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8/12/2019 LSCM Journal Paper Review
1/19
LOGISTICS & SUPPLY CHAIN MANAGEMENT
REVIEW of JOURNAL PAPERS
Reverse Supply Chain Management
Submitted to:
Prof. SAMIR KUMAR SRIVASTAVA
Indian Institute of Management, Lucknow
Group 3
Pankaj Nagar | Shantanu Rai | Rahil Sahu
PGP29245 | PGP29270 | PGP29272
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Table of Contents
Critical ReviewAlliance or no allianceBargaining Power in competing reverse supply
chains......................................................................................................................................... 3
Bibliographic Citation .......................................................................................................... 3
Summary ........................................................................................................................... 3
Research Critique ............................................................................................................. 5
Critical Review - Reverse logistics: past research, current management issues, and future
directions ................................................................................................................................... 7
Bibliographic Citation .......................................................................................................... 7
Research paper background ................................................................................................ 7
Research paper summary and critique ............................................................................... 8
Strengths of the paper ............................................................................................................ 11
Weaknesses of the paper ................................................................................................ 12
Critical Review - Impact of Reverse Logistics on Supply chain performance ................... 13
Bibliographic Citation ........................................................................................................ 13
Research Paper Background ............................................................................................. 13
Research paper Summary & Critique ............................................................................... 13
Introduction .................................................................................................................... 13
Methodology ................................................................................................................... 14
Key stakeholders of the system
.................................................................................. 15
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INTRODUCTION
The onset of the environment responsibility being imposed on manufacturers bygovernments and regulators, the green supply chain has become the new buzz word. Companies
are combining reduce, reuse & recycle1 motto in their supply chain to help environment,
customers and their bottom line. This has led to companies embracing reverse logistics
strategies.
The electronics manufacturers have taken the lead in the reverse logistics. They are trying
to repair damage products and reuse parts from obsolete products to generate additional
revenue. In 2007, Samsung, a global leader in the electronics industry, began its Recycling Direct
program partnering with take-back and recycling companies that do not incinerate, send
materials to solid waste landfills, or export toxic waste to developing countriesand has since
recycled 14 million pounds of waste from its consumer goods and IT products2.
Reverse logistics includes recalls, recycling, obsolete equipment, hazardous material,
salvage and asset recovery.3The reverse logistics providers face major challenges in performing
their tasks such as Collection, Scanning, Production disposition, Credit store & Invoice vendor.
These complicate the process returns at proficiency level preventing optimal solutions at times.
In this report, three research papers regarding reverse logistics have been chose based on
various factors affecting the reverse supply chain. The papers have been critiqued based on our
limited exposure to the subject.
1Partridge, Amy Roach; Green Reverse Logistics Brings Many Happy Returns; Jan 2010
2
Ibid3Harrington, Ryan ; Reverse Logistics: Customer Satisfaction, Environment Key to Success in 21
stCentury,
2006
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Critical ReviewAlliance or no alliance Bargaining Power in
competing reverse supply chains
Bibliographic Citation
Jiuh-Biing Sheu, Xiao-Qin Gao. Alliance or no alliance- Bargaining power in competing reverse
supply chains.European Journal of Operational Research, Vol. 233, No. 2, 2014, pp. 313-325
Summary
With the increasing levels of environment awareness, many developed and developing countries
are implementing the concept of Extended Producer Responsibility (EPR) to encourage green
practices in organizations. This green legislation differs across countries but there is a consensus that
manufacturers should bear responsibility for collecting and recycling their products. According to
Khetriwal et al. (2009), extended producer responsibility (EPR) can be implemented using administrative,
economic (such as additional collection charges, green taxation, and subsidies), and informative
instruments.
In this research paper, Sheu & Gao have attempted to analyse the effects of bargaining power onthe negotiations between the manufacturers and the reverse logistics providers in reverse supply chain for
the supply price & quantity of recycled product. The assumption is that the negotiations are conducted
under the context of government intervention (by subsidies, taxation, charges etc.). The authors have
used a three-stage reverse supply chain model (refer Fig.1):
- Stage 1Government intervention
- Stage 2Bilateral Negotiations between manufacturers & reverse logistics provider
- Stage 3Product competition in market
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Fig 1.Three stage model framework
For the sake of simplicity, the authors have assumed a competitive market where the
manufacturers and the reverse logistics providers are in duopoly competition.
In Stage 2, the authors have analysed the model for two scenarios
- Scenario 1There is no alliance between the reverse logistics providers
- Scenario 2There is an alliance between the reverse logistics providers
The backward induction approach has been to approximate the equilibrium solutions of each of
the stages in this three-stage model. The tentative equilibrium solution of the third stage is
calculated first, followed by second stage using the solutions of the third stage and then finally
identifies the equilibrium solutions of the first stage.
