TOWARDS AN INVESTIGATION ON THE
DETERMINANTS FOR EFFECTIVENESS AND EFFICIENCY OF REVERSE LOGISTICS SYSTEMS
(RLS)
Francisco
Gaudêncio Mendonça Freires
Universidade
Federal da Bahia, Brazil
E-mail:
francisco.gaudencio@ufba.br
Submission:
26/06/2013
Revision:
09/07/2013
Accept:
27/08/2013
ABSTRACT
This
article deals with the influence of economies of
scale and postponement on the efficiency and effectiveness of reverse logistics
systems (RLSs). In a global way, it provides an understanding of returns
management and RLSs to generate knowledge of
practical and theoretical character. Starting from a generic model of circular
flow of materials, the system studied is positioned between the final consumer
and the traditional or direct supply chain. It is a qualitative approach over
two case studies carried out in Portugal and Brazil dealing with scraptires.
One deals with management system while the other deals with the reverse
logistics system. As conclusions, the efficiency of RLSs is aided by economies
of scale. Postponement has positive effects on efficiency by increasing the
system capacity reducing logistics costs which indirectly leads to economies of
scale, having a positive influence on the effectiveness of RLSs. According to
what has been stated in this paper, the coordination between the direct and
reverse flow is a typical case of a closed circuit.
Keywords: reverse
logistics systems, economies of scale, postponement
1.
INTRODUCTION
Business
performance management was mainly financial for many years. Nowadays, however,
models such as the Balanced Scorecard (BSC) are designed to monitor the
implementation of the strategy outlined for the company, promoting their
re-evaluation, from strategic discussions, but keeping the financial indicators
and also including non-financial indicators, united in order to form a system
of evaluation.
Holmberg
(2000) states that companies that have succeeded in managing the performance of
their supply chains thought about chain as a whole and sought results shown in
the revenue growth, asset utilization and cost reduction, in other words, the
strategic themes. When talking about performance management, you cannot leave
aside two concepts: effectiveness and efficiency. Both are components of
performance, which are addressed in different ways according to the subject or
discipline to be investigated.
According to Harrington
(1993) and Neely et al. (1995), the effectiveness refers to the extent to which
the outputs of the processes or sub-processes reach the needs and expectations
of customers. You could say that effectiveness refers to produce the ‘right
things’. Organizations must meet the needs of customers and then produce the
appropriate product (product being a good or a service). To measure the
effectiveness of an organization, one must measure the results achieved by the
processes. Efficiency is an indication of how resources are used by the
organization (resources are minimized and wastes are eliminated) to achieve
efficacy (HARRINGTON, 1993; NEELY et al., 1995). In simple words, efficiency is
doing ‘things right’. Once the organization found the needs of its customers,
it should produce the product/service using minimum resources possible.
Like
any logistics system, the RLSs must be effective and efficient. Logistics effectiveness
and efficiency can be approached from several perspectives and be related to
several issues. In this section, the determinants for logistics effectiveness
and efficiency will be described and discussed. The aim is to settle specific
issues related to the effectiveness and efficiency of reverse logistics systems
(RLSs) that will be addressed throughout this work. As logistics is a vast
topic and includes a wide range of issues and aspects concerning performance
management, three areas were chosen to be investigated afterwards.
The
discussion of this work is centered on two principles covered to a certain
extent by the literature on logistics. The principles presented are economies
of scale and the postponement, both
associated with the push strategy. The two principles aim the increase of
logistics effectiveness and efficiency in terms of cost reduction, increased
resource utilization and customer satisfaction. Due to the descriptive and
partly analytical interest of this work, we intend to answer a question:
What is the influence of economies
of scale and postponement on the efficiency and effectiveness of RLSs?
Economies
of scale and postponement relate to several decisions of interest to the
logistics, such as variety of products, location of factories and warehouses,
modularization of products and process reengineering. Both principles aim the
increase of logistics effectiveness and efficiency in terms of cost reduction,
increased resource utilization and customer satisfaction. Therefore, they work
as determinants for logistics effectiveness and efficiency in logistics systems
(direct or reverse).
