Exploring Sustainability Issues in Supply Chains

Abstract

Sustainability initiatives are at the forefront of many firms' agendas today. Consumers and government mandates are both calling for environment-friendly business practices. In this presentation, we will examine sustainability issues from two perspectives.

Remanufacturing is one approach to sustainability, with benefits that include the diversion of discarded products from landfills, reduced virgin raw material usage, and energy consumption lower than in original manufacturing. It is perceived as an environment-friendly end-of-use management option for many product categories. For example, remanufacturing in the auto industry saves over 80% of the energy and raw material required to manufacture a new part, and keeps used parts out of landfills. It has also been observed that remanufacturing consumes less energy than does manufacturing of new products, and evidence suggests that remanufacturing can be superior to recycling in material consumption and overall environmental impact. Since remanufacturing activities can either be performed in-house or outsourced, we attempt to understand the drivers of when either one of the two alternatives are superior not only in terms of profitability but also in terms of environmental impact.

A second focus is to evaluate policy decisions for product disposal and reuse. Given that consumer electronics have become an integral part of daily life and revolutionized the way we live, an associated downside is that more than 50 million tons of e-waste were discarded in 2009 and 72 million tons are expected to be disposed in 2014. Hence, government incentives and legislations are now used to facilitate end-of-life/end-of-use management of electronic products. This includes (but not limited to) refurbishment or remanufacturing, recycling e-waste and disposal. Based on practice, we evaluate three alternative mandates from the perspective of the consumer, the firm, and the environment.