Impact of closed-loop network configurations on carbon footprints: A case study in copiers

Abstract

Growing concerns about the environment make a supply chains’ eco-footprint increasingly important, presuming that footprints are a more effective (policy) instrument than those currently in use. The eco-footprint comprises all kinds of environmental impact, but often is narrowed down to one aspect; e.g. the carbon footprint, material footprint, the water footprint, and so on. Although returns give rise to an additional goods flow from customers back to producers, it usually improves the eco-footprint due to the substitution effect. The reverse channel supplies high quality (recovered) products, components and materials to the forward channel thereby reducing the need for virgin sourcing and production. We refer to this as closed-loop recovery, as opposed to recovery for cascade markets which lacks substitution. To maximize substitution, the recovered items must re-enter the original supply chain. The feasibility of closed-loop recovery depends partly on the geographical proximity of forward and reverse facilities. We develop a decision framework for optimizing closed loop network configurations, i.e. the combined disposition and location–transport decision. We apply the framework to a single case study concerning one type of footprint (namely the carbon footprint) of a copier (closed-loop) supply chain. The main implication is that a regional network, with combined forward and reverse facilities per continent, proves most efficient and most robust in view of uncertain exogenous variables, but only when a full set of closed-loop options is available (including closed-loop recycling). As an embedded case, main contribution value of it lies in the discovery of a new phenomenon with generic implications; namely that not only the closed-loop supply chains footprint strongly depends on the substitution effect, but that in turn the feasibility of closed-loop recovery options depends heavily on the network design. From delineations of the study we derive issues for further research.