Sharing Responsibility for Product Recovery Across the Supply Chain

Abstract

Extended producer responsibility (EPR) programs typically hold the producer—a single actor defined by the regulator—responsible for the environmental impacts of end‐of‐life products. This is despite emphasis on the need to involve all actors in the supply chain in order to best achieve the aims of EPR. In this paper, we examine the economic and environmental implications of product recovery mandates and shared responsibility within a supply chain. We use a two‐echelon model consisting of a supplier and a manufacturer to determine the impacts of product collection and recycling mandates on the incentive to recycle and resulting profits in the integrated and decentralized supply chains. For the decentralized supply chain, we demonstrate how the sharing of responsibility for product recovery between the echelons can improve total supply chain profit and suggest a contract menu that can Pareto‐improve profits. To examine both the economic and environmental performance associated with responsibility sharing, we propose a social welfare construct that includes supply chain profit, consumer surplus, and the externalities associated with virgin material extraction, product consumption, and disposal of nonrecycled products. Using a numerical example, we discuss how responsibility sharing may or may not improve social welfare. The results of this paper are of value to firms either anticipating or subject to product recovery legislation, and to social planners that attempt to balance economic and environmental impacts and ensure fairness of such legislation.

Sustainable Operations Management: An Enduring Stream, or Passing Fancy?

“…Kalkanci et al (2013) explore the effect of policy intended to improve supply chain transparency (the public disclosure of performance). They warn that government regulation requiring firms to disclose what they know The exploration of Extended Producer Responsibility (EPR)-regulation whereby manufacturers are held accountable for the recovery and reuse or disposal of their products-has been an active area of CLSC research well-integrated with policy (e.g., Atasu et al 2009, Jacobs and Subramanian 2012, Gui et al 2013. Gui et al (2013), for example, show that return-share methods traditionally employed by regulators to allocate recovery costs to manufacturers result in fragmented and relatively costly collection networks.…”

Green Supply Chain Collaboration for Fashionable Consumer Electronics Products under Third-Party Power Intervention—A Resource Dependence Perspective

“…In Japan, FCEP branders favor establishing their own reverse channels with contracted retailers to facilitate end-of-life product returns from end-customers, controlling recycled-material input quality for green manufacturing, and optimizing recyclability by greener designs [12]. As a supply chain partner of an FCEP producer, the contracted retailer is likely to bear extended producer responsibility with the producer coercively and non-coercively under the influence of governments and green organizations, respectively [11,108]. When the FCEP producer fails to comply with green regulations (e.g., take-back laws and RoHS), the contracted retailer's economic performance (e.g., sales and profits) will be influenced, particularly when the producer is the retailer's key supplier [9,16].…”

“…Thus, we argue that, under the increased uncertainty of task environments under TPPI, cooperation and coordination of dyadic members (i.e., a producer and contracted retailer) likely extends from a typical distribution channel to an FCEP bi-directional green supply chain for joint extended producer responsibility. As the concept of product stewardship emerges, increasing consensus exists in that the FCEP supply chain partners of producers, including retailers, must be involved and regulated by green laws and social norms [108,121].…”

OM Forum—Sustainable Operations Management: An Enduring Stream or a Passing Fancy?

“…The exploration of extended producer responsibility-regulation whereby manufacturers are held accountable for the recovery and reuse or disposal of their products-has been an active area of CLSC research well integrated with policy (e.g., Atasu et al 2009, Jacobs and Subramanian 2012, Gui et al 2013. Gui et al (2013), for example, show that returnshare methods traditionally employed by regulators to allocate recovery costs to manufacturers result in fragmented and relatively costly collection networks.…”