Introduction
Supply chain management is a complicated business activity that involves all activities a company undertakes from the sourcing of raw materials to the delivery of a product to the end-user. The process includes purchasing, manufacturing, logistics, distribution, and marketing. All this activities interact to add or deliver value to the customer. Most companies have a supply chain management process since their income depends on the effectiveness of the activities. In recent years, sustainability demands have focused on the supply chain, requiring it to become sustainable or, instead, avoid waste (Zhi-hua 2018). Sustainable development and green economics have affected supply chain management. Significant changes have occurred in recent years that transform the relationship between different stakeholders in the supply chain (Wei & Zhao 2013). Although firms implement numerous technologies to make the supply chain sustainable, Closed-Loop Supply Chain Management (CLSCM) or Reverse Logistics is one of the most beneficial. However, managers should understand their strengths and weaknesses for effective implementation.
Problem and SC Objective Identification
ABC Company is an electronics firm operating in the US, but with operations around the world. In a recent meeting, it came to the notice of the management that its products are the leading environmental pollutants. The company’s products have a very short lifespan, which means that within a short time, users dispose off a lot of waste to the environment. Like Haws, Winterich, and Naylor (2014) state, members of the public have complained about the increasing level of pollution from the company’s waste product. Furthermore, many consumers are avoiding its electronic product since they have become more conscious of the need to protect the environment and the need for sustainable development. The reality means that the company is losing sales since customers are purchasing from competitors. The management needs to solve the issue fast to regain customers’ trust and increase its sales revenue from the local and international market (Kim, Do Chung, Kang & Jeong 2018). One of the consultants has advised the firm’s executives to implement CLSCM or Reverse Logistics as the most effective solution to the issue.
The supply chain management team has identified some strategic objectives that will guide the implementation of CLSCM or Reverse Logistics as an effective solution to the supply chain sustainability problem. The approach in determining the objectives involves categorizing the areas that the new technology will affect the company. One of the goals is to achieve environmentally friendly manufacturing in the company by reducing the waste from the used products (Zhi-hua 2018). The second objective is to make the firm more competitive by ensuring that the company becomes more attractive to environmentally conscious consumers (Dekker et al. 2013). The last objective is to increase the sales and revenue of the company by attracting lost customers back to the company and attracting new ones (Autry et al. 2013; Coenen, Van der Heijden & van Riel 2018). ABC Company needs to restore trust with its operations, especially its supply chain management. However, before implementing CLSCM, the supply chain management team should analyze its strengths and limitations.
Analysis of CLSCM
The supply chain management team should define CLSCM to understand its strengths and weaknesses as a solution to the supply chain problem. CLSCM refers to a technique in which management of company closes the loop by recovering products from customers in exchange for value and recycling it. Kumar and Kumar (2013) defines CLSCM as a “design, control and operation of a system to maximize value creation over the entire life cycle of a product with the dynamic recovery of value from different types and volumes of returns over time” (156). Furthermore, the process involves “collection, inspection/separation, re-processing, disposal and re-distribution” (Kumar & Kumar 2013, 156). In most cases, retailers collect the products from end-users on behalf of the company, which pays incentives collection and shipping. Generally, CLSCM is a value-addition process for the company, with various strengths.
Scholars and supply chain management practitioners report numerous strengths and advantages of the CLSCM. First, CLSCM focuses on the change to make the supply chain more efficient and sustainable. Moreover, CLSCM maximizes economic benefits for the firm, as well as reducing the consumption of energy and resources (Kazemi, Modak, & Govindan 2019). For example, recycling provides an opportunity for the company to re-use some of its products, thus reducing the cost of raw materials. In addition, CLSCM plays a critical role in the company’s commitment to reducing pollution and climate change (Stindt & Sahamie 2014). It helps to create a socially responsible enterprise by being mindful of the society and the environment. Furthermore, CLSCM creates a more comprehensive supply chain model integrated into the overall corporate management policy. It also creates a culture within the company founded on sustainability. Finally, it is a successful process of greening the supply chain and the entire company’s operations (Ramezani, Kimiagari, Karimi & Hejazi 2014). Regardless of the strengths, CLSCM has some weaknesses that the supply chain management team should understand before implementing it into the business practice.
Various drawbacks emerge in the use of CLSCM in supply chain management. First, the process involves a high-cost investment for the company. Traditionally, owners design businesses to produce and bring products to customers. Thus, they include the cost of operation up to the point where the goods reach the final consumer (Al-Salem, Diabat, Dalalah & Alrefaei 2016). Conversely, the use of CLSCM involves the additional cost of returning products to the manufacturer and recycling. Furthermore, CLSCM is a sophisticated technology that requires comprehensive changes to the supply chain management policy in the company (Ramezani, Kimiagari, Karimi & Hejazi 2014). The company will create a new strategy to accommodate technology and implement a culture change to ensure support and compliance among employees. Finally, CLSCM lengthens the supply chain and includes more stakeholders, such as people who collect products from end-users to bring them back to the company (Al-Salem, Diabat, Dalalah & Alrefaei 2016). Regardless of the limitations, CLSCM is the most suitable technology to solve the current supply chain problem facing ABC Company.
