Analyzing Alternatives in Reverse Logistics For End of Life Computers With ANP and BSC

Computers & Industrial Engineering 48 (2005) 327356
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Analyzing alternatives in reverse logistics for end-of-life computers: ANP and balanced scorecard approach*
V. Ravia, Ravi Shankara,*, M.K. Tiwarib
b
Department of Management Studies, Indian Institute of Technology Delhi, Hauz Khas, New Delhi 110 016, India Department of Manufacturing Engineering, National Institute of Foundry and Forge Technology, Jharkhand State, Ranchi 834003, India
Abstract Activities in reverse logistics activities are extensively practiced by computer hardware industries. One of the important problems faced by the top management in the computer hardware industries is the evaluation of various alternatives for end-of-life (EOL) computers. Analytic network process (ANP) based decision model presented in this paper structures the problem related to options in reverse logistics for EOL computers in a hierarchical form and links the determinants, dimensions, and enablers of the reverse logistics with alternatives available to the decision maker. In the proposed model, the dimensions of reverse logistics for the EOL computers have been taken from four perspectives derived from balanced scorecard approach, viz. customer, internal business, innovation and learning, and nance. The proposed approach, therefore, links the nancial and non-nancial, tangible and intangible, internal and external factors, thus providing a holistic framework for the selection of an alternative for the reverse logistics operations for EOL computers. Many criteria, sub-criteria, determinants, etc. for the selection of reverse logistics options are interrelated. The ability of ANP to consider interdependencies among and between levels of decision attributes makes it an attractive multi-criteria decision-making tool. Thus, a combination of balanced scorecard and ANP-based approach proposed in this paper provides a more realistic and accurate representation of the problem for conducting reverse logistics operations for EOL computers. q 2005 Elsevier Ltd. All rights reserved.
Keywords: Reverse logistics; Balanced scorecard; Analytic network process; Multi-criteria decision making; Computer hardware industry
This manuscript was processed by Area Editor Surendra Gupta. * Corresponding author. Tel.: C91 11 26596421; fax: C91 11 26862620. E-mail addresses: to_raviv@yahoo.com (V. Ravi), ravi1@dms.iitd.ernet.in (R. Shankar), mkt09@hotmail.com (M.K. Tiwari).
0360-8352/$ - see front matter q 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.cie.2005.01.017
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V. Ravi et al. / Computers & Industrial Engineering 48 (2005) 327356
1. Introduction It has been estimated that about 60 million computers enter the market every year in the USA and over 12 million computers are disposed of every year. Out of these only about 10% are remanufactured or recycled (Platt & Hyde, 1997). The remaining may lead to enormous amount of e-waste to be generated in a few years: 4 billion pounds of plastic, 1 billion pounds of lead, 1.9 million pounds of cadmium, 1.2 million pounds of chromium, 400,000 lbs of mercury, etc. (Silicon Valley Toxics Coalition, 2002). The National Safety Council in a report ranks computers as the nations fastest-growing category of solid waste by the Environmental Protection Agency (Hamilton, 2001). By 2004, there would be more than 315 million systems ready for disposal as opposed to 21 million obsolete systems in 1998 (Bertagnoli, 2000). According to another estimate, about 500 million computers will be rendered obsolete by 2007 in the USA alone (Hamilton, 2001). With the obsolescence rates on the rise (Blumberg, 1999) an important question that remains to be answered is what can be done to these EOL computers both from economical and environmental point of view. Due to shortening of product life cycles, for products like consumer electronics, the recovery of value from these consumer goods, after use, is becoming a necessity (Hillegersberg, Zuidwijk, van Nunen, & van Eijk, 2001). Several alternatives exist for disposing these EOL computers. Some of the methods for handling the EOL products include temporary storage, recycling the product, disposing of the product via landlls, etc. (Jacoby, Berning, & Diettvorst, 1977). EPAs Municipal Solid Waste FactBook reports that 29 states in USA have 10 years or more of landll capacities remaining, 15 states have between 5 and 10 years of landll capacity remaining, and six states have less than 5 years of landll capacity remaining (Rogers & Tibben-Lembke, 1998). But landll usage may be a short-term solution to the problem as for example, states like Massachusetts, Minnesota and Wisconsin have either banned or are considering banning the dumping of the computer-related equipment in their landlls (Stough & Benson, 2000). The German Packaging Ordinance of 1991 mandate that industries organize the reclamation of reusable packaging waste, while local authorities continue to handle the collection and disposal of the remaining waste. In Taiwan, proper disposition of computers and electrical home appliances at their EOL phase has been strongly