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Integrating Closed-Loop Supply Chains and Spare-Parts Management at IBM

Rotterdam School of Management/Faculteit Bedrijfskunde, Erasmus University Rotterdam, PO Box 1738, 3000 DR Rotterdam, The Netherlands
Rotterdam School of Management/Faculteit Bedrijfskunde, Erasmus University Rotterdam, PO Box 1738, 3000 DR Rotterdam, The Netherlands
Global Service Logistics, ITS, IBM Nederland N.V., Johan Huizingalaan 761, 1066 VH Amsterdam, The Netherlands
mfleischmann{at}fbk.eur.nl
jnunen{at}fbk.eur.nl
graeve{at}nl.ibm.com

IBM is among the pioneers recognizing the benefits of closed-loop supply chains that integrate product returns into business operations. We worked on a project exploiting product returns as a source of spare parts. Key decisions concern what recovery opportunities to use, the channel design, and coordinating alternative supply sources. Our analytic inventory-control model and a simulation model showed that procurement-cost savings largely outweigh reverse logistics costs and that information management is essential. These findings provide a basis for significantly expanding the usage of the novel parts supply source, thereby cutting procurement costs.

Key Words: Industries: computer; electronic. Inventory; production: policies

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