Closed loop supply chain models are different from a forward supply chain model as in the former case, the good meant for sale are not only transferred to the ultimate consumers but are also sourced back for different purposes at a later time. There are several provisions in the case of a closed loop supply chain model that allow companies to acquire the products that they sold earlier and use them for remanufacture or any other profitable activity. This creates a circular supply chain in which materials are recycled and remarketed from time to time.
Most companies practice closed loop supply chain models by incorporating elements like the chance to return products after a 60 day, 90 day or 120 day period or by allowing sales returns. Certain companies also initiate offers of receiving back goods that may have been purchased a significant number of years ago by customers in exchange for new products at a much reduced price. They thus use their existing customers for the generation of possible raw materials that can be reworked into new products.
Although most companies spend a high amount of time, money and energy on forward supply chain models, very little time is spend on closed loop supply chain models as they are generally seen as being less profitable. However, companies must realize that such supply chain models, if implemented and monitored properly can indeed bring huge returns for businesses with a decreased amount of investment in sourcing new raw materials. Close attention should thus be paid on integrating forward moving supply chain activities with backward ones in which products are acquired. There are several stages that form a part of a typical closed loop supply chain model. These are:
Most companies practice closed loop supply chain models by incorporating elements like the chance to return products after a 60 day, 90 day or 120 day period or by allowing sales returns. Certain companies also initiate offers of receiving back goods that may have been purchased a significant number of years ago by customers in exchange for new products at a much reduced price. They thus use their existing customers for the generation of possible raw materials that can be reworked into new products.
Although most companies spend a high amount of time, money and energy on forward supply chain models, very little time is spend on closed loop supply chain models as they are generally seen as being less profitable. However, companies must realize that such supply chain models, if implemented and monitored properly can indeed bring huge returns for businesses with a decreased amount of investment in sourcing new raw materials. Close attention should thus be paid on integrating forward moving supply chain activities with backward ones in which products are acquired. There are several stages that form a part of a typical closed loop supply chain model. These are:
- Informing customers about possible offers under which they can return back products they may once have bought and the means to do so. This will consist of a certain amount of advertizing so as to generate awareness about the possibility of returning items.
- Another aspect associated with such models is having a quality inspection team in place to sort through the materials collected from the ultimate consumers. Such a team can classify the useful elements from the useless ones.
- The company can then formulate different ways of working the collected materials into the production processes to come up with brand new products to be sold to consumers.
