Collaboration Mechanism for Shared Returnable Transport Items in Closed Loop Supply Chains

Abstract

This paper addresses a relevant practical approach of collaboration in supply chains including reverse flows of materials. The objective is to simulate a two-stage closed loop supply chains in which two producers use reusable pallets to distribute their finished products to the same retailers. The producers supply raw materials and new pallets they need from suppliers. For each producer, the flows of raw material, loaded/empty pallets and finished products are triggered by information flows. Two simulation models are considered. In the first model, supply chains are non-collaborative. Each producer manages his own pool of pallets. After receiving replenishment orders, trucks deliver loaded pallets and simultaneously pick-up empty ones from retailers to be returned to the producer. In the second model, the two producers share their pool of empty pallets. The results show that collaboration can lead to economies of scale and costs reduction. They also highlight the need for a third part y to manage the entire system to promise mutual benefits for the concerned parties.