Sustainable sourcing of strategic raw materials by integrating recycled materials

Abstract

In this paper we investigate a manufacturer's sustainable sourcing strategy that includes recycled materials. To produce a short life-cycle electronic good, strategic raw materials can be bought from virgin material suppliers in advance of the season and via emergency shipments, as well as from a recycler. Hence, we take into account virgin and recycled materials from different sources simultaneously. Recycling makes it possible to integrate raw materials out of steadily increasing waste streams back into production processes. Considering stochastic prices for recycled materials, stochastic supply quantities from the recycler and stochastic demand as well as their potential dependencies, we develop a single-period inventory model to derive the order quantities for virgin and recycled raw materials to determine the related costs and to evaluate the effectiveness of the sourcing strategy. We provide managerial insights into the benefits of such a green sourcing approach with recycling and compare this strategy to standard sourcing without recycling. We conduct a full factorial design and a detailed numerical sensitivity analysis on the key input parameters to evaluate the cost savings potential. Furthermore, we consider the effects of correlations between the stochastic parameters. Green sourcing is especially beneficial in terms of cost savings for high demand variability, high prices of virgin raw material and low expected recycling prices as well as for increasing standard deviation of the recycling price. Besides these advantages it also contributes to environmental sustainability as, compared to sourcing without recycling, it reduces the total quantity ordered and, hence, emissions are reduced.

Designing Sustainable Recovery Network of End‐of‐Life Product during the COVID‐19 Pandemic: A Real and Applied Case Study

“…[30] designed the reverse flow of the waste of plastic with a sustainable approach. Rogetzer et al [31] researched recycling materials with a sustainable approach. Two study sources provided a new way to predict the cost at the early stage for EOL products by specifying the best EOL option with the AHP method [32,33].…”

Glove Industry Spikes during Covid-19 Pandemic: A Case Study of Comfort Gloves Berhad (CGB)

“…This has formed a moderate power of suppliers where they have significant roles in supplying and determining the level of raw materials inventory in the production warehouse of CGB. The coalition of suppliers to increase or fix the raw materials' prices will influence the stocks of raw materials available in the markets (Rogetzer et al, 2018). Therefore, to reduce the fluctuation of raw materials prices supplied by the suppliers, the CGB can sign contracts with its raw materials suppliers for agreed prices and terms to reduce the risks.…”

Sourcing with recycled materials: a contingent sourcing model with supply unavailability and setup time uncertainty for ripple effect mitigation

“…They showed that recycled materials comprise a strategic supply source leading to higher production quantities and profits. Rogetzer, Silbermayr, and Jammernegg (2018) considered a firm's sourcing strategy in a single-period setting with uncertainties in recycling quantity and price under random demand. Unlike the literature on contingent sourcing discussed earlier, this firm considered the reliable supplier (i.e.…”

“…Rogetzer, Silbermayr, and Jammernegg (2019) also considered a firm's sourcing strategy in a single-period setting with random demand, uncertain yield, uncertain prices of recycled and virgin materials. However, differing from Rogetzer, Silbermayr, and Jammernegg (2018), they regard the suppliers of recycled and virgin materials as the main supplier and the backup supplier, respectively, and consider that the firm uses an options contract with the main supplier to mitigate supply risk.…”