In the third stage, the author follows the downward-sloping demand form (Cournot Inverse)P
= a bQ, where Q is the summation of the quantity of the product sold by both the
manufacturers. The constants a andbare positive parameters.
In the second stage, the work utilizes the asymmetric Nash bargaining game to derive the
equilibrium solutions for the prices & quantity of the recycled products. The objective function
in this stage is to maximize the profit function of both the manufacturers and the reverse
logistics provider.
In the first stage, the social welfare is maximized as the objective function. As per classical theory
of economics the social welfare is calculated as the sum of consumer surplus, producer surplus
and the environmental benefits of green products and the environment pollution cost is
subtracted from it. The governments generally use the rationale of economic instruments to
maximize social welfare. So the recycling rate, environmental pollution fee levied on
manufacturers and unit subsidies to reverse logistics providers have been used to maximize the
social welfare.
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Based on the derived equilibrium solutions and analysis, the following are some of the insights
from the research paper:
An alliance among reverse logistics providers does not enhance profits to the logistics
providers in a recycled component market dominated by them. An alliance significantly decreases the bargaining power of the manufacturers over a non-
alliance of reverse logistics providers.
In a vendor-dominated market, a reverse logistics alliance with extreme bargaining power
will create a counter-effect that will decrease the profits of all the players in the chain.
The social welfare is negatively correlated with the manufacturers bargaining power
Research Critique
The authors, Sheu and Gao, have identified the importance of interactions between the
manufacturers and the reverse logistics suppliers in this era of governments enforcing the
concept of extended producer responsibility (EPR). Using the example of Chinas high
consumption of steel and by highlighting the share of the consumed steel coming from recycled
& scrap market, the authors emphasises the need & importance of cooperation between the
manufacturers & reverse logistics providers in a production of green products and green supply
chain.
The authors site a number of articles in their literature review indicating the well-researched field
of the importance of reverse logistics under a government intervened EPR scheme. Various
mathematical models and frameworks have also been identified in the various related studies.
The lack of research papers on the importance of alliance among the reverse logistics providers
and the drivers governing them have also been identified. Hence this paper has emphasised
special importance to the alliance of reverse logistics providers.
The framework utilised in this research is very basic in nature. The three stage model onlyinterplays the importance of government intervention affecting the negotiation between
manufacturers and reverse logistics providers leading to equilibrium in the market. The
complexities in the supply chain of the reverse logistics have been left out of the problem, but
there are certain factors like the geographical spread, size, technological obsolesce etc. may have
bearing on the relationships defined the three-stage model.
The assumptions of a duopoly market in the model are idealistic in nature and rarely found in the
reality. Though the authors try to compare the characteristics of the Chinese notebook market, ahighly competitive oligopoly market to having the characteristics to symmetric duopoly
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completion, the explanation lacks credibility. The assumption of bundling of all manufacturing &
recycling costs into a single variable is acceptable has they have a small variations and
dependency on the negotiations. The assumption of a downward-sloping linear function for the
demand- price relationship in the market should have been upgraded to a more realistic parabolic
curve. In the calculation of the social welfare, the assumption of only taking economic factors
and neglecting the administrative and information instruments is correct as the latter two are
difficult to quantify.
The solutions for each of the stages of respective scenarios have been well explained and derived
with additional information provided in the online appendix. The equilibrium solutions have
been clearly defined. Also the derivation of the proofs for the propositions in the methodology
has been mentioned in the appendix.
The findings of the results and the analysis have been clearly done. The research provides
valuable insights for the government and the market regulators in implementing regulations to
achieve sustainable economic development. The fees, subsidies and the recycling rates affect the
bargaining power of the manufacturers and the reverse logistics providers which in turn affects
the profit centres. The research may not have significant addition to the improvement of the
reverse logistics supply chain or the green supply chain, it provides guidelines for the
governments in identifying the correct economic factors to enable green products.
The authors have also identified the future scope of the work required in addition to this paper.
They have identified inclusion of more factors to be included in the model, like ratio of unit
collection cost to unit environmental benefit. There is scope to expanding research on this by
increasing the range of factors affecting the relationships.
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Critical Review - Reverse logistics: past research, current
management issues, and future directions
Bibliographic Citation
Joseph R. Huscroft, Benjamin T. Hazen, Dianne J. Hall, Joseph B. Skipper, Joe B.
Hanna. Reverse Logistics: past research, current management issues, and future
directions. The International Journal of Logistics Management, Vol. 24 No. 3, 2013, pp. 304-327.