The
discussion throughout the paper will be based specifically on reverse logistics
systems for scraptires. The choice for this type of product is due to the fact
that scraptire represents a large environmental problem both within Brazil and
globally and also present challenges in terms of achieving economies of scale
and adoption of postponement. Case studies were conducted in Portugal and
Brazil as part of the collection of data from a doctoral project. Findings
related to these two principles are analyzed and the answers to the research
question are presented in the form of propositions.
2.
ECONOMIES OF SCALE AND POSTPONEMENT
Feitzinger
and Lee (1997), Van Hoek et al. (1998) as well as Pagh and Cooper (1998) have
approached economies of scale and postponement regarding the configuration and
strategy creation for supply chains. More recently, Yang et al. (2007) states
that responsiveness can be achieved through a combination of economies of scale
and postponement strategies.
Both
principles, economies of scale and postponement were largely related to the
direct distribution of logistics systems. As the main objective of this paper
is the investigation of RLSs, basically the collection and post-collection
systems, it is possible to perceive the collection system as an inverted image
of the distributon (Figure 1).
In
general, property recovered or recycled must compete on price with virgin
materials or new products (GEYER et al., 2007; GALBRETH and BLACKBURN, 2010). Thus,
the reverse channel development with a focus on cost reduction becomes
necessary for these prices to remain low. The possibility of achieving this
reduction passes through economies of scale in steps of collecting, sorting,
and especially in transportation. In order to achieve these savings, companies
involved in the reverse channels should have focus on the volume of collected
and processed material. In the same line of thought, Stock (1998) and Ferguson,
Fleischmann and De Souza (2010) argue that economies of scale, in respect to
volumes, are important for the viability of reverse logistics programs, both
for an individual company and for the partnership between businesses.
Figure 1- Collection systems, as reverse channels of
distribution. MRF is the abbreviation for materials recovery facility, where
products pass through the early stages of the recycling process
Source: Jahre, (1995a)
Economies
of scale are closely related to push strategies. This type of strategy is based
on demand forecasts horizons established by long term planning. Push strategies
are more suitable when opportunities to reduce costs due to economies of scale
and uncertainty of demand are low. For certain RLSs, a push strategy
demonstrates to be the most appropriate in the collection stage, since the
service level at this stage is less important than the reduction in costs that
results from economies of scale (especially in transports).
Transport
costs are especially important for the discussion of economies of scale. There
is little margin in the recycling business and product recovery and the costs
associated with transportation are comparatively high relative to direct
logistics systems (STOCK, 1998). Regarding the possibility of centralizing the
operations of recycling or recovery, the author states that although such
operations benefit from economies of scale, transportation costs may rise
because of the distances between the sources, processing/production and
consumer market.
Postponement
is a principle that has been applied since 1920´s (BOONE et al., 2007).
Focusing on marketing channels, Alderson (1950) has introduced the concept of
postponement. The concept was originally introduced to reduce the risk and
uncertainty costs tied to the differentiation (form, place and time) of goods.
Postponement means delaying activities in the supply chain until customer
orders are received with the intention of customizing products, as opposed to
performing those activities in anticipation of future orders (VAN HOEK, 2001).
For
example, in manufacturing postponement, parts are shipped to the distribution
centers and the manufacturing is completed on the realization of Customer
order. One example to this is the soft drinks industry where the syrup is
supplied to bottling facilities where sugar and water are added to obtain the
soft drinks (ZINN, BOWERBOX, 1988).
According
to Van Hoek (1999), the postponement principle is generic in nature, for being
applicable to different parts of a company or supply chain and to be related to
different criteria, such as shape and time. In summary, the main purpose of the
principle is to reduce risks by keeping products in one place until such time
that the request is made or retaining the product without differentiation until
the last possible location in the distribution channel.
The
postponement principle was studied by Jahre (1995b) with respect to RLSs for
household wastes. In this context, postponement means not making any selection
of waste collected until the latest possible stage. The gains are in volume, in
terms of costs reduction and opportunity to make your selection according to
the existing demand by the output fraction. Basically, the postponement
principle for RLSs is the same as in a form postponement in production. In his
doctoral thesis, Jahre (1995a) arrived at two conclusions regarding household
wastes:
·
In
areas of low population density, recycling programs for household wastes should
include fewer fractions and the selection should be done at the source
(speculation), while;
·
In
areas of high population concentration, recycling programs should include
several fractions with the separation of waste held in central units of
recovery.