Reflecting on Supply Chain Digital Transformation Readiness Framework
The supply chain management team will use the Supply Chain Digital Transformation Readiness Framework to inform the effective implementation of CLSCM or Reverse Logistics. The commencement point will be the identification of market forces involved in the adoption of the technology to promote a sustainable supply chain (Al-Salem, Diabat, Dalalah & Alrefaei 2016). The framework reveals some of the market forces that will affect the implementation, including rapid technology changes and demand for sustainability among customers. Identification of the forces will focus on the objectives that the new technology will achieve for ABC Company.
The Supply Chain Digital Transformation Readiness Framework will inform the phase(s) of the supply chain that the supply chain management team will digitalize during the implementation of CLSCM. The project will involve digitization and digital transformation of the final stage of the supply chain when the finished product reaches the end-user. From that perspective, digitization will include the change from the analog system of reaching and relating to consumers to the digital one, which will help the company to get back products from them for recycling (Loebbecke and Picot, 2015, Parviainen et al., 2017). The activity also involves the use of IT or digital technologies to change the current business processes (Li et al., 2016). The implementation will also involve digital transformation, which is a pervasive phase in which a complete change causes a new business model to begin operating in the company (Pagani and Pardo, 2017). The model will be entirely new for the firm since it will implement it for the first time.
The implementation process will involve some challenges that the implementing team should understand, and address to ensure success. One of the problems is the cost of implementing new technology in supply chain management. The company will invest in purchasing technology and increasing the workforce to support its use. Another challenge is the need for comprehensive change in the business processes to accommodate the change. The change could cause resistance among employees, which the management should address to achieve efficiency (McAfee & Brynjolfsson, 2017). To address the challenges, the company will require some capabilities to support the supply chain transformation. First, the change requires a competent team of implementers to acquire and integrate a useful technology into the company’s supply chain activities (Devika, Jafarian & Nourbakhsh, 2014). In addition, they require skilled users of the new technology to ensure the continuous quality improvement of the supply chain through the new system. The capabilities will ensure the successful implementation of technology.
Discussion of Findings
CLSCM has been proven effective in improving the sustainability of the supply chain in various companies around the world. The demand for sustainable supply chain and green processes has led to the high rate of the implementation of Closed-Loop Supply Chain Management (CLSCM) in companies around the world (Al-Salem, Diabat, Dalalah & Alrefaei, 2016; Kaya & Urek 2016). The demands have “caused organizations to consider closing the supply chain loop” to achieve environmentally-friendly manufacturing (He, Xiong & Lin, 2016; Gaur, Subramoniam, Govindan & Huisingh 2017). Firms are developing economically and environmentally sustainable through the use of systems. CLSCM and Reverse Logistics (RL) are already in use in automobile companies, such as BMW and General Motors (Govindan & Soleimani 2017). Other firms, such as Hewlett Packard, StorageTek, and TRW, have also implemented some sort of CLSCM (Kaya & Urek, 2016). The firms have proofed to be efficient in creating sustainability through technology. Therefore, ABC firm also expects to improve efficiency, build a competitive advantage, and achieve sustainable development through the use of technology in the supply chain.
ABC Company will also benefit from CLSCM or Reverse Logistics by improving its supply chain to become greener and highly sustainable. The management expects the firm to achieve all the three objectives and become more sustainable with the successful implementation of the technology. The company will invest a lot of finances and resources to acquire and implement the technologies that will support the efficiency in the supply chain. However, a cost-benefit analysis reveals that the economic effect of the transformation will outweigh the cost of implementing the new system. The supply chain management will also borrow the best practice from others within and outside the industry that has succeeded in implementing and using CLSCM or Reverse Logistics (Diallo, Venkatadri, Khatab & Bhakthavatchalam 2017). It will also acquire the best technology in the market to increase the chances of success. Therefore, ABC firms move towards greening its supply chain through technology, which will retain and attract more customers to increase revenue and profitability.
Conclusions and Recommendation
ABC Company requires to implement a new technology to improve its supply chain management. The firm faces challenges in its products’ disposal, which has led to the high contribution of pollution and reduction in customers due to unsustainable supply chain. Evidence from companies within and outside the industry indicates that the company could benefit from implementing CLSCM or Reverse Logistics by developing a technology to enable customers to return products to the manufacturer for value-addition purposes.
The supply chain management team should use several recommendations to implement the change successfully. First, they should use a team of qualified persons to implement the change. They should identify experts in the field to acquire the right technology that will meet the needs of the company. In addition, the management team should identify the best vendor in the market in terms of cost and quality. Developing a great relationship with the vendor will ensure the successful implementation and continued maintenance of the technology. Finally, the team should learn best practices in the adoption and use of CLSCM or Reverse Logistics from companies that have successfully implemented and benefitted from the system. Lessons from others have confirmed that technology is effective in achieving the identified goals. If the supply chain management team follows the recommendations, it will succeed in implementing and using CLSCM or Reverse Logistics.
