Some articles addressing Reverse Logistics

1. Some articles addressing Reverse Logistics Manufacturing Automation & Integration Lab. 2004. 04. 09 Eoksu Sim(ses@ultra.snu.ac.kr)

2. Contents • Some books • Strategic Supply Chain Alignment 1998 • Introduction to Supply Chain Management 1999 • Modeling the Supply Chain 2001 • Supply Chain Management Based on SAP Systems 2002 • A paper • Reverse logistics system planning for recycling electrical appliances and computers in Taiwan • What I will do… MAI-LAB Seminar

3. Reverse logistics in some books

4. Strategic Supply Chain Alignment Best practice in supply chain management Editor John Gattorna Assistant Editors : Theresa Jones, Alister Danks, Yamini Dhillon, Lucinda Holdforth Gower Publishing Limited 1998

5. The strategic alignment model INFORMATION ENABLERS AND DRIVERS THE MARKET The different market segments The key customer values The marketplace dynamics The causes of varying demand patterns Creating Customer value Integrating supply with demand Formulation of strategy STRATEGIC RESPONSE Logistics requirements of each market segment Operations and distribution Channel strategy Supply chain configuration Ties the whole framework together CULTURAL CAPABILITY Diverse skill cultures to meet customer requirements Execution of strategy Organization options Change management LEADERSHIP Leadership team to understand, shape and drive the logistics strategy into the marketplace Leadership style Vision MAI-LAB Seminar

6. Special interest • Australia’s fast-moving consumer goods industry • The SC in the telecommunications industry • The healthcare SC • China’s SC challenge • Reconfiguring the automotive industry SC • Reverse Logistics Bringing the product back: taking it into the future MAI-LAB Seminar

7. Introduction • Some smart companies implementing RL strategies • BMW, Sears, Tesco and Xerox • Reverse logistics definition • An organization’s management of material resources obtained from customers • The collection of used, out-of-date or damaged products and packaging from customers to a point of ultimate disposal. • The coordination of processes to ensure complete, efficient and effective utilization of products and material throughout their entire lifecycle. • Information in reverse logistics • A key attribute of reverse logistics • Product and parts usage profiles & return profiles • To develop and understand customer consumption patterns more thoroughly MAI-LAB Seminar

8. Drivers of reverse logistics • Powerful drivers forcing companies to move RL • Government legislation • Global warming, the greenhouse effect and increased pollution • Some regulation laws to develop shared producer responsibility. • Shortening product lifecycles • The increased volumes of waste entering RL systems • The increased cost of managing the products • New channels of distribution • Products may be damaged in transit • Products don’t appeal to the customer in a real rather than virtual state. • Shifting power through the SC • Buyers and retailers MAI-LAB Seminar

9. Reverse logistics in action • Two different issues • Six different reverse processes • Physical network to facilitate these processes. • Closed loop • Used materials are returned and processed by the producer • Open loop • Materials and products are collected by the originator, but processed by other parties. • Reverse processes • Refurbishment or remanufacture/Repair • Reuse/Resale/Recycling • Scrap MAI-LAB Seminar

10. Reverse logistics challenges • Difference in products and their returns • Products : To customer through efficient, established channels • Return or collection : unpredictable and often in uneconomic quantities as small as single items. • Uncertainty in companies • How much product they will receive back • What condition product will be in. • Hiring a third-party organization • Supply forecasting • To be in a better position to manage processing. MAI-LAB Seminar

11. Trends in reverse logistics • Developing faster, more efficient and cost-effective RL systems • Design for disassembly • To understand how new products can be designed to be dismantled • To understand how current products can be dismantled • To improve opportunities for recycling the product and component • Recycle more material • To use more recycled material. (The car industry) • Increased product lifecycles • Establishing modular design techniques • Using standardized product interfaces. • Materials • To use recycled and recyclable materials in their products MAI-LAB Seminar

