Integrating Closed-loop Supply Chains and Spare Parts Management at IBM

Moritz Fleischmann, Jo van Nunen and B. Graeve

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: Ever more companies are recognizing the benefits of closed-loop supply chains that integrate product returns into business operations. IBM has been among the pioneers seeking to unlock the value dormant in these resources. We report on a project exploiting product returns as a source of spare parts. Key decisions include the choice of recovery opportunities to use, the channel design, and the coordination of alternative supply sources. We developed an analytic inventory control model and a simulation model to address these issues. Our results show that procurement cost savings largely outweigh reverse logistics costs and that information management is key to an efficient solution. Our recommendations provide a basis for significantly expanding the usage of the novel parts supply source, which allows for cutting procurement costs.

Keywords: inventory management; product recovery; reverse logistics; service management; supply chain management (search for similar items in EconPapers)
JEL-codes: M M11 R4 (search for similar items in EconPapers)
Date: 2002-11-25
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Citations: View citations in EconPapers (5)

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Journal Article: Integrating Closed-Loop Supply Chains and Spare-Parts Management at IBM (2003)
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