Reference List
Al-Salem M, Diabat A, Dalalah D & Alrefaei M 2016, ‘A closed-loop supply chain management problem: Reformulation and piecewise linearization,’ Journal of Manufacturing Systems, vol. 40, pp. 1-8.
Autry CW, Whipple JM, Bell JE, Mollenkopf DA & Stolze HJ 2013, ‘Natural resource scarcity and the closed‐loop supply chain: a resource‐advantage view,’ International Journal of Physical Distribution & Logistics Management, vol. 3, no. 5, pp.351-379
Coenen J, Van der Heijden RE & van Riel AC 2018, ‘Understanding approaches to complexity and uncertainty in closed-loop supply chain management: Past findings and future directions,’ Journal of Cleaner Production, vol. 201, pp. 1-13.
Dekker R, Fleischmann M, Inderfurth K & van Wassenhove LN (Eds.). 2013. Reverse logistics: quantitative models for closed-loop supply chains. Springer Science & Business Media, New York
Devika K, Jafarian A, & Nourbakhsh V 2014, ‘Designing a sustainable closed-loop supply chain network based on triple bottom line approach: A comparison of metaheuristics hybridization techniques,’ European Journal of Operational Research, vol. 235, no. 3, pp. 594-615.
Diallo C, Venkatadri U, Khatab A & Bhakthavatchalam S 2017, ‘State of the art review of quality, reliability and maintenance issues in closed-loop supply chains with remanufacturing,’ International Journal of Production Research, vol. 55, no. 5, pp. 1277-1296
Gaur J, Subramoniam R, Govindan K, & Huisingh D 2017, ‘Closed-loop supply chain management: From conceptual to an action-oriented framework on core acquisition,’ Journal of Cleaner Production, vol. 167, pp. 1415-1424.
Govindan K & Soleimani H 2017, ‘A review of reverse logistics and closed-loop supply chains: A Journal of Cleaner Production focus,’ Journal of Cleaner Production, vol. 142, pp. 371-384.
Haws KL, Winterich KP & Naylor RW 2014, ‘Seeing the world through GREEN-tinted glasses: Green consumption values and responses to environmentally friendly products,’ Journal of Consumer Psychology, vol. 24, no. 3, pp. 336-354.
He, R., Xiong, Y., & Lin, Z. (2016). Carbon emissions in a dual channel closed loop supply chain: the impact of consumer free riding behavior. Journal of Cleaner Production, 134, 384-394.
Kaya O & Urek, B 2016. ‘A mixed integer nonlinear programming model and heuristic solutions for location, inventory and pricing decisions in a closed loop supply chain,’ Computers & Operations Research, vol. 65, pp. 93-103.
Kazemi N, Modak NM & Govindan K 2019, ‘A review of reverse logistics and closed loop supply chain management studies published in IJPR: A bibliometric and content analysis,’ International Journal of Production Research, vol. 57, no. 15, pp. 4937-4960.
Kim J, Do Chung B, Kang Y, & Jeong B 2018, ‘Robust optimization model for closed-loop supply chain planning under reverse logistics flow and demand uncertainty’ Journal of Cleaner Production, vol. 196, pp. 1314-1328.
Kumar NR & Kumar RMS, 2013, Closed Loop Supply Chain Management and Reverse Logistics -A Literature Review, International Journal of Engineering Research and Technology, Vol. 6, No. 4, pp. 455-468
Li, A. Nucciarelli, S. Roden, G. GrahamHow smart cities transform operations models: A new research agenda for operations management in the digital economy Production Planning & Control, 27 (6) (2016), pp. 514-528
Loebbecke, C., & Picot, A. (2015). Reflections on societal and business model transformation arising from digitization and big data analytics: A research agenda. The Journal of Strategic Information Systems, 24(3), 149-157.
McAfee, A & Brynjolfsson, E. 2017, Machine, Platform, Crowd. Harnessing our digital future. New York: W. W. Norton & Company Ltd
Pagani M & Pardo C 2017, ‘The impact of digital technology on relationships in a business network,’ Industrial Marketing Management, vol. 67, pp. 185-192.
Parviainen P, Tihinen M, Kääriäinen J & Teppola S 2017, ‘Tackling the digitalization challenge: how to benefit from digitalization in practice,’ International Journal of Information Systems and Project Management, vol. 5, no. 1, pp. 63-77.
Ramezani M, Kimiagari AM, Karimi B & Hejazi TH 2014, ‘Closed-loop supply chain network design under a fuzzy environment,’ Knowledge-Based Systems, vol. 59, pp. 108-120.
Stindt D & Sahamie R 2014 ‘Review of research on closed loop supply chain management in the process industry,’ Flexible Services and Manufacturing Journal, vol. 26, no. 1, pp. 268-293.
Wei J & Zhao J 2013, ‘Reverse channel decisions for a fuzzy closed-loop supply chain,’ Applied Mathematical Modelling, vol. 37, no. 3, pp. 1502-1513.
Zhi-hua Z 2018, ‘Comparison and Analysis of Domestic and Foreign Research on Reverse Logistics and Closed-loop Supply Chain,’ Logistics Engineering and Management, vol. 4, pp. 34-39.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
