The Bullwhip Effect in Closed-Loop Supply Chains: A Comparison of Series and Divergent Networks
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The Bullwhip Effect in Closed-Loop Supply Chains: A Comparison of Series and Divergent Networks Linda Tombido 1
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& Louis Louw & Joubert van Eeden
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Received: 3 October 2019 / Accepted: 21 May 2020/ # Springer Nature B.V. 2020
Abstract
Supply chain network structure has been mentioned as one of the contributors to the Bullwhip Effect in the supply chain. With the incorporation of reverse logistics into most of the supply chains, the structure of the supply chain changes especially if there are more than one player in the reverse chain. In this research, systems dynamics models were developed to compare the Bullwhip Effect between serial and divergent supply chain networks with different structures in closed-loop supply chains. The scenario experimentation revealed that increasing the number of collectors in the reverse chain increased the Bullwhip suffered, Bullwhip generated and the Bullwhip slope in all supply chain configurations. Therefore, it seems to be more beneficial for a closed-loop supply chain to have one reliable collector supplying used products than more than one collector with uncertainties in the quantity of products returned. Findings also reveal that a serial network is more sensitive to changes in the reverse chain in terms of the number of parties involved compared to a divergent supply chain. This means that the serial network assumption overestimates Bullwhip measures. Whilst it may be easy to measure the Bullwhip Effect by assuming a serial supply chain structure, this value might be overestimated especially for supply chains that are involved with more than one player at each echelon. These findings provided some useful insights on modelling supply chain networks to reduce the Bullwhip Effect in closed-loop supply chains. Keywords Reverse logistics . Bullwhip effect . Closed-loop supply chains . Supply chain network structure
* Linda Tombido [email protected] Louis Louw [email protected] Joubert van Eeden [email protected]
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Department of Industrial Engineering, Stellenbosch University, Stellenbosch, South Africa
Journal of Remanufacturing
Introduction “In an ideal world, reverse logistics would not exist.” [1]. However, this world noted by Whalen is not ideal. Products no longer only move downstream but also in the opposite direction in a supply chain. For example, in 2010, Toyota recalled 8.1 million vehicles because of the potential for gas pedals to get stuck in floor mats. Toyota estimated costs related to the recall at $2 billion. Similarly, in 2016, Samsung was forced to discontinue and recall 2.5 million faulty devices after some of them burst into flames. Whilst the two examples mentioned demonstrate the negative impacts of reverse logistics to an organisation, the reverse logistics process can also have a positive impact on an organisation. Domgala and Woliniak [2] give an example of Bosch, a company that has made a profitable business by selling remanufactured tools such as starters and alternators. This demonstrates how the process can also be an alternative form
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