IoT-enabled coordination for recommerce circular supply chain in the industry 4.0 era

Abstract

The current advances in integrating devices through the Internet of Things (IoT) have encouraged researchers to focus on the applications of IoT in the recommerce business. Recommerce and the circular economy are growing worldwide as customers and businesses prioritize sustainability. A lack of coordination between channel participants is a significant hurdle to successfully adopting Circular principles in the recommerce industry. This study explores the coordination issue for a circular supply chain consisting of a Web-based recommerce platform and an IoT-enabled original equipment manufacturer. The proposed study is analyzed using a mixed-method research strategy combining a case study with a game-theoretic model. We analyze the problem under a consignment contract with revenue sharing for different channel structures. We introduce a hybrid contract to coordinate the decentralized channel in a cooperative game model. The results show that the consignment contract cannot coordinate the business in a decentralized structure. The recommerce platform achieves perfect coordination through the hybrid contract and obtains a unique Pareto optimization. We are proposing a IoT-enabled system in which resources are not wasted, thereby providing a way for businesses to use the circular economy concept to achieve sustainability goals.