Article ID: | iaor20042958 |
Country: | United States |
Volume: | 33 |
Issue: | 6 |
Start Page Number: | 44 |
End Page Number: | 56 |
Publication Date: | Nov 2003 |
Journal: | Interfaces |
Authors: | Fleischmann Moritz, Nunen Jo A. E. E. van, Grve Ben |
Keywords: | computers, production |
IBM is among the pioneers recognizing the benefits of closed-loop supply chains that integrate product returns into business operations. We worked on a project exploiting product returns as a source of spare parts. Key decisions concern what recovery opportunities to use, the channel design, and coordinating alternative supply sources. Our analytic inventory-control model and a simulation model showed that procurement-cost savings largely outweigh reverse logistics costs and that information management is essential. These findings provide a basis for significantly expanding the usage of the novel parts supply source, thereby cutting procurement costs.