Exploring Drivers of Closed Loop Supply Chain in Malaysian Automotive Industry

Exploring Drivers of Closed Loop Supply Chain in Malaysian Automotive Industry

Fadzlina Mohd Fadzil (Universiti Sains Malaysia, Malaysia) and Yudi Fernando (Universiti Malaysia Pahang, Malaysia)
Copyright: © 2018 |Pages: 10
DOI: 10.4018/978-1-5225-2255-3.ch467
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Abstract

This chapter is aim to explore the drivers of closed loop supply chain in Malaysian automotive industry. The growth of automotive industry in Malaysia is rapidly increasing. There are five drivers identified that can implement the closed loop supply chain in Malaysian automotive industry. Customer awareness has urged the manufacturers and suppliers to produce and supply more environmental friendly product. Social responsibility is the firms' obligations to ensure that their operation activities could reduce environmental impacts which can be harmful to the society. Environmental concern is the awareness on environmental preservation and conservation. Governmental legislation has been implemented to ensure the firms adhere to the government policies as to attain greener industrial practices. Waste management refers to the waste disposal system in order to reduce waste treatment costs, pollution and landfill issues. Therefore, the drivers are important elements in carrying out the closed loop supply chain in the Malaysian automotive industry.
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Closed Loop Supply Chain

Closed-loop supply chain is defined by Guide & Van Wassenhove (2009), as a supply chain management which can maximize the creation of value through the entire life cycle of a product and also the dynamics of the recovery of the species and the number of returns in a short period of time. The maximizing value creation process and also the dynamics of the recovery is obtained through the design, control and operation of the system.

The closed loop supply chain combines both forward and reverse supply chain where these green practices able to minimize the industrial waste and also reduce the environmental impact. The practice of zero-waste which includes recycling, reuse, reduce, remanufacturing, refurbish and repair in closed loop supply chain has generate a process of cradle-to-cradle where it can generate values not only in terms of profitable values to the shareholder and also to its stakeholders. Shaharudin, Govindan, Zailani, & Tan (2015) stated that when the organization could identify the benefits of all types of product returns, then the combination of design for forward and reverse supply channels and an environmentally friendly way to dispose the product; it will then give the organization the ability to achieve sustainability in business.

Key Terms in this Chapter

Sustainable Development: Sustainable development is the development that meets the needs the present without compromising ability of future generations to meet their own needs ( WCED, 1987b ).

Supply Chain Management: Supply chain management is the integration of key business processes from end users through suppliers that provides product, services and information that add value for customers and stakeholders ( S. M. Lee, Tae Kim, Choi, Kim, & Choi, 2012 ).

Reverse Logistics: Reverse logistics are the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal ( Govindan, Soleimani, & Kannan, 2014 ).

Green Supply Chain Management: Green supply chain management or GSCM has emerged as an important new archetype for enterprises to achieve profit and market share objectives by lowering their environmental risks and impacts and while raising their ecological efficiency (Qinghua Zhu, Sarkis, & Lai, 2008 ).

Automotive Original Equipment Manufacturers: Automotive original equipment manufacturers (OEMs) assemble single components to final vehicles that are sold via a dealer-network to business and private customers.

Value Creation: The creation of value is the core purpose and central process of economic exchange. Traditional models of value creation focus on the firm’s output and price. Value is created by the firm in the form of a good, and this valuable good is exchanged in the marketplace for money (or possibly other goods). Value creation refers to traditional supply chain objectives, customer satisfaction and cost reduction, as well as environmental goals ( Schenkel et al., 2015 ).

Supply Chain Activities: Supply chain activities is a set of activities that includes purchasing, manufacturing, logistics, distribution, marketing, that perform the function of delivering value to end customer ( Paksoy, Bektas, & Özceylan, 2011 ).

Closed Loop Supply Chain Management: Closed loop supply chain management is the design, control and operation of a system to maximize value creation over the entire life cycle of a product with dynamic recovery of value from different types and volumes of returns over time (V. D. R. J. Guide, Harrison, & Wassenhove, 2003 AU24: The in-text citation "R. J. Guide, Harrison, & Wassenhove, 2003" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. ).

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