Research paper background
PurposeThe focus of the paper is on identifying the major concerns/issues experienced by todays supply
chain practitioners while managing reverse logistics (RL) processes and compare these
concerns with the subjects examined in extant research. Therefore this comparison enables the
researchers to find the areas which are practically relevant and/ or areas which may need further
research.
Methodology
The researchers applied Delphi method to discover the prominent issues in RL which are beingfaced by the professionals and practitioners. In order to test the similarity between extant
literature and the proposed framework by Carter and Ellram (1998) an extensive and systematic
literature analysis is done. While conducting Delphi study the researchers came across seven key
issues viz. Customer Support, Top-management Support, Communication, Cost, Formalization,
Timing of Operations and Environmental Issues. These issues were then ranked in subsequent
rounds of the Delphi study. Finally these issues were compared with the proposed framework of
Carter and Ellram (1998).
Implications
Researchers came across key findings which provide the practitioners and professionals an
understanding of most important factors while implementing RL programs. Further the paper
gives direction for future research areas which will be helpful in better aligning of academic and
current managerial issues related to RL processes and programs. Formalization and establishing
RL as a profit center in an organization are the areas on which the paper emphasizes for further
scholarly research.
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Keywords
Reverse Logistics (RL), Delphi Method, Formalization
Research paper summary and critique
Introduction
In real world not all the business deal are final. In recent times with the increase in online
retailing the concept of reverse logistics has become the catch phrase of the supply chain
industry and practitioners. The examination of reverse logistics (RL) has become more
prominent in both the business community and academia in recent years, spanning such diverse
areas as recycling, remanufacturing, information technology, warehousing, operations, and
environmental sustainability, among others (Dowlatshahi, 2010, 2012; Hazen et al., 2011; Lee et
al., 2009; Pokharel and Mutha, 2009; Venkatesh, 2010). There are various reason which areattracting the operations managers and supply chain industry people towards reverse logistics
programs. Few of them are as shown below.
1. RL as a target for efficiency improvement and cost reduction: Logistics managers realize
that the reverse channel is a target for gains in efficiency and reduction of costs and have
started to give more attention to this area, thus employing RL as a potential market
differentiator and profit center (Stock, 2001a; Stock et al., 2002, 2006).
2. RL as a target for improved customer service and customer delight: the increased focus
on RL has started moving organizations beyond the paradigm of only serving customers
during the initial transaction to ensuring that customer needs are cared for even after the
initial transaction, especially if the product should be returned, exchanged, or superseded
by a new product (Mason, 2002; Tibben-Lembke, 2002).
3. RL gaming popularity in research works: In the earlier years of RL research, there was a
very limited body of academic literature (Carter and Ellram, 1998). However, empirically
based RL research has recently begun to gain momentum (Daugherty et al., 2001, 2002,
2005; Dhanda and Hill, 2005; Mollenkopf et al., 2007a; Richey et al., 2005b).
This increase in researcher and practitioner focus reinforces the emergence of RL as a key
strategic capability for any organization within the supply chain (Guide and Van Wassenhove,
2009; Hazen, 2011).
Methodology
The research paper focuses on issues faced by practitioners and industry professional in RL
processes. The Delphi method creates opportunities to gain valuable insight from practicingmanagers, compare how their practical insights align with those from academia, and identify
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topics that need further investigation (Malhotra et al., 1994). Researchers did an extensive study
for use of Delphi method and with citation from different research papers they found it to be
appropriate for their study. Therefore in-order to gain industry insights Delphi method was used
in which practitioners from different areas and industry were involved.
They chose participants from Government, Military, and Logistics Service Providers keeping in
mind to mix both large and small firms. Following table gives the mix of professionals involved.
Delphi
Method
Rounds
Sector
Total
Organization Size
(Employess)Position Experience (Years)
Govt./
Military
Logistics
Service
Providers
OthersSmall
(300)
Senior
Mgmt.
Middle
Mgmt.
In
Log.
In
Org.
In
current
job
1 9 10 5 24 3 6 15 10 14 14.4 12.1 6.8
2 9 9 3 21 3 4 14 9 12 14.6 12.5 6.7
3 8 8 2 18 3 2 13 7 11 15.9 13.1 6.7
Table -1: Delphi study participantsdemographics (Joseph R. Huscroft et al, 2013)
The study was conducted in three rounds. In the first round the researchers gave an open ended
question to find out the major concerns and issues in RL programs and processes. After this
round they collated all the responses and figured out seven major issues which are as listed below
(Not ranked, only alphabetical order).