The
first type of structure results in low costs and low service levels, while the
second structure achieves high service level and keeps costs down. Therefore,
the system choice with respect to the principle adopted (postponement or
speculation) should be conducted by the supplier structure.
The
principle of economies of scale is of special interest to investigate the
performance of reverse logistics systems because the focus on costs is both
relevant to the logistics and how to produce. Economies of scale are applicable
to a number of areas, of which production was the focus for a long time, both
at the level of corporations as at the level of chains.
With
respect to the postponement principle, a basic point is the trade-off between
risk reduction through the postponement of irreversible operations until the
point where customer demand is known and costs reduction happen through, for
example, economies of scale.
3.
REVERSE
LOGISTICS SYSTEMS AND RETURNS MANAGEMENT
A
reverse logistics system (RLS) is a system that involves all actors, their
activities and relationship involved in the process of recovering goods or the
value of end-of-life products (FREIRES, GUEDES, 2008). Since RLS is a
relatively new area of investigation and is rather practical, other terms can
be found in literature, such as: logistics of return, inverse logistics, and
backward logistics distribution. All these expressions are almost the same.
The
effectiveness and efficiency of such systems is usually evaluated in terms of
costs due to the fact that little research has been done in this field. The
interest for RLSs is partly due to the pressure of new legislations, which have
been forcing the producers to be responsible for the collection and final
destiny of their products. Recent developments demonstrate that legislation and
its consequences have grown, particularly regarding end-of-life (EOL) vehicles,
Waste Electrical and Electronic equipment (WEEE) and product’s packaging.
Returns
management may be defined as
the design, control, and operation of a system to maximize value
creation over the entire life cycle of a product with the dynamic recovery of value
from different types
and volumes of returns
over time (GUIDE, VAN WASSENHOVE, 2006). This is clearly a business
definition. A decade ago, the definition given would have been operational and
technical.
Product
returns are an increasing concern to industry.
Even so, only a small percentage of the value is being recovered.
Companies still view product recovery activities as a problem, and this
prevents them from identifying potential value creation activities. Hewlett-
Packard estimates that returns cost them as much as 2% of total outbound sales.
Less than half of the value of those product returns is being recovered. To make
matters even worse, personal computer manufacturers have short life-cycle
products that can lose 1% of their value per week and have high return rates
(GUIDE, VAN WASSENHOVE, 2006).
Products,
components, materials and equipment can pace a reverse flow in their supply
chains. For some time we became familiar with products that are rebuilt during
its manufacturing process due to the unsatisfactory aspects of quality.
Defective products can be discovered after its entry into the supply chain,
resulting in a withdrawal of this product at a later point in its supply chain
(Ex: Recall of damaged vehicles). At this stage there are more actors involved
in the chain with reverse flow. Business processes such as agreements on return
versus take back of obsolete products (B2B - business to business) gain
importance. Moreover, in the scenario of relationships with consumers (B2C -
business to consumer) products may be sent back due to misuse by the customers
or gaps in expected quality (DE BRITO, 2004).
A
particular situation is electronic commerce, where high percentages of returned
products are not a surprise. During its use and still under warranty, these
products can be returned to be replaced by others, or being repaired (warranty
and return services). Even after its useful life products are to be collected,
for example, remanufactured, recycled or incinerated (end-use and end of life).
At this point the question related to the environmental impact must be taken
into account, especially in Europe, where environmental issues are in greater
evidence. In conclusion, products can reverse its direction in the supply chain
for a variety of reasons (DEKKER, VANDER LAAN, 2002).
Even
in the event that remanufacturing is technically achievable, the potential
value recovery must surpass the costs of recovery processes. This is a
necessary but not sufficient condition. To make remanufacturing
economically attractive, one
also needs adequate
quantities of used products
of the right
quality and price,
at the right time, as well as a
market for the recovered products. In other words, one needs to go far beyond
the technical and operational boundaries and take a global business process
perspective (GUIDE, VAN WASSENHOVE, 2009).
