Design of Closed Loop Supply Chains

Increased concern for the environment has lead to new techniques to design products and supply chains that are both economically and ecologically feasible. This paper deals with the product - and corresponding supply chain design for a refrigerator. Literature study shows that there are many models to support product design and logistics separately, but not in an integrated way. In our research we develop quantitative modelling to support an optimal design structure of a product, i.e. modularity, repairability, recyclability, as well as the optimal locations and goods flows allocation in the logistics system. Environmental impacts are measured by energy and waste. Economic costs are modelled as linear functions of volumes with a fixed set-up component for facilities. We apply this model using real life R&D data of a Japanese consumer electronics company. The model is run for different scenarios using different parameter settings such as centralised versus decentralised logistics, alternative product designs, varying return quality and quantity, and potential environmental legislation based on producer responsibility.supply chain management;reverse logistics;facility location;network design;product design

Quantitative models for reverse logistics

This article surveys the recently emerged field of reverse logistics. The management of return flows induced by the various forms of reuse of products and materials in industrial production processes has received growing attentio

Forecast Model for Return Quality in Reverse Logistics Networks

Giving rise to the field of reverse logistics are the governmental legislations mandating used electronics take-backs and sustainable recovery, which often burden manufacturers with the challenge of high implementation costs but no guaranteed profitability. One way to tackle this challenge is to demystify the multi-faceted uncertainties of product returns, namely timing, quantity and quality, that currently inhibit optimal design and operations of reverse logistics networks (RLN). In recognition of the limitations particularly caused by uncertainty of returns’ quality in the strategic, tactical and operational planning of the RLN, this research seeks to develop a forecast model for the prediction of the returns’ quality of future electronics returns. The proposed forecast model comprehensively incorporates three major factors that affect quality decisions which are usage, technological age and remaining economic value of expected product returns to predict its quality grade. While technological age and economic trends can readily be established, the main complexity lies in modeling of usage-dependent reliability distribution of returned electronics. The novelty of the proposed forecast model lies in deducing usage distributions through segmentation of the consumer base by socioeconomic factors such as age, income, educational status and location. These usage distributions are then used to estimate remaining useful life of returned products and their components, the associated repair costs and the subsequent profitability of reprocessing based on economic value in the market. This research develops analytical models of expected return quality based on empirical usage distributions and pricing trends. The analytical models are then applied in Monte Carlo simulations to forecast expected returns’ quality from different regions, including large and small population centers, in Canada

Reverse logistics - a framework

In this paper we define and compare Reverse Logistics definitions. We start by giving an understanding framework of Reverse Logistics: the why-what-how. By this means, we put in context the driving forces for Reverse Logistics, a typology of return reasons, a classification of products, processes and actors. In addition we provide a decision framework for Reverse Logistics and we present it according to long, medium and short term decisions, i.e. strategic-tactic-operational decisions.Framework;Decision-making;Reverse logistics;Theory building

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

Design Principles for Closed Loop Supply Chains

In this paper we study design principles for closed loop supply chains. Closed loop supply chains aim at closing material flows thereby limiting emission and residual waste, but also providing customer service at low cost. We study 'traditional' and 'new' design principles known in the literature. It appears that setting up closed loop supply chains requires some additional design principles because of sustainability requirements. At the same time however, we see that traditional principles also apply. Subsequently we look at a business situation at Honeywell. Here, only a subset of the relevant design principles is applied. The apparent low status of reverse logistics may provide an explanation for this. To some extent, the same mistakes are made again as were 20 years ago in, for instance, inbound logistics. Thus, obvious improvements can be made by applying traditional principles. Also new principles, which require a life cycle driven approach, need to be applied. This can be supported by advanced management tools such as LCA and LCC.reverse logistics;case-study;closed loop supply chains

Modeling and optimization of remanufacturing operations of spent products for sustainability

