An Optimal Purchase Decision of Reusable Packaging in the Automotive Industry

Abstract

Among the many components of material delivery operations, packaging is one of the foundations of secure and cost-efficient on-time delivery. Current environmental concerns have increased the popularity of returnable packaging over disposable packaging. This study considers a supply chain in the automotive industry where a single supplier adopts returnable packages for delivery operations to a single recipient. If a returnable package is not available, then an expendable package will be used as a more expensive alternative. Thus, an investment decision on the number of returnable packages must be made prior to launching a returnable packaging system. Using the actual data from an automotive supply chain, this study conducts simulated experiments, under the uncertainty of future demand and required lead time of reverse logistics, to identify the optimal quantity of returnable packages. Sensitivity analysis is then performed by varying the assumptions on operation duration, demand variability, and lead time variability. In general, the results indicate that a greater initial purchase of returnable packages is desirable for longer operation duration, higher demand variability, and higher lead time variability. However, if operation duration is short and the uncertainty is high, then there may be little benefit in using reusable packages. These results generalize the findings from previous studies. This approach and solution can enhance reliable and efficient supply chain operations in the automotive industry and may be applied to other industries where packaging is important and expensive.

A Model for Managing Packaging in the Product Life Cycle in the Automotive Industry

“…Efficient use of returnable packaging contributes to reducing waste, costs, and potential damage during transport, while the use of reusable packaging can help companies achieve economic and environmental benefits [4,8]. These are the reasons that led to returnable packaging gaining wide acceptance in supply chains in the automotive industry as early as thirty years ago.…”

“…Meanwhile, the single-trip reverse logistics arrangement was most favourable economically due to its shortest payback period of 0.33 year. Na et al [8] performed a cost simulation of the use of expendable containers and returnable containers in the automotive industry. The results of the study indicate that a greater initial purchase of returnable packages is desirable for longer operation duration, higher demand variability, and higher lead time variability.…”

“…It continues with entering data on various types of packaging (non-returnable, returnable, and returnable foldable) and data on other logistics processes that are part of the proposed model. The authors define a disposable packaging system as packaging that is not returned to the sender, such as single-use expandable pallets [21], expendable container [8], disposable bottles [16]. RTI is defined as a special type of reusable packaging materials such as pallets, trays, boxes, or crates [3].…”

“…The same definition of reusable packaging is also used by The Reusable Packaging Association [23]. The terms 'reusable packaging' and 'returnable packaging' are used both in theory and in practice [8,23]. In the developed model, we used the term non-returnable packaging for the disposable packaging system.…”

Impacts of the BOPS Option on Sustainable Retailing

“…Chen et al [15] studied the influences of both text and image information on consumer behavior in recycling of express packages and derived a series of other factors affecting individual recycling behavior. Na et al utilized data from the automotive industry to support firms' decisions on the ordering of reusable packaging [31]. Zeng and Durif investigated the effects of eco-design packaging on consumers' purchasing decisions [32].…”