In
short terms, a product is developed and goes into production following its
supply chain with the purpose of reaching a customer. However, at any time, the
product may return to the supply chain. At this time, the supply chain also
embodies activities related to the recovery/collection processes. This is
called the Closed Loop of Supply Chain. This designation highlights the
possible integration of forward and reverse logistics flows.
4.
METHODOLOGY
In
contrast to quantitative research, which takes a phenomenon to analyze its
components, giving rise to the variables of the study, qualitative research
seeks to clarify how all the parts operate to form a whole. In this research
paper is adopted a qualitative approach, where the researcher is the main tool
for collecting and analyzing data. Overall a qualitative study is very
descriptive, being developed by the reason that the existing theories are not
sufficient to adequately explain the phenomenon in question. The purpose of a
qualitative study is not to test theories. So there are no research hypotheses
to be deduced from the theory (MERRIAM, 1998).
Among
the different visions of the world, this study is located in the interpretative
paradigm, and is based on the vision that the events in the social reality do
not exist in any fixed direction, but are equivalent to the product of the
subjective and interpretative experiences of people. Society is conceived from
the perspective of the participant and not that of the observer. Following this
orientation, we are able to understand the process by which multiple shared
realities are built, kept and modified. Science is conceived as a network of
language games, based on concepts and rules subjectively determined, created
and followed by scientists (STRAUSS and CORBIN, 1998).
From
a subjective vision of the reality, the study follows qualitative methods.
This, according to Yin (2009), is not a particular set of techniques, but a
proposal approach, for the study of a social phenomenon. According to Merriam
(1998), the philosophical assumption whereupon all types of qualitative methods
are based is the vision that reality is created by individuals interacting with
their social worlds. The author adds that investigations following this
orientation are interested in understanding the meaning invented by people.
This approach tries to understand how individuals live and experience their
world.
In
contrast with a quantitative inquiry (which takes a phenomenon and analyzes its
components), the qualitative investigation seeks to clarify the way individual
parts of a system operate to form “the whole”. Within this context, the
investigator constitutes the main instrument of collection and analysis of
data. In a general way a qualitative study is sufficiently descriptive, being
developed for the rea-son that existing theories are not adequate enough to
explain the phenomenon in question. The aim of a qualitative study is not to
test theories. Therefore, there are no hypotheses to be deduced in the theory.
The
position adopted in this article is that a description is always sensitive to
context, selective and incomplete, being, therefore, revocable. A description
never tells all that can be said about an effort, a per-son, an object or an
event. In principle, it is possible to argue against a certain description,
pointing out other characteristics from the situation in question. Moreover,
when executing the descriptive task, the investigator has an intention and prioritizes
what he considers important, in regards to the investigated phenomenon (STRAUSS
and CORBIN, 1998).
Merriam
(1998) states that the project of a qualitative study is emerging. That is,
normally, the investigator does not know beforehand, all of the players that
are going to be interviewed, nor all the questions to be asked. On the basis of
his intuition the investigator directs his attention to certain segments of
data.
In
this perspective, this study includes two case studies, one conducted in
Portugal and the other in Brazil. Although dealing with the same aspect (RLSs
for scraptires) the realities of the two cases are different, and the data
collection was done in different periods.
The
data used is characterized by a variety of qualitative and quantitative data,
extracted from primary as well as secondary sources. Based on interviews, the
primary data collection procedure is similar to that of the two case-studies
(which are the basis of this paper) in terms of preparation of respondents,
documentation and verification of the collected data.
Secondary
data was captured from observations, companies’ information (printed) and
internal data collected for other purposes (production volumes, transport
volumes and suppliers). The qualitative methodology and quantitative data was
combined to discuss the main results of this paper. Table 1 presents a summary
of the characteristics of the data sets adopted in this study.
