Research on Factors that Affect the Eco-efficiency of

ORIENT ACADEMIC FORUM
Research on Factors that Affect the Eco-efficiency of
Remanufacturing Closed-loop Supply Chain
YANG Wei, ZENG Yongzhi, WU Yue
School of Logistics, Beijing Wuzi University, China, 101149
[email protected]
Abstract: At present, there are still lots of resources wasted in manufacturing in our country and the rate
of recovery and remanufacturing is highly low. The enterprises don’t have a high level of environmental
protection consciousness. So it is of great importance and practical significance to study the
eco-efficiency of remanufacturing closed-loop supply chain. This article mainly analyzes the
possibilities of cutting down the remanufacturing costs and consumption of resources from the
perspective of product design and remanufacturing closed-loop supply chain process activities. By
studying the factors that affect the eco-efficiency of remanufacturing closed-loop supply chain, it offers
a new idea to reduce the remanufacturing costs and the impact on natural environment; besides it
provides a scientific reference for improving the sustainable development capability for economics and
society in our country.
Keywords: remanufacturing closed-loop supply chain, eco-efficiency, product design
With the decrease of resources and the deterioration of the environment in our world, people’s
consciousness for environment protection is increasing quickly, therefore sustainable development has
become a main theme in the development of the world. Generally speaking, resources are
non-renewable; moreover the use of some resource may bring about negative impact to the environment.
Thus, the recycling of waste products has become a hot topic in both academia and the business
community currently (Xie Jiaping, 2008). At present, our country is developing into the manufacturing
center of the world, but the product recycle rate of the manufacturing industry is relatively low and
enterprise environmental awareness is also insufficient, resulting in the serious environment pollution
and great waste of resources. Therefore it’s very necessary to make a research on the factors that affect
the eco-efficiency of the remanufacturing closed-loop supply chain.
1 Introduction
1.1 Remanufacturing closed-loop supply chain
Remanufacturing is a process of changing the waste products into new ones functionally by necessary
dismantling, overhauling and replacing spare parts (Li Yongjian, 2006). Remanufacturing can reduce
environment pollution, cut down the cost of pollution abatement and disposal expenses of the waste, win
better social image, and add intangible assets for the enterprise. Research indicates that enterprises can
reduce cost of products such as electric refrigerators, automobiles, computers by 40%~60% through the
implementation of remanufacturing (Sameer Kumar 2008).
Remanufacturing closed-loop supply chain includes not only traditional forward supply chain, but also
reverse supply chain of the recovery and remanufacturing of waste products, showing a closed-loop
feature of “from source to sink, then from sink to source”. Consequently, the closed-loop supply chain
transfers the open-loop process of “resource-production-consumption-waste” to the closed-loop cyclic
process of “resource-production-consumption-renewable resources” through positive delivery of
products and reverse recovery and remanufacturing. For details, see picture 1.
，
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Figure1. The general process of remanufacturing closed-loop supply chain
On one hand, remanufacturing can lessens the manufacturing cost and improves economic efficiency
through recycling of resources. On the other hand, the whole process of material obtaining, processing
and manufacturing, packing and storing, distribution, using, recovery, remanufacturing and scrap
disposal, especially taking environment into consideration at the stage of scrap disposal, can make the
adverse influence to environment caused by the whole closed-loop supply chain least, and the efficiency
of resources highest.
1.2 Eco-efficiency of remanufacturing closed-loop supply chain
With more and more attention paid to "the system of extended producer responsibility" and environment
performance of the product terminal link, the research of eco-efficiency gradually extends to all links
related to production and circulation. Enterprises no longer care only economic efficiency, but also
environmental benefits, that is, more consideration of the eco-efficiency of all links related to products.
The eco-efficiency of remanufacturing closed-loop supply chain refers to cutting down the
manufacturing cost, resource consumption and minimize the adverse influence to environment to the
same level of the ecologic capacity of natural environment, while pursuing improving the quality of
products, in all the stages of the whole closed-loop supply chain based on the whole life cycle. So we
say the eco-efficiency of remanufacturing closed-loop supply chain is a concept which considers both
economic efficiency and environmental benefits. According to some related researches Tohru(2005), a
Japanese scholar, analyzed the eco-efficiency of closed-loop supply chain recycle system of used
automobiles and household electrical appliances in the eco-city of Hyogo, Japan. The results indicated
that it is 57% higher than the traditional processing methods, and the eco-efficiency of recycle system of
household electrical appliances is 40% higher in closed-loop supply chain recycle system.
