Closed-loop Supply Chain: A Systematic Review

Abstract

The extraction of virgin materials from nature depletes existing resources and creates huge waste problems both in the extraction process itself and at the product’s end-of-life. There is a propensity for this waste to be reduced by adopting an effective product-recovery process, which can ensure that future consumption needs are met for the ever-growing population and eventually result in low rates of landfill. A closed-loop supply chain (CLSC) system provides an efficient sustainable production process where the most used products, parts, and other waste materials are recovered to improve material efficiency and ultimately reduce environmental degradation. Over the last few decades, companies have started to advance in their efforts to implement CLSC systems that contribute to value creation and reduce waste. The objective of this thesis is to map and assess the performance of different product-recovery choices (remanufacturing, recycling, and hybrid) in reducing environmental risks and enhancing the end-of-life of used products, parts, and other waste materials. While the concept of CLSC has been adopted by many companies, there remains a lack of knowledge as to how to identify the criteria with which to evaluate what factors are crucial in adopting different product-recovery choices. Therefore, to learn how to close this knowledge gap, a systematic review of the extant literature surrounding three different product-recovery choices (remanufacturing, recycling, and hybrid) was conducted through the lens of transaction cost economics (TCE). Previous studies have provided information by choosing a specific product-recovery option or choosing between different product-recovery options at a given point in time from the companies’ perspectives. This thesis expands upon the critical literature surrounding different product-recovery choices by identifying patterns across industries. Also, this study ascertains the impacts of take-back legislation across industries and across geographical locations with respect to these different product-recovery choices. The results of this study identify distinct characteristics of product-recovery choices and posit how companies might weigh the benefits of remanufacturing and recycling through the integration of CLSC. The findings imply that all relevant intra- and inter-organizational production processes must be channelled to improve the effectiveness and efficiency of CLSC. This thesis contributes to the existing CLSC literature, and fills an important literature gap by exploring industrial patterns with respect to different product-recovery choices; it also highlights important implications for companies seeking to drive their production activities towards being more sustainable.