Communications
Costs
Customer Support
Environmental
Formalization
Timing of operations and
Top-management support
In round two all the participants were asked to rank these seven issues according to their priority
and further in round three all these factors were ranked by these individuals based on the group
rankings. The weighted average rankings of both the groups are shown in table 2 below.
Round II Issue Round III Rankings Issue
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Rankings (Final Ranking)
1 Customer Support 1 Customer Support
2 Top Management Support 2 Top Management Support
3 Communications 3 Communications
4 Costs 4 Costs
5 Formalization 5 Formalization
6 Timing of Operations 6 Timing of Operations
7 Environmental 7 Environmental
Table 2: Ranking of issues based on round 2 and 3 responses
After each round the consensus was measured using Kendalls coefficient of concordance (W)
according to the recommendations of Schmidt (1997). Here if W lies between 0.1-0.2 then there
is slight agreement and if it is between 0.8-1.00 then it represent near perfect agreement. In
round 2 the Wwas 0.15 (p
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Strengths of the paper
References
The paper investigated the LR field thoroughly. To find the suitability of the methodology
adopted for the research and in order to reach to their conclusion the authors have taken the
support of several journal papers. Some of them are listed below:
a. Operations Management Review
i. Journal of Operations Management
ii. Production and Operations Management
iii. International Journal of Production Research
iv. European Journal of Operations Research
b.
Logistics Management Review
i. Journal of Business Logistics
ii. International Journal of Logistics Management
iii. International Journal of Physical Distribution & Logistics Management
iv. Supply Chain Management: An International Journal
c. Information Systems
a. Management of Information Systems Quarterly
b.
Information Systems Researchc. Journal of Management Information Systems
d. European Journal of Information Systems
d. Environmental Economics
a. Journal of Environmental Economics and Management Ecological Economics
b. Resource and Energy Economic
c. Environmental and Resource Economics
d. Environment and Development Economics
The inclusion of these journals has brought credibility and authenticity to the work.
Approach
The paper adopts a systematic approach of finding real management issues in RL programs and
then compares these to the Carter and Ellrams (1998) framework constructs.
This approach has contributed in the thorough understanding of current management issues in
RL programs and their significance according to business perspective.
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Weaknesses of the paper
Although the authors have tried to compare the practitioners concerns with the past research
framework, but all the concerns cannot be compared on a direct basis to the framework
construct. This leaves a scope of ambiguity and interpretations.
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Critical Review - Impact of Reverse Logistics on Supply chain
performance
Bibliographic Citation
Mario Turrisi, Manfredi Bruccoleri, Salvatore Cannella. Impact of Reverse Logistics on Supply
chain performanceInternational Journal of Physical Distribution & Logistics Management Vol
43, No 7, 2013, pp.
Research Paper Background
Purpose: This paper is aimed at analysing the impact that reverse logistics has on the varianceamplification of inventory and orders in a single-echelon supply chain. While single echelon
systems are less common when compared to their multi-echelon counterparts, the paper
attempts add significant value by going on to propose a new order policy to reduce such
amplification.
Methodology: The introduction begins with a review of the literature describing the impact of
reverse logistics on SC performance. For the modelling and analysis of a closed SC difference
equation mathematics have been used. For validation, data from the European Union statisticshave been used.
Implications: The authors have proposed a replenishment rule that is aimed at co-coordinating
upstream and downstream flows in a supply chain. This is in line with the ultimate goal of
reducing inventory and ensuring orders to suppliers are more stable in a supply chain with
reverse logistics.
Research paper Summary & Critique
Introduction
In recent times, sustainability has captured the imagination of not just researchers but our
policy makers and the press too. This has stemmed from an understanding that our resources are
limited and our futureeconomic, social, environmental is uncertain.
From the operations perspective, this new focus on sustainability takes us straight to closed-loop
supply chains and reverse logistics. Their benefits are manifold and have been documented in
detail
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1. Generate value from products that have reached the end of their life cycle, through the
reusage of components or the recycling of any materials or even obtaining energy
through incineration (Kleindorfer, 2005)
2. Limit the end consumers risk and at the same time increase the consumers value to the
company. (Russo and Cardinali,2012 ; Rogers and Tibben-Lembke, 2001)
3. Standard benefits include reduction in waste, extracting raw materials and thus limiting
the negative consequences on the environment.
Most importantly from the implementation point of view we know that reverse logistics require
the co-ordination of material and information flow - both forward and backward. (Guide and
Van Wassenhove, 2002). There is no denying the fact that the reverse flow of products entering
the supply chain will affect orders being placed with suppliers and the inventory of the channel
members.