urged by the general public because of the scarcity of landll space and the hazardous materials contained in these appliances (Shih, 2001). If offsetting of the increasing demand of landlls is to be done, enhanced efforts for recycling are needed, which directly requires the reverse logistics activities (Barnes, 1982). Reverse logistics provide many opportunities to reuse and create value out of this nearly omnipresent asset (Rogers & Tibben-Lembke, 1998). Industries have started to realize that the reverse logistics can be used to gain competitive advantage (Marien, 1998). An evaluation framework, which incorporates determinants and dimensions of reverse logistics, would be useful in conguring the post-activities associated with the EOL computers. One of the prime issues in this context is the evaluation of the various alternatives faced by computer companies, which seek to undertake reverse logistics activities for the EOL computers. One such approach, with an application of a systemic analysis technique is presented in this paper. This technique evaluates the various dimensions of reverse logistics through an analytic hierarchy network model. There are a number of variables affecting the reverse logistics, some of these are interdependent among each other. Analytical Hierarchical Process (AHP) is one of the analytical tools, which can be used to handle a multi-criteria decision-making problem (Saaty, 1980). However, a shortfall of AHP is that it lacks in considering interdependencies, if any, among the selection criteria. Analytic Network Process
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(ANP) is a similar technique, but can capture the interdependencies between the criteria under consideration, hence allowing for a more systemic analysis. It can allow inclusion of criteria, both tangible and intangible (difcult to quantify), which has some bearing on making the best decision (Saaty, 1996). Further, many of these factors have some level of interdependency among them, thus making ANP modeling better t for the problem under study. The ANP model presented in this paper structures the problem related to selection of an alternative for the reverse logistics option for EOL computers in a hierarchical form and links the determinants, dimensions, and enablers of reverse logistics with different alternatives. One of the important issues for any strategic planning would be how the organization should prioritize the determinants and what policy elements or initiatives impact them (Wheelwright, 1978). The balanced scorecard is a performance measurement system that allows managers to look at the business from four divergent important perspectives: customer, internal business, innovation and learning, and nance (Kaplan & Norton, 1992). Brewer and Speh (2000) had used the concept of balanced scorecard to measure the supply chain performance. In the proposed ANP model, the dimensions of the reverse logistics for the EOL computers have been taken from the four perspectives of the balanced scorecard, thus balancing as well as linking the nancial and non-nancial, tangible and intangible, internal and external factors. Therefore, the proposed framework provides a holistic approach to the selected multi-criteria decision-making problem for EOL computers. This paper is further organized as follows. Section 2 provides a background of reverse logistics and its application in various industries including the computer industry. Then a brief discussion of the determinants, dimensions and their enablers of reverse logistics and alternatives to be evaluated in this model are provided. These characteristics are then used to structure the model. Later, the proposed methodology for evaluating the decision model is presented and applied to a decision-making problem faced by a small computer hardware company. This is followed by a discussion and managerial implications of this research. Finally, we conclude the work with the limitations of this work and directions for further research.
2. Reverse logistics Reverse logistics is the movement of the goods from a consumer towards a producer in a channel of distribution (Murphy, 1986). Stock (1992) recognized the eld of reverse logistics as being relevant for business and society in general. Kopicki, Berg, Legg, Dasappa, and Maggioni (1993) paid attention to the eld and pointed out opportunities on reuse and recycling. Fleischmann, Bloemhof-Ruwaard, Dekker, van der Laan, van Nunen, and Van Wassenhove (1997) had given a comprehensive review of literature of the quantitative models in reverse logistics. Reverse logistics programs in addition to the various environmental and the cost benets can proactively minimize the threat of government regulation and can improve the corporate image of the companies (Carter & Ellram, 1998). Reverse logistics is the process of planning, implementing, and controlling the efcient, cost effective ow of raw materials, in-process inventory, nished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal (Rogers & Tibben-Lembke, 1998). A reverse logistics denes a supply chain that is redesigned to efciently manage the ow of products or parts destined for remanufacturing, recycling, or disposal and to effectively utilize resources (Dowlatshahi, 2000).