1.3 The selection criteria of factors that affects the eco-efficiency of remanufacturing closed-loop
supply chain
The eco-efficiency of remanufacturing closed-loop supply chain is ultimately reflected in two aspects:
one is to reduce the economic costs and resource consumption in the pursuit of improving product
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quality; and the other is to reduce the adverse impact on the natural world, which is to minimize the
emissions of waste and the proliferation of toxic substances, then promote the sustainable use of
renewable resources. From the macro and micro aspects, this paper respectively analyzes the factors of
the eco-efficiency of remanufacturing closed-loop supply chain based on the two criteria.
Microscopically, product design factors not only affect the product quality and performance, but also
determine the materials, manufacturing process, recovery ratio and remanufacturing characteristics of
products, etc. For example, in the manufacturing stage, product design determines the raw materials, the
manufacturing process flow and the consumption of resources; in the remanufacturing stage, product
design directly determines the recyclability and remanufacture-ability of products, and thus directly
affects the benefits of the entire closed-loop supply chain. So, to a large extent, the product design
factors affect the cost of remanufacturing and resources consumption of the products, and the adverse
impact on the natural environment, scilicet the eco-efficiency of remanufacturing closed-loop supply
chain.
As to macro aspect, it is of great importance to analyze the eco-efficiency of each link and phase of
remanufacturing closed-loop supply chain process. For only by coordinating all the member enterprises
in all stages of the whole supply chain, can the remanufacturing closed-loop supply chain be operated in
low cost and high efficiency. Only through analyzing it, can we find the every link that can lower the
cost, minimize the impact on the environment, and maximize the resource utilization, so that the
eco-efficiency of the whole remanufacturing closed-loop supply chain can be improved.
2 The Analysis of Product Design Factors
Most researchers believe that the product design factors determine 70% ~ 80% of products
manufacturing cost Zhao Xin, 2008 . At present the product design focuses on the convenience of
products manufacturing and assembly, as well as the structure simplifying and the reduction of material
costs without considering the waste disposal problems at the end of the product life cycle. With the
product life increasingly been shortened, there are more and more discarded goods. As a result, the
eco-efficiency is gradually reduced.
In product designing, the module structure, the connection modes and the diversity of materials
composition, etc, to a large extent, affect the recyclability and remanufacture-ability of products, which
greatly influences its eco-efficiency. Therefore, only by taking the road of product design for
remanufacturing based on the whole life cycle (PDRLC) in the stage of product design, can we reduce
the resource consumption, pollution and emissions of the waste to the full extent.
（
Table 1
Differences
）
The differences between PDRLC and traditional product design
Traditional product design
PDLRC
Comprehensive consideration of the
design, ecology, economy and
social science, etc
Recyclable,
environmentally
friendly
Minimum, consistent with the
ecological carrying capacity
Theoretical basis
Design,
relatively homogeneous
Use of materials
Poor material recycling& circulation,
high energy consumption
Pollution results
More serious
Economical& ecological
Opposite, short-term vision
The same, long-term vision
The function
Environmental
functionality
Single-period
Multi-period
Factors focused on
Life cycle
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Dismantling features
Relatively difficult
Simple & convenient
The difficult degree
Easy to achieve
Relatively difficult
The proportion of products
returned
Little
More
The PDRLC refers to fully considering the basic attributes of product features, quality, development
cycle and cost etc, as well as its environmental attributes, recycling/remanufacturing conditions, and
optimizing all the design factors during its whole life period, thus enabling the production and
manufacturing process to make the least impact on environment and the resource consumption to a
minimum. The PDRLC is the core of the whole product remanufacturing life cycle. Besides reducing the
cost of product design, manufacturing, transportation and remanufacturing, the goal is to improve the
practical value of products and, to the greatest extent, to reduce the resources consumption and
environmental pollution, which closely combines the basic attributes of products and environmental
attributes. The case based on the PDRLC made by Netherlands shows that it can be reduced by 30% to
50% of the environmental load(Xu Qijin,2008).