Table 1 - Data Used in this Study
|
Nature of
Data |
Qualitative |
Quantitative |
|
Primary |
Descriptions of processes and
relationships Opinions of experts Interviews Visits in company Photos |
Weekly processed volumes Weekly exchanged volumes Weekly number of truck loads |
|
Secondary |
Processed contracts Companies´information from internet Printed documents Brochures and catalogues Videos and softwares |
Financial Data Production and planning reports Material flows reports |
In a global way, this article aims to provide an understanding of RLSs
to generate knowledge of practical and theoretical character. Starting from a
generic model of circular flow of materials (Figure 2), the system studied is
positioned between the final consumer and the traditional or direct supply
chain.
Figure 2 - The generic model and a simplified circular flow of materials
and positioning of the reverse logistics system (RLS).
The
RLS presented in the previous figure can be broken into several players and
their relationships, leading to a chain. The studied system is divided into two
phases or subsystems: collection system and post-collection system. It will be
studied the connections or relationships with a focus on recycler or first
order regenerator, decomposing the RLS in two subsystems (Fig. 3).
Figure 3 - The RLS studied and their two phases or sub-system:
collection and post collection.
The post-collection
system can end up with a raw material producer, a manufacturer of final product
(if parts are reused), an energy exploiter (fractions of a product used as
fuel) or other recycler. The post-collection system starts after the selection
and removal of products to be recycled. After these processes, post-collection
system is treated as a regular supply chain.
The
position adopted in this investigation is that a description is always
context-sensitive, selective and incomplete, and therefore revocable. A
description never exhausts all that can be said about an action, person, object
or event. In principle, one can argue against a particular description,
pointing out other features of the situation in question. Furthermore, when
performing the task description, the investigator has a purpose and prioritizes
what you consider important in relation to the investigated phenomenon (STRAUSS,
CORBIN, 1998).
5.
CASE STUDIES
Within
this context, the research presented includes two case studies carried out in
Portugal and Brazil. After searching for information regarding RLSs for
scraptires, these cases were chosen for the availability of data collection and
because their reverse logistics systems perfectly fit this research. Both cases
follow the same logic of data collection. Observations were made both
structured and unstructured, as well as interviews with those involved in the
system to obtain answers to research questions. Besides the interviews, photos
and notes of observations were also used as primary data. The secondary data
used were mainly printed information and internal documents of the companies
for other purposes (processed volumes, transported volumes). Hereafter are
presented the case studies and their respective RLSs.
The
first case study (“Tire Management Company – Valorpneu”) sought to describe the
implemented management system of end of life tires in Portugal. This system is
basically constituted by an entity (Valorpneu) that centralizes the management,
a network of waste tires collectors, a recycler (Recipneu) and a final customer
(Recipav). Figure 4 presents a description of this system with the presentation
of the actors involved. All these actors and their roles within the system are
described below.
Figure 4 - The reverse logistic system of
Valorpneu.
The
features of this first case differ from the second one cause its management
systems (collection and post-collection) is centered on an entity that was
formed by the initiative of manufacturers and importers of tires. The fund
manager acts as a regulatory system, in other words, it controls the amounts of
tires received (delivered by collection points) according to the needs of the
recycling companies (Recipneu and Recipav).
The
second case was developed in Brazil, where he addressed the reverse logistics
system for waste tires, involving a company that makes tire retreading
(Bscolway) and an oil exploration company (Petrobras). Besides these two main
actors, the case also investigated the role of supporting actors (business
associations, collectors cooperatives, chambers and state government). Figure 5
shows a schematic of the system and the actors involved. The data described
below were obtained through interviews and observations conducted in the company’s
Petrobras and BScolway.
Figure 5 - The reverse logistic system
Paraná Running Clean Program.
The purpose of this
case study was to obtain the prospect of a revaluation of experience with tires
in a developing country and describe the relationships between the actors investigated.
We chose to study a developing country, given that the economic and social
reality is very different from Europe. Consequently, the motives (reasons,
forces, drivers) that lead to recycling of tires are different from Europeans.
The
characteristic of the data was mostly qualitative, seeking to describe and
understand the activities within the inter-organizational relationships.
Primary data were collected through visits to companies and personal interviews
(structured and semi-structured). The visits were always accompanied by middle
managers or directors. Prior to the semi-structured interviews, a script was
sent via e-mail and all interviews were recorded. As supplements to the
information provided during interviews and visits, it were also collected
secondary data (company documents, booklets, videos and electronic information)
in order to gain a greater understanding of each actor within the system.
