ABOUT RETURNS is a brand new event to talk about the Reverse Supply Chain and Returns Management in a Customer-Centric and Circular Economy. ABOUT RETURNS '17 is the kickoff for an event that we will organize every year.
6. Closed loop supply chains:
the road to value Creation
Prof dr ir Harold Krikke
7. Open Universiteit Nederland
• Southern Netherlands (Heerlen)
• Distance learning
• BsC, MsC and PhD program
• 15.000 students, wide variety in age but mostly 30-45 years
• Three faculties, amongst which Management Science and
Technology
• 50 external PhD, 20 internal PhD
8. Closed-loop supply chain management is the design, control
and operation of a system to maximize value creation over
the entire life-cycle of a product with dynamic recovery of
value from different types and volumes of returns over time.
Guide and Van Wassenhove, 2006.
harvesting
15. Critical success factors in value
Creation in Closed loop
• Compliance
• Extended producer responsibility
• Quality and hygiene
• Complexity
• Product design and supply chain design
• Disassembly and recovery optimization (multi-loop)
• Control
• Gate keeping, product acquisition, use of IT
• Collaboration
• Stakeholders management/alignment
• Industrial ecology and energy storage in clusters
• Carbon footprint
• Context (type of business)
• Customer
• Value creation/PSS
• Modularity/reconfiguration
• Repurchase intention and returns behavior
16. What is Customer service?• A product-service system (PSS), also known as a function-oriented business model, is
a business model, developed in academia, that is aimed at
providing sustainability of both consumption and production
M.B. Cooka, T.A. Bhamrab & M. Lemonc (2006). "The Transfer and Application of Product Service Systems: From
Academia to UK Manufacturing Firms". Journal of Cleaner Production. Elsevier Ltd. 14 (17): 1455–
1465.doi:10.1016/j.jclepro.2006.01.018.
• Product Oriented. Ownership with remains with customer but additional
services supplied.
• Example: extended warranty on car
• User Oriented. Ownership with provider but usage rights with customer
• Example: lease car
• Result oriented. Direct function delivered. Owner is provider or one
customer.
• Example: shared car
18. Benefits and barriers
• Less risk for customer
• Constant revenue stream
• More sustainable
• Byer supplier relations
• Installed base monitoring
• Stable demand and
return flow
• Capital investment (upfront)
• Uncertainty for customer (life time
guarantee)
• Customer freedom of choice reduced
• Technology dev/upgrades
• Economies of scale (lagging), first mile
• Benefits sustainability unclear
19. Assignment I: how to inCorporate new
values in business model (duo)
• Which values to incorporate in customer proposition
• Value for whom? (pros and cons)
• **
20. What is a business model?
• A business model concerns
• Customer value proposition
• Products/ offered to market segments and customer relations management
(‘Marketing’)
• Value creation and delivery.
• Management of resources, processes, partners/stakeholders and technology (‘SCM’)
• Value capture.
• Cost structure and revenue stream (‘verdienmodel’). This includes capital needed and
ROI.
Adapted from Bocken et al., 2014
21. ReCent typology
(van Ostayen et al., 2013)
• Input based
• Availability based
• Usage based
• Performance based
• Solution focus
• Effect focus
• Demand focus
• HYBRIDS
22. Assignment II
• Which subtype of PSS is most feasible?
• per type of industry and/or
• per phase in the life cycle?
• Are hybrids needed?
23. ExerCise
harvesting reman refurbish reuse Re-fill recycle
PSS Automotive Industrial
equipment
Medical
equipment
E-commerce cartridges E-waste
product Related
service
Advice
consulting
Extended
warranty
use Lease
Rent
Share/pool
result Act mgt/
outsource
Pay per unit
Functional
result (SLA)
24. Classic PSS typology falls short
Classic typology does not capture essence of value creation within closed loop:
a. It does not connect to the key elements of business model
b. More values than in the past play a role but how to integrate them in the business model?
c. Stakeholders interests, e.g. third parties may be involved due to capital requirements
d. Requirements may change over the life cycle
e. We have to understand dynamics between business models and other succesfactors as well as
values mutual.
