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

Author

Listed:
  • Fleischmann, M.
  • van Nunen, J.A.E.E.
  • Graeve, B.

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.

Suggested Citation

  • Fleischmann, M. & van Nunen, J.A.E.E. & Graeve, B., 2002. "Integrating Closed-loop Supply Chains and Spare Parts Management at IBM," ERIM Report Series Research in Management ERS-2002-107-LIS, 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.
    • Handle: RePEc:ems:eureri:258
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    References listed on IDEAS

    as
    1. Craig C. Sherbrooke, 1968. "Metric: A Multi-Echelon Technique for Recoverable Item Control," Operations Research, INFORMS, vol. 16(1), pages 122-141, February.
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    More about this item

    Keywords

    inventory management; product recovery; reverse logistics; service management; supply chain management;
    All these keywords.

    JEL classification:

    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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