LSCM Journal Paper Review

8/12/2019 LSCM Journal Paper Review

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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


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


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.

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