By taking the product’s remanufacture-ability into consideration in the product design stage, the
remanufacturing capacity of products at the end of product life can be significantly improved. The
differences between the PDRLC and the traditional product design are shown in table 1.
In a word, the quality of PDRLC is closely related with the level of economic costs and the treatment
cost of environment. It can reduce the economic costs, environmental impacts and resource consumption
mainly through the following measures: raising utilization ratio of the material with a high regeneration
rate; saving the procurement and usage costs of raw materials; improving the design of light-weight,
energy-saving, modularization and dismantling for products. The starting point of these measures is
consistent with the goal of eco-efficiency, and embodies the requirements of eco-efficiency.
3 Analyzing the Factors of Activity Procedure of Remanufacturing Closed-Loop
Supply Chain
On the angle of fluid engineering, remanufacturing closed-loop supply chain activity procedure can be
divided into two aspects of fluid and the carrier, which are the product level and enterprise logistics level.
Through the research in factors on the product level, we can create a detailed analysis of the fluid
(materials, components, modules and finished products) operating conditions for the remanufacturing
closed-loop supply chain at every stage, and their impact on the eco-efficiency. According to the
analysis of enterprise logistics level, we can sort out the carrier operating conditions at every stage of the
remanufacturing closed-loop supply chain, identify the process that can be improved, and eventually
improve the eco-efficiency of it in practice.
3.1 The product level
On the product level, we analyze how it affects the eco-efficiency of remanufacturing closed-loop
supply chain mainly in different product forms (materials, components, modules and finished products)
that are produced in material flow, components flow, modules flow, products flow respectively in
manufacturing stage. For details, see picture 2.
(a) Material flow: raw material supply ----- component manufacturing ----- module assembly ----product assembly ----- warehousing product ----- use ----- disassembly ----- inspection ----- material
recycling ----- raw material supply
Material flow mainly happens in the following four stages: raw material supply, material recycling,
thermal recovery and disposal. The quality, economy and regeneration at the raw material supply stage
have a direct impact on the economic cost and treatment cost of environment for the entire
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remanufacturing closed-loop supply chain, that is, its eco-efficiency; at the material recycling stage, the
proportion of material circulation largely affects the cost and benefit of remanufacturing; at the thermal
recycling stage, we can recover the energy and maximize the use of materials by making use of those
that can not enter the recycling; and at the disposal stage, the disposal of those acyclic materials,
although some of the costs consumed, can reduce the impact on the external environment utmostly.
(b) Component flow: component manufacturing ----- module assembly ----- product assembly ----warehousing product ----- use ----- disassembly ----- inspection ----- material recycling ----- component
manufacturing
Component flow is mainly carried out in the stages of component manufacturing and inspection. Both
the rationality of component design and the reliability of processing technology in the component
manufacturing stage affect the economy of products; in the inspection stage, the higher proportion of
component in re-manufacture circulation, the stronger economy of the closed-loop supply chain will be.
Figure2. The flowchart of closed-loop supply chain for remanufacturing products
(c) Module flow: module assembly ----- product assembly ----- warehousing product ----- use ----disassembly ----- inspection ---- module rebuilding ----- module assembly
Module flow mainly works in the following four stages: product assembly, disassembly, inspection and
module rebuilding. At the stage of product assembly, the rationality of module design and the economy
of assembly largely affect the fixed and variable costs of products; at the disassembly stage, the higher
percentage of modularity, the easier the disassembling work will be, and then the lower labor and energy
cost consumed will be; at the inspection stage, the higher proportion of module recycling after
inspecting, the stronger the economy of the whole remanufacturing closed-loop supply chain will be;
and at the module rebuilding stage, after simple re-processing, the more the modules enter the stages of
module assembly and product assembly, the lower the remanufacturing cost will be.