6.
DATA
ANALYSIS
Before starting the
discussion on economies of scale in RLSs scraptires, it will be taken the
example of this principle application to another product, the paper. Paper is
usually collected by compactor trucks. This is an important aspect for
achieving efficiency in transportation to the paper recycling facility.
The use of compactor
trucks is a clear example of how to increase the effectiveness and efficiency
of logistics. Without the compression of the paper, the volume filled by truck
would be underweighted. A high utilization of resources is achieved through
compression of paper transported, because the load capacity with respect to
weight is better exploited, leading to greater efficiency. Compression has also
positive impact on the effectiveness, in terms of cost, because of the fact
that fewer trucks can transport the same quantity of products.
Another way to make
transport more efficient is to collect only a specific category of paper during
the same trip. Although sometimes mean a greater number of stops per trip, less
effort also entails selection of the paper when it is received at the recycling
facility. In line with Jahre (1995a), this collection method was more efficient
than the collection of all grades of paper during the same trip.
For the cases studied,
economies of scale were applied deliberately for the process of scraptires
recycling. Despite the legal issues, there is an expectation that economies of
scope should be adopted at a multinational level, or even global to the issue
of scraptire recycling. In a way, this has already been checked when -rich
tires countries export waste tires to developing countries.
With regard to
transport, economies of scale were applied in the form of higher utilization
rates in order to increase the efficiency of reverse logistics system capacity.
This also had a positive impact on efficiency and cost of the system. However,
it also meant a decrease in the frequency of collection of waste tires, both in
relation to the collection system and the post-collection. A possible solution
would be to increase the quantities of materials operators, not yet in a fully
consolidated basis for the emerging market for waste tires.
There is an expected
increase in the number of companies that use fractionated materials (rubber,
steel and fiber) out of waste tires as raw materials for other products. It is
expected that the demand for waste tire will increase due to industries that
use this product as an alternative energy to diesel. In particular, there is
already a growing demand from cement factories, to use waste tires as fuel for
their ovens.
Related to speculation,
in opposition to the conclusions of Jahre (1995a), their adoption was only
observed in the stage of collection, still in a much reduced scale. On the
other way, in all cases investigated it was identified the practice of
postponement. This means that once the tires leave the waste-collection point,
is not carried out any kind of selection until reaching the recycling units.
This is more an effect of low volumes of product than a deliberate strategy of
postponement. What will happen when volumes begin to grow is a point to
consider in future research.
In the cases
investigated it is clear that economies of scale are adopted with respect to
transport and recycling. With regard to the practice of postponement, this was
identified in all cases.
In case 2, the
collection of scraptires is performed by the distributor of retread plant
BScolway from its various retailers, this leads to the coordination of
collection activities with deliveries to retail outlets. Transport in the
collection phase of this RLS is an example of closed-loop system. Economies of
scale in the system are obtained in the logistic activities through the
consolidation of the selection process and a good ability to coordinate
transportation.
Regarded to recycling
processes, BScolway, considered a centralized structure as the best option in
terms of achieving economies of scale. The efficiency of the recycling process
depends largely on the quality and quantity of waste tires to be processed.
Thus, a centralized structure enables the processing of high volumes, reaching
economies of scale turning the system more effective and efficient.
The case of Valorpneu
has some differences from the BScolway. The collection system for waste tire is
driven by 27 collection points scattered through Portuguese territory. As
previously described these points are represented by waste treatment municipal
companies’, recycling companies, scrap tires and tire recycling operators.
These companies act as "lungs" in the supply chain of waste tires,
since they hold up stocks to a certain volume before notifying Valorpneu to
collect them. At this point, RLS management of Valorpneu is more complex than
the BScolway, as composed of a greater diversity of collection points. However,
in terms of spatial coverage, BScolway RLS management covers a territory of
approximately 450,000 km2, representing about five times the Portuguese
territory.