12. The future: reverse networks • A physical logistics structure • To get the products back quickly, but at the lowest possible cost. • Third-party operators, dedicated facilities • Financial impact • Products will be leased rather than sold to customers. • Producers can track, receive and dispose of the product at the end of its life. • Information technology • Two dimensional barcodes, miniature coding. • This data management • To track the movement of products between customers • To identify how often the product has been returned for recycling • To improve the reliability of products • To identify particular problems in the reverse SC • To improve forecasting of the supply of goods MAI-LAB Seminar

13. Introduction to Supply Chain Management Robert B. Handfield Associate Professor of Purchasing and Operations Management Dept. of Marketing and SCM The Eli Broad Graduate School of Management, Michigan State University Ernest L. Nichols, Jr Associate Professor of Operations Management, Decision Sciences Area, and Director of FedEx Center for Cycle Time Research Fogelman College of Business and Economics The University of Memphis Prentice Hall 1999

14. Contents • Introduction to SCM • The role of information systems and technology in SCM • Managing the flow of materials across the SC • Developing and maintaining SC relationships • Cases in SCM • Future challenges in SCM • Sharing risks in interorganizational relationships • Managing the Global SC • The “Greening” of the SC • Design for SCM • Intelligent Information Systems MAI-LAB Seminar

15. Introduction • The roots of environmentalism • WWII, government regulation, public awareness • A number of manufacturing firms • HP, Dow Chemical, GM, Xerox, International Paper. • There are several reasons for this necessary expediency. • Government regulations are becoming increasingly harsh on polluters. • Limited new landfill sites and filled up existing landfills • Critical shortages of different types of raw material • Factors having a major effect on the environmental performance of an organization. • Design decisions • Cost control • Manufacturing planning and control • Supply-based strategy MAI-LAB Seminar

16. Two generic types of orientations • Proactive versus reactive SC approaches • Reactive approaches • Proactive policies : maximization-oriented • Four specific areas with regard to the SC • Supplier selection and evaluation • Surplus and scrap disposition • Carrier selection and transportation of hazardous materials • Product design, packaging and labeling MAI-LAB Seminar

17. Proactive vs. Reactive MAI-LAB Seminar

18. Modeling the Supply Chain Jeremy F. Shapiro Professor of operations research and management The Sloan School of Management at Massachusetts Institute of Technology DUXBURY 2001

19. Contents • Introduction to SCM • SCM, Integrated Planning, and Models • Information Technology • Modeling and Solution Methods • Fundamentals of Optimization Models: LP • Fundamentals of Optimization Models: MIP • Unified Optimization Methodology for Operational Planning Problems • SC Decision Databases • Applications • Strategic and Tactical SCP: State-of-the-Art Modeling Applications • Strategic and Tactical SCP: Advanced Modeling Applications • Integration of Financial and Physical SC • Operational SCP • Inventory Management • The Future • Organizational Adaptation of Optimization Modeling Systems MAI-LAB Seminar

20. Inventory Management • 11.1 Inventory Theory Models • 11.2 Incorporating Inventory Management Decisions in Strategic and Tactical SC Models • 11.3 Inventory Management in Distribution SC • Distribution Scheduling in a RL Company • RL refers to SC networks where products distributed by a company to its customers are subsequently returned to the company. • Two types of RL SC • Stand alone : rents reusable containers or automobiles • Linked to a standard supply chain : with a facility dedicated to warranty returns and repairs. MAI-LAB Seminar

21. Supply Chain Management Based on SAP Systems G. Knolmayer University of Bern, Institute of Information Systems, Information Engineering Group, Switzerland P. Mertens University of Erlangen-Nuremberg, Department of Information Systems I, Germany A.Zeier University of Erlangen-Nuremberg, Bavarian Information Systems Research Network (FORWIN), Germany Springer-Verlag Berlin Heidelberg New York 2002

22. Contents • Fundamentals of SCM • Application systems in the individual business functions • SAP’s SCM system • Recent developments in order and SCM based on SAP systems • Case studies on SCM • Internet resources for SCM MAI-LAB Seminar

23. Application systems in the individual business functions • 2.1. Engineering • 2.2. Sales • 2.3. Procurement • 2.4. Production • 2.5. Distribution • 2.5. Service Management • 2.7. Recycling and Disposal MAI-LAB Seminar