(d) Finished product flow: warehousing product ----- use ----- disassembly ----- inspection ---- module
rebuilding ----- product assembly ----- warehousing product
Finished product flow mainly happens in the warehousing product stage and use stage. At the stage of
warehousing product, the quality, weight and environment protection character of products will affect
the economic benefits of warehousing activities; and at the use stage, the product flow allows for the
realization of the product value. Therefore the quality of products is particularly important and we
would also aim to minimize the damage of products to the environment at this stage.
3.2 The enterprise logistics level
The implementation of remanufacturing closed-loop supply chain is to a large extent based on the daily
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operation through enterprises behaviors. Therefore, the research on the stages of remanufacturing
closed-loop supply chain from enterprise logistics, aiming to find the process of reducing resource
consumption, production costs and adverse impact on environment, is of great practical significance for
the eco-efficiency of remanufacturing closed-loop supply chain. From enterprise logistics,
remanufacturing closed-loop supply chain can be divided into the following six stages:
Supply logistics stage: Supply logistics is the input point and starting point of the entire closed-loop
supply chain. The transportation costs of supplies, recyclability of the material and its environment
protection character can not only directly determine the remanufacture-ability of products, but also have
severe impact on the economic cost and environmental cost.
Production logistics stage: Production logistics is a key activity of the entire closed-loop supply chain.
For example, if the production level cannot be handled properly, it will result in multiple transportation
in the parts processing and special maintenance needed in the later stage of product, which will
eventually lead to increased production cost and waste of resources.
Package logistics stage: Packaging logistics is an important activity of the closed-loop supply chain.
Packaging greatly influences the cost and efficiency of the whole system, especially the efficiency and
effectiveness of transportation and storage. It can greatly reduce the impact on the environment and
economic costs through simple packaging and environmental protection materials.
Transportation stage: Transportation stage is a key activity of the entire closed-loop supply chain.
Through improving the efficiency of the cargo transport, choosing the mode of rational transportation
measures and adopting optimal path, we can greatly reduce unnecessary transportation cost and energy
consumption.
Warehouse logistics stage: Warehouse logistics is an important activity of the closed-loop supply
chain. Products warehousing need a lot of human, material and financial resources. Storage environment
and the product life cycle both have a significant effect on the influence of quality and efficiency of
products.
Recycle logistics stage: Recycle logistics is a key activity of the entire closed-loop supply chain. As
regard to the recycle logistics, on the one hand, the quantity and quality of recycled products has not
only seriously affected the conduct of the remanufacturing activities, but also largely determined the
economy and environmental friendliness of the remanufacturing closed-loop supply chain. On the other
hand, we should rationally layout recycling distribution network, inspection facilities and trade off
transportation costs and the solid construction costs. In addition, we should minimize the transportation
distance between remanufacturing centers, reduce energy consumption, environmental impact and
transport costs.
Through the above analysis we can see, at every stage of enterprise logistics, we can reduce the
economic cost, energy consumption and environmental pollution by strengthening management,
optimizing design, and meanwhile, improve the public appearance of the enterprise and customer value.
Furthermore, from a long-term perspective, it is helpful to promote manufacturing enterprises into the
economic and ecological operation mode, which is in an accord with the scientific development concept
and the circular economy development ideas and requirements, and will also help enterprises to obtain
good economic benefits, taking on a great significance to the economy and society.
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4 Conclusion
This article applies eco-efficiency into the analysis of remanufacturing closed-loop supply chain, and
put forward the concept of the eco-efficiency for remanufacturing closed-loop supply chain. It analyzes
the influencing factors of the eco-efficiency for remanufacturing closed-loop supply chain from product
design and the activities procedure of remanufacturing closed-loop supply chain, which can significantly
improve the activities efficiency of the remanufacturing closed-loop supply chain, enhance the sense of
enterprise’s responsibility for environmental protection, and reduce waste emissions, resource
consumption and the remanufacturing cost. It will help solve many social problems at the present stage
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in china, such as the more and more serious shortage of resources and environmental pollution, and can
improve the sustainable development ability of economy and environment and bring about tremendous
environmental benefits and economic benefits.
Acknowledgements:
This paper is sponsored by logistics system and technology research lab of Beijing Wuzi university.
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