From waste to value – a system dynamics model for strategic decision-making in closed-loop supply chains

Although the field of closed-loop supply chain management has attracted a lot of attention in recent years and the management of reverse logistics processes has become a major field of supply chain management, there is still a lack of research conducting analyses using a comprehensive approach that takes the complexity of problems of reverse logistics processes into account. Hence, the purpose of this paper is to develop a model that allows an original equipment manufacturer in the electronics industry to test different value recovery strategies for business-to-business products in a closed-loop supply chain setting. For this purpose system dynamics is used because this approach enables one to capture the high complexity of reverse logistics processes and is suitable, contrary to traditional optimisation approaches, for analysing the dynamic behaviour of closed-loop supply chains comprehensively. The simulation analysis identifies leverage points for the improvement of decisions concerning reverse logistics. In particular, the simulation runs conducted highlight the high complexity and connectivity inherited with various value recovery processes. The paper contributes to a better understanding of supply chain dynamics, the impact of product backflow, and reverse logistics.