternative supply sources. We developed an analytic inventory controlmodel and a simulation model to address these issues. Our results showthat procurement cost savings largely outweigh reverse logistics costsand that information management is key to an efficient solution. Ourrecommendations provide a basis for significantly expanding the usageof the novel parts supply source, which allows for cutting procurementcosts.supply chain management;reverse logistics;product recovery;inventory management;service management

OPTIMAL INBOUND/OUTBOUND PRICING MODEL FOR REMANUFACTURING IN A CLOSED-LOOP SUPPLY CHAIN

The paper presents a model for optimizing inbound and outbound pricing for closed-loop supply chains that remanufacture reusable products. Remanufacturers create reusable products from returned used products and sell the products “as new” to manufacturers or consumers. By implementing a return subsidy, remanufacturers can encourage the consumer to return used products. Demand for the as-new components often depends on the selling price and inventory. The available inventory increases as the subsidy increases and as the price decreases. Our model can determine the optimal subsidy and selling price for used and remanufactured products, respectively. Our model uses the Karush–Kuhn–Tucker conditions to solve its nonlinear problem. Sensitivity analysis reveals how different parameters affect profit under model-optimized conditions