26. System DynamiCs
Recovered
products and parts
Returned products
and parts
+Sales recovered
products and parts
+
Installed base
+
+
Product
design
Customer
services
Information
management
Business
model
Trade-In rate
+
+
Maren Schenkel, 2016
28. Assignment III
• Start the virtuous circle by reversing the vicious circle.
• How to manage dynamics of transition?
• Role stakeholders and alignment?
• Where to start?
Onderwerp via >Beeld >Koptekst en
voettekst
Pagina 28
29. Wrap up
• Multiple CsF in value Creation with mutual relations
• Multiple values (positive and negative)
• Manage dynamic to create virtuous circles
• PSS is not a full grown business model
• One size fits all does not work (ergo product Leasing)
• Research agenda
Keep the C alive
30. Research agenda
• Topics and funding
• Value Creation in closed loop supply chains (Maren Schenkel)
• Value of information and organizational learning (Ilkka)
• Forecasting and intervention
• 3D and (CL) supply chain design (Victor Verboeket)
• Supply chain risk (Quan Zhu and Evangelos)
• Footprinting, economics & stakeholders
• CIRCULAR BUSINESS MODELS (> NWO call)
• Plastic soup
• Cold chain and returns
• Research questions
• How to develop PSS into full business model
• Interaction other CSFs (Business model and value of information)
• Role of the life cycle, hybrids
• Multiple values (are circular business models more sustainable?)
• Stakeholders (lock-ins, mutual dependency)
MANAGE DYNAMICS
38. Direct-to-Customer Commerce 1
More Complete and On-Time Inbound &
Outbound Orders
Reduced Total Landed Cost per unit
Lower Average Stock-out Rates Reduced Transportation Cost per unit
Greater Finished Goods Inventory
Turns Per Year
Improved Out-of-Stock recovery
time
Source: Aberdeen Group
42. Experience & Share Economy 2
Customer Journey
Purchase:
1. Right product
2. Right place
3. Right quantity
4. Right price
5. Right time
6. Right service
Product:
1. Useful
2. Available
3. Sustainable
4. Fun to use
5. Easy to dispose
BUY USE
43. Experience & Share Economy 2
DeliveryPurchaseOrientation
Buy
conversion focused
End of UseAt UseStart of Use
Use
retention focused
44. Experience & Share Economy 2
End of UseAt UseStart of Use
Use
retention focused
50. Change Customer CentricCircularFlexibleScalableSustainable
The circular economy is an economic system that
is designed to maximize reusability of products
and raw materials and minimizing value
destruction. Unlike the current linear system, in
which raw materials are converted into products to
be destroyed at the end of their life.
51. Change to a new Economy
An economy is the system of production, distribution and consumption of scarce
goods and services in a society.
Products
Supply Chain
Consumers
52. A closed loop supply chain for a customer
centric and circular economy.
Change to a new Supply Chain
53. Plan Source Make Deliver Return
Sales Journey
Conversion focused
Orientation Purchase Delivery
Service Journey
Retention focused
Start of Use At Use End of Use
Customer Service Operations
Returns & Exchanges
Warranty & Repair
Take-Back & Recycling
“I don’t like it”
“Help, it doesn’t
work”
“I don’t use it
anymore”
Refund & Exchange
Repair &
Replace
Reward &
Rebate
Forward Supply Chain Reverse Supply Chain
54. DeliverMakeSourcePlan
Start of
Use
At Use
End of
Use
Return
Returns &
Exchanges
Refund /
Exchange
Warranty
& Repair
Repair /
Replace
Take-Back &
Recycling
Reward /
Rebate
Reuse, Resell
Repair, Refurbishment, Remanufacturing
(parts) Recovery, Recycling
55. Supply Chain
Forward Reverse
Plan Source Make Deliver Return
Record-to-Report
Procure-to-Pay Order-to-Cash
Return-to-
Settlement
Business Processes
Change to a new Business Process
56. “very interesting product and I think a really good handle on representing
the reverse supply chain as an extension of the existing forward supply
chain... great reference to the connectedness of customer service
operations and supply chain operations in what they called a returns-to-
settlement business process...”
79. ABOUT RETURNS
DISCUSSION:
1. The importance of
the Reverse Supply
Chain
2. Trends and future
developments
3. How is 12Return
helping?
4. What is expected
from 12Return?