After the collection of
scraptire from the collection points, Valorpneu starts to manage the transport
to the recycling company Recipneu. Transport is performed by more than one
company selected by Valorpneu. Unlike BScolway the Valorpneu contracts specific
companies for the transportation of waste tires, and does not constitute a
closed loop as in the situation of BScolway. The recycling system is also
centralized in a single actor, Recipneu.
Note that when
considering the aspects of performance (effectiveness and efficiency), the
reverse logistics system cannot be separated from the recycling process.
Several players expressed this aspect through the empirical descriptions. It
was also shown that different actors with different specialties perceived the
relationship between the principle of economies of scale and performance
differently. For example, the end customers (Petrobras and Recipav) of the two
systems investigated gave importance to the economies of scale in transport,
not considering the same extent for the recycling process.
The definition of time
schedule for deliveries was affirmed by the two recyclers (BScolway and
Recipneu) as a need for good system performance. The Recipneu receives waste
tires at intervals of at least 30 minutes, according to the schedule agreed
with Valorpneu. This time period was determined by Recipneu as the maximum time
not to form lines of trucks in the recycling unit. BScolway receives waste
tires according to a scale set in conjunction with its dealers and only full
loads are accepted.
The reason given for
adopting such strict requirements is due to the need to achieve an efficient
supply of materials. Beyond this, respondents also justified for security
reasons the desire to keep download times short (maximum 30 minutes). Several
vehicles circulating in the recycling unit means an increased risk of
accidents.
Coordination between
the distribution systems and direct RLSs is possible in situations where the
recycling or reprocessing units are close to units of direct distribution.
Gains in efficiency can be obtained in terms of transport capacity, and the
effectiveness of RLSs. However, this is an issue that emerged during the
research process and was not analyzed in the same level of detail as the issues
related to economies of scale and postponement, which becomes a suggestion for
future deeper investigations. This type of coordination was observed in the
collection phase of the RLS program "Clean Running Paraná", where
BScolway used its distribution structure to collect the waste tires deposited
in their stores. According to what has been stated in this paper, the coordination
between the direct and reverse flow is a typical case of a closed circuit. The
influence of structural aspects of the effectiveness and efficiency of RLSs are
summarized in Figure 6.
Figure 6 - Influence of structure on performance
(efficiency and effectiveness) of RLSs in terms of indicators. The +/- signs
indicate whether the relationship is positive or negative.
The volumes of
scraptires are still quite small and irregular to talk about logistics
structures actually consolidated. However, it is expected (in both Brazil and
Portugal) a growth in a more regular supply of waste tires. The greatest
uncertainty regarding the supply pointed to is also the behavior of final
consumers.
7.
CONCLUSIONS
According to the
suggestions of Stock (1998) for the case of paper recycling, economies of scale
are an opportunity available due to higher volumes and market maturity. The
consequence of this principle for the scraptires case is a high
efficiency-related costs, system capacity and service level.
The efficiency of RLSs
is aided by economies of scale, in large part this is due to the fact that high
rates of use are achieved, which is related to the efficiency in terms of
capacity. The principle of economies of scale also contributes to the increase
of efficacy, since it decreases RLSs costs. A negative effect was identified in
post-collection system; to obtain satisfactory volumes for economies of scale,
the frequency of collection of waste tire is low, which reflects as an
inefficient level of service to the end customer (paving companies, factories
of articles of rubber and cement plants).
Despite the fact that
demand for scraptires is still small, the practice of postponement was observed
in both cases investigated. According to what was previously expressed in this
paper, the postponement means that the various types of tires are transported
along the points of collection to the recycling plants, and only there they
undergo a selection process.
Postponement practices
were identified in the collection system of scrapires, however the highest
reason described for the centralization of the selection process was the desire
to achieve economies of scale. It can be argued that the postponement has
positive effects on efficiency, by increasing the system capacity. Due to
providing the reduction of logistics costs and indirectly to lead to economies
of scale, the postponement has a positive influence on the effectiveness of
RLSs.
Finally, there is an
influence of the maturity of the market on the economies of scale. In the case
of paper recycling, the market is already stabilized (Recycling Forum, 2000).
The volumes are high and constant, being of course possible to achieve
economies of scale, which is directly opposite to the case of scraptire market.
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