Excerpt from: China Supply Chain and Logistics Strategy
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| November 14, 2005 | | Strategic Supply Chain Considerations Associated with Recoverable Product Systems | By the end of the year the Chinese government is expected to implement a series of environmental protection laws modeled after those of the European Union. The new regulations mark a shift in the nature of global supply chain management, from the traditional focus on the local and immediate effects of products and processes, to an extension to include supply chain mechanisms for product recovery on a global scale. Extending the supply chain to include recovery operations, such as remanufacturing, recycling, and re-use adds a new set of potential strategic supply chain considerations, such as:
Effects of traditional supply chain strategies on environmental performance
When tackling traditional supply chain problems such as determining where to locate a facility, environmental factors such as product recovery and solid waste must be including in the analysis. Thus, supply chain planning will include simultaneous operational/environmental supply chain optimization; merging environmental and operational goals into the traditional analysis. In China, this may entail locating a facility at the Lingang Industrial Park across from the new deep water port in order to take advantage of the remanufacturing capabilities and the bonded port functions which will be available there in the near future.
The number and location of collection/recovery facilities
National networks of recycling zones are currently being established in China. China aims to develop its remanufacturing industry and the country is currently working on establishing relevant laws to turn it into one of the pillar manufacturing industries in China. Companies will need help setting up their recycling networks, both in China and their home markets. An added layer of complexity may involve the possibility of re-imported used products from the US or Europe to be recycled or remanufactured in China.
Level and location of buffer inventories must be considered on both sides of the extended supply chain
Both the forward and reverse supply chains need to be assessed when determining the level of buffer inventories. There are two basic problems that must be considered: 1. The replacement/recovery process is uncertain (time requirements, quality, and quantity of returned products, packaging, and/or containers. 2. Reverse distribution process can be challenging, includes the collection and transportation of used products, packaging, and/or containers. Additionally, when dealing with international shipments there are the associated China and US Customs issues, legal restrictions, and other potential supply chain bottlenecks.
New criteria for vendor selection and certification
Purchasing decisions must consider availability of recycled materials, recyclability/reusability, renewable resources, hazard reduction, process waste reduction, handling and disposal, environmental technology, energy efficiency, and the supplier’s environmental commitment. Preference is given to suppliers who engage in environmentally responsible practices. | | |
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