Decision-Making and Performance Analysis of Closed-Loop Supply Chain under Different Recycling Modes and Channel Power Structures

Abstract

The recycling and remanufacturing of e-waste is linked to a worldwide emphasis on the establishment and implementation of Extended Producer Responsibility system (ERP), which has become an important problem in the process of cycling economy. Meanwhile, with the development and expansion of large-scale retail enterprises, the power structure of supply chain channels is showing a tendency towards diversity as well. However, few studies on closed-loop supply chains (CLSC) have considered both recycling modes and channel power structures. We aim to explore the influence of different recycling modes and channel power structures on the optimal decisions and performance of a closed-loop supply chain (CLSC), considering three recycling channels including manufacturer recycling, retailer recycling and hybrid recycling of retailer and manufacturer and two dominant modes including manufacturer-led and retailer-led. We construct six closed-loop supply chain models under different combinations of three recycling channels and two dominant modes. We analyze the effect of different recycling channels on company decision-making under the same dominant mode, whether participating in recycling has an impact on company decision-making under different dominant modes, and the effect on supply chain members and supply chain system under different dominant modes and recycling channels. The results show that the hybrid recycling strategy is always optimal for both supply chain members; the sub-optimal recycling strategies are both recycled by the subordinate enterprise, and the worst recycling strategies are both recycled by the leading enterprise. Moreover, it is always the worst strategy for manufacturer to participate in a closed-loop supply chain dominated by retailer and recycled by retailer; participating in a closed-loop supply chain dominated by manufacturer and recycled by manufacturer is always the worst strategy for retailer. From a system point of view, system efficiency is the highest under hybrid recycling, and system efficiency is the lowest if leading company recycles separately.

Who Drives Green Innovation? A Game Theoretical Analysis of a Closed-Loop Supply Chain under Different Power Structures

“…The similar result can be found in Gong et al [19], where authors emphasized that it is always advantageous for manufacturers and retailers to participate in recycling at the same time in terms of the sustainability and profitability of CLSCs. Hence, the manufacturer and retailer are expected to benefit even more from a cooperative effort when implementing green innovation strategies.…”

“…Cheng et al [51] discussed the relationship between environmental responsibility transfer and market power structure and showed that regardless of who decides upon environmental responsibility transfer, a manufacturer as a game leader may make the environmental and economic performance worse. Gong et al [19] analyzed the effects of three types of recycling modes in manufacturer-led and retailer-led CLSCs. Their results confirmed that regardless of who has leadership, a hybrid recycling mode outperforms in terms of the overall supply chain profit and recycling performance.…”

“…In addition, the higher the collecting rate of the used products is, the higher the investment costs associated with the collecting technology will be. According to Gong et al [19], the collector's fixed cost is assumed to be µt 2 /2, where µ is the cost coefficient of the investment in collecting.…”

“…Recently, many manufacturers have transferred their dominant positions in supply chains to giant retailers such as Wal-Mart and Amazon to focus on their core business tasks [17][18][19]. As seen in the literature and in the real world, a power shift from manufacturers to retailers in CLSCs can have a major impact on pricing, green innovation efforts, and resource recycling decisions.…”

Game Analysis and Coordination of a Closed-Loop Supply Chain: Perspective of Components Reuse Strategy

“…In the field of closed-loop supply chain, lots of scholars has adopted game theory to investigate the optimal pricing decisions [18][19][20][21]; cooperation and coordination of member enterprises [22][23][24][25][26][27]; reverse channel design [28][29][30][31][32], etc. These studies focus on the downstream and reverse logistics of supply chain, and provide positive guidance for the decision optimization of 'manufacturer-retailer', 'manufacturer-remanufacturer', and 'manufacturer-retailer-recycler/remanufacturer' under product remanufacturing strategy.…”