In last century, the world has witnessed a great deal of technological and industrial progress. Branded products manufacturers have been competing in introducing new versions of their products frequently. Retailers and banks have been developing relaxed paying systems to fund the purchase of these new products. Exchanging strategies have been initiated by companies for customers to exchange their old version product for the latest versions. Such exchanging strategies are famous for vehicles, mobiles, and electrical appliances. Hence, a huge amount of unused or spent products are generated every day. Many researchers have been developing different models for dealing with the decisions related to remanufacturing operations. However, there is no decision making system the manufacturers could use for cost / benefit assessment of disassembling and recovering these products that considers the following points: (1) evaluating the value of recovering the whole product versus value associated with recovering its disassembled items , (2) using Multi-Objective Mixed Integer Linear Programming (MILP) to assign spent products and their items to various recovery alternatives considering their received physical conditions, (3) selection of operations for items is not limited by a fixed regular production-hour capacity for each operation, (4) model assumptions, constraints, and formulation that satisfy the three aspects of sustainability, which are economic, social responsibility, and environmental aspects in one step model , (5) considering other vital dimensions which are the quality of recovered products and the minimum batch size for vending recycled materials, (6) utilizing the recycling operation in the optimum way that increases revenue from vending isolated materials. The thesis addresses these points using mathematical modeling and optimization for the remanufacturing operations of spent products. The aim of this study is achieved through modeling the problem using a multi-objective mixed integer linear programming technique with two objective functions considering net profit maximization and total disposal weight minimization. Maximizing the net profit over specified planning periods satisfies the economic aspect of sustainability. Minimizing the total weight at all items assigned to disposal over specified planning periods satisfies the environmental aspect of sustainability. Initiating fair refunding system for spent products satisfies social responsibility aspect of sustainability. The optimum solutions of the model provides: optimal disassembly sequence of items, number of each item assigned to various recovery operations of the remanufacturing unit, specification of the required total regular production hours, total needed number of workers, and specification of the number of workers hired and fired. For verifying the proposed model and its LINGO code, the data of a simplified version of the trailer case study was used to display the model and tracking the displayed model to assure that the generated code exactly matches the model formulation, and to discover and correct any logical error. Then, the model was run several times to assure the accuracy of the model and to test the functionality of all the model mathematical equations. Its target was to assure that the integration of the model constraints exactly matched the logic of solving the problem, and the mathematical equation succeeded in expressing the model goals. A case study that involves a numerical real- life critical problem in Egypt is solved considering only the first objective function, which is targeting feasible solutions for the collected trailers that are prohibited to move on the Egyptian roads. The results show that the remanufacturing of semi-trailers from the collected trailers is the most profitable solution for the good-condition trailers, while applying the cannibalization operation on the bad conditions trailers is the most profitable solution for the case. The remanufacture unit would make a net profit of L.E 8,878,800 for applying this solution at the end of the three planning periods. In case the remanufacture unit decided to restrict its recovery activities to the good condition trailers, the net profit of scenario 2 is L.E 20,499,100 at the end of the three planning periods, which is associated with an increase of L.E 11,620,300 in profit compared to recovering different conditions trailers. A professional sensitivity analysis is implemented using the factorial design to accurately decide the significant input parameters that impact the net profit and total disposal weight at the end of the three planning periods for the trailers numerical problem. This factorial sensitivity analysis is designed to test 3 factors for 5 levels. Therefore, 53=125 runs are conducted of all possible combination of these factors (input parameters), and the determination of output responses corresponding to each combination. Hence, the significant input parameters that impact the decisions were concluded. The input parameters that were selected are: selling prices, refund costs, and direct labor processing costs. The output responses that were selected are the net profit and the total disposal weight. It was discovered that changing the selling prices of the output products from the recovery operations which are refurbishing, repairing, remanufacturing, and cannibalization, and the selling prices of the recycled materials has the most influential impact on the net profit , and has the only significant impact on the total disposal weight at the end of the three planning periods. The refund costs paid to the end users for compensating them of getting their products is the second significant factor on the net profit at the end of the three planning periods. Hence, it is crucial to specify these selling prices and refund costs wisely. Two approaches are used to solve the multiple objectives of the modified trailer case study, and to create a set of non-dominating solutions for the referred case which are: Minimax weighting method and constrained method. The most profitable and worst environmental non-dominated solution happened when the referred case was solved using the constrained method at bounding the disposal to 14870.3 kg, where the net profit value reaches its maximum of L.E 8,183,012, when the total weight of the items assigned to disposal reaches its peak of 14835.3 kg. This first best environmental non-dominating solution happened when the case was solved using the constrained method at bounding the disposal to 0 kg, where the net profit value reaches its minimum of L.E 7, 425,400. Solving the referred case using Minimax weighting methods is resulted in balancing solution of two competing objectives. The generated set of non-dominated solutions demonstrated the multi-objective nature of the proposed model

Reverse Logistics Network Structures and Design

Logistics network design is commonly recognized as a strategic supply chain issue of prime importance. The location of production facilities, storage concepts, and transportation strategies are major determinants of supply chain performance. This chapter considers logistics network design for the particular case of closed-loop supply chains. We highlight key issues that companies are facing when deciding upon the logistics implementation of a product recovery initiative. In particular, we point out differences and analogies with logistics network design for traditional 'forward' supply chains. Moreover, we discuss the strategic fit between specific supply chain contexts and logistics network structures. Conclusions are supported by a quantitative analysis