24. Recycling-Oriented Product Development • Disposal and recycling throughout product development • Save costs and provide competitive advantages. • The main requirements to achieve recycling- and disposal-friendly designs • Basic material compatibility • Design for dismantling • Other measures • The identification of spare part • Restriction of the volume of materials to be dumped • A corrosion-resistant product design. • A general issue • Whether recycled parts are of an equal quality to new materials • Whether any quality differences are relevant for their designated use MAI-LAB Seminar

25. IS for Recycling and Disposal • An assembly-, service-, and disassembly-friendly product development. • Environment information systems • Recycling-oriented ERP systems • Precondition : information on the composition and dismantling of products • Parts master data • Recycling graphs • Recycling product structures • Disassembly plans • Production and Recycling Planning and Control (PRPC) • The extension for recycling-relevant aspects • Requires many changes relative to conventional production planning and control • Basic data • Quantity planning • Scheduling • Consideration of uncertain events MAI-LAB Seminar

26. IS for Recycling and Disposal • Information Systems for RL • RL are often an exception-driven process. • SAP’s functionalities in several R/3 modules: • Recycling Administration (REA) function group • Using existing master data and transition data from the MM and SD modules • mySAP Environmental, Health & Safety (EH&S) • Integrated with MM, LO, PM, HR • Functions in the MM and PP modules • Important properties for recycling in the master data • Industry solutions for the process and automotive industries • PP-PI, EH&S component • Asset Redeployment Management Systems (ARMS) • Web-based applications using within the group and a global B2B exchange • Add-ons to asset management modules of ERP systems. MAI-LAB Seminar

27. Reverse logistics system planning for recycling electrical appliances and computers in Taiwan Resources, Conservation and Recycling 32 (2001) 55-72 Li-Hsing Shih* Department of Resources Engineering, National Cheng Kung University, Tainan, Taiwan 701

28. Introduction • Products at their end-of-life (EOL) phases • The scarcity of landfill space and the hazardous materials • In Taiwan • SHACRR by announced EPA in 1998 • 20 U.S. dollars of disposal fees for each product sales • Many researches on reverse logistics planning for EOL consumer products disposition • Mathematical programming methods • This study • Employs the MIP method to create an optimal collection and recycling system plan for EOL computers and home appliances • Several scenarios for different take-back rates and operating conditions are simulated via the model. EPA : The Environmental Protection Administration SHACRR : Scrap Home Appliances and Computers Recycling Regulation MAI-LAB Seminar

29. Current status of EOL computers and home appliances disposition • Four types of stakeholders in the EOL computers and home appliances disposition system • Collecting points : most of which are legitimate retailers • Storage sites : a buffer between collecting points and the disassembly/recycling plants • Disassembly and recycling plants : dismantle, disassemble, shred and classify the four major appliances or computers • Secondary material market, final treatment and landfill MAI-LAB Seminar

30. RL MAI-LAB Seminar

31. A mixed integer programming model • Constraints • Flow conservations • Capacity constraints • Number limit of facilities MAI-LAB Seminar

32. Estimation of model parameters • The estimation of some model parameters • Amount of EOL appliances : estimated based on their average lifetime and past domestic annual sales • Fixed cost and operation cost : obtained from several sites operating currently • Revenue from selling reclaimed materials : based on a field survey of similar reclaimed materials • Material composition of the appliances : from a thorough survey of Taiwanese manufacturers and the field data of the existing disassembly plants • Capacity of the facility : based on the design of the existing plants MAI-LAB Seminar

33. Conclusions • The different scenarios for different take-back rates and operation conditions. • A mixed integer programming model • To determine the optimal system including the infrastructure design and reverse network flow operation. • The difficulty of parameter estimation • An example that solves for the optimal planning for EOL electrical products disposition in northern Taiwan MAI-LAB Seminar

34. What I will do… • Closed-loop supply chain • Product Life cycle Model • To reflect some characteristics of return process • Input-output models for Life cycle analysis MAI-LAB Seminar