For this exact reason, despite all its benefits, supply chain managers look at reverse logistics very
sceptically. It brings in additional variables into two already sufficiently complicated matters
inventory and order quantities. There is therefore a need to integrate both forward and reverse
flows. The authors of this paper aim to do exactly that by coming up with an order
replenishment rule which uses information from both flows. They attempt to practically change
the perception of returned material from additional variables to products that are waiting to be
sold at a profit (Stock et al, 2002).
Methodology
We know the objective of the authors very clearlyembed the product return level variable into
their replenishment rule to synchronize upstream and downstream flows of material and thereby
reduce inventory and order variability.
The authors go ahead with a single echelon closed-loop supply chain for their analysis. Their
reasoning is that multiple echelon system would have brought in more variables and takes the
emphasis away from the variables which really matter. A fair observation, but one help but
wonder whether an opportunity to better represent a realistic situation was missed out.
A math model has been used to describe a CLSC. They acknowledge a research setting that is
quite similar to Zhou and Disney (2006).
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Figure: Authors Flow diagram of single echelon CLSC
Key stakeholders of the system
1. ManufacturerPlaces orders for raw materials, processes the same and provides finished
products to the consumer.
2.
Raw materials supplierAn external entity with a limitless capacity to supply rawmaterial.
3. ConsumerThe actual user of the product who may dispose of the product or actually
return it.
4. RemanufacturerConverts a certain k percentage of returned goods into supply
serviceable inventory.
At this point it is possible to question the loop chosen by the authors. While the nature of some
industries allows a remanufacturer to turn a used product directly back into serviceable
inventory, in most the used product would probably be a source of raw material. Also if we
assume the remanufacturing is done within the organization (and not an external entity) then it
would be safe to assume that certain additional raw materials will be required from the supplier
by the remanufacturer, once again changing the loop structure.
To keep it simple however it may have been more realistic to close the loop before the
manufacturing process.
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Figure: A potentially more realistic flow diagram of single echelon CLSC
The authors acknowledge the usage of a model quite similar to that of Zhou and Disney (2006).
The main features of the model are as follows
Consumer Demand Unlike Zhou and Disney(2006) who considered demand to be a i.i.d
stochastic variable, the authors choose a normally distributed demand pattern in accordance with
Dejonckheere (2003).
Forecast method Simple exponential smoothing where the forecast made in a period t is used to
make order estimations in period t.
Order policyFor their order policy the authors use a modification of the APIOBPCS (Auto
Pipeline Feedback Order Based Production Control System)
Note the authors here make an assumption that the market demand can be satisfied by the
serviceable inventory without backlog. Stockouts are thus allowed, but there will be no negative
inventory. A reasonable assumption, that we find to be quite commonly used.
We know the paper is aimed at looking at the impact of reverse logistics on orders and inventory
levels specifically and that is why the authors choose two metrics to do the same
1. Order variance ratio (OVrA) = output/ demand
2. Inventory Variance Ratio(IVrA) = inventory/ demand
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Figure: The set of all difference equations used for the model
Equation 3 is of particular interest to us because it brings in an additional variable
remanufactured products which boost the serviceable inventory. To ensure that this effect is also
accounted for by the order quantities the authors propose aligning the WIP with the reverse
flows, a move which seems very logically sound. They decide the target WIP must be
The authors thus propose reducing the material in the pipeline by subtracting products coming
in from the reverse flow.
The authors have then gone on to an experimental setup to explore the effect of the primary
factors that characterize reverse logistics k, Tp,Tr. After initializing the model with a set of
parameters, 270 simulations have been recorded. Something the authors seemed to have glossed
over is an explanation for the initialization of all the parameters.
The conclusions of the case are interesting, the biggest one being reverse flow positively
impacts the order variance. This is especially true in a situation where perfect remanufacturing
is possible as it reduces the actual order quantities, thus simplifying the process. But one canthelp but wonder about the impact on a system where returned products are used only for
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extraction of raw materials. We think to a large extent it will be the same. If the amount of
material that can be extracted is standardized it will make the ordering process for that particular
extracted material much more simple.
Inventory variability however takes a beating because of the cumulative effect of two sources ofvariability the customer demand (traditional channel) and the products obtained through
reverse logistics.
All in all the authors give sound reasoning and evidence for the method of optimization of the k,
Tp,Tr variables to actually bring about improvements in the supply chain performance of a
similar closed loop single echelon system. It would be interesting to introduce some more
realistic variables however to see how the model would accommodate them the biggest being
supplier capacity and time limitations (we assumed infinite capacity), remanufacturing as asupplier role, and timing variances and a drastically fluctuating k value.