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The typical reverse logistics operations include the activities a rm, which uses returned merchandise due to product recalls, excess inventory, salvage, unwanted or outdated products, etc. In addition, it includes the recycling programs, hazardous material programs, and disposition of obsolete equipment and asset recovery. The reverse ow of the product originates from several points and is consolidated at just a few (or one) destinations. The various functions executed throughout the reverse logistics activities include gatekeeping, compacting disposition cycle times, remanufacturing and refurbishment, asset recovery, negotiation, outsourcing, nance management and customer service. Thus, the reverse logistics focuses on managing ows of material, information, and relationships for value addition as well as for the proper disposal of products. Reverse logistics has been used in many industries like photocopiers (Krikke, van Harten, & Schuur, 1999a; Thierry, Salomon, Nunen, & Wassenhove, 1995; van der Laan, Dekker, & Van Wassenhove, 1999) single-use cameras (Toktay, Wein, & Stefanos, 2000), jet engine components (Guide & Srivastava, 1998), cellular telephones (Jayaraman, Guide, & Srivastava, 1999), automotive parts (van der Laan, 1997) and rellable containers (Kelle & Silver, 1989). In all the cases, one of the major concerns is to assess whether or not the recovery of used products is economically more attractive than the disposal of the products. Reverse logistics are also extensively practiced in the computer hardware industry. IBM and Dell Computer Corporation have embraced reverse logistics by taking steps to streamline the way they deploy old systems; and in the process make it easier for the customers to refurbish existing computers or buy new parts (Ferguson, 2000). Grenchus, Johnson, and McDonell (2001) reported that the Global Asset Recovery Services (GARS) organization of IBMs Global Financing division has integrated some of the key components of its reverse logistics network to support and enhance environmental performance. Moyer and Gupta (1997) have conducted a comprehensive survey of previous works related to environmentally conscious manufacturing practices, recycling, and the complexities of disassembly in the electronics industry. Gungor and Gupta (1999) have presented the development of research in environmentally conscious manufacturing and product recovery (ECMPRO) and provided a state-of-the-art survey of the published work in this area. Veerakamolmal and Gupta (1997) have discussed a technique for analyzing the design efciency of electronic products, in order to study the effect of end-of-life disassembly and disposal on environment. Nagel and Meyer (1999) discuss a novel method for systematically modeling end-of-life networks and show ways of improving the existing and new systems with ecological and economical concerns. Boon, Isaacs, and Gupta (2002) have investigated the critical factors inuencing the protability of end-of-life processing of PCs. They also suggested suitable policies for both PC manufacturers and legislators to ensure that there is a viable PC recycling infrastructure. Lambert (2003) presented a state-of-the-art survey of recently available literature on disassembly sequencing and the papers closely related to this topic. Krikke, van Harten, and Schuur (1999b) have discussed a case of the recycling PC-monitors as a part of a broader pilot project at Roteb (the municipal waste company of Rotterdam, The Netherlands) where by using the model developed, it achieved a reduction of recycling costs by about 25%. Ferguson and Browne (2001) discussed the issues in EOL product recovery and reverse logistics. Knemeyer, Ponzurick, and Logar (2002) utilized a qualitative methodology to examine the feasibility of designing a reverse logistics system to recycle or refurbish EOL computers that are deemed no longer useful by their owners. From the literature review, it is observed that there is not much work reported till date for multi-criteria decision making in the decision making related to reverse logistics practices in the case of EOL computers.
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3. Determinants of reverse logistics Economic factors both directly and indirectly (de Brito & Dekker, 2003), legislation (de Brito & Dekker, 2003), corporate citizenship (de Brito & Dekker, 2003; Rogers & Tibben-Lembke, 1998) and environmental and green issues (Rogers & Tibben-Lembke, 1998) are the four determinants of reverse logistics taken into account in this research. These are briey described below. 3.1. Economic factors Economics is seen as the driving force to reverse logistics relating to all the recovery options, where the company receives both direct as well as indirect economic benets. It is seen that companies continually strive for achieving cost savings in their production processes. If a rm does reverse logistics well, it will make money (Stock, 1998). The recovery of the products for remanufacturing, repair, reconguration, and recycling can lead to protable business opportunities (Andel, 1997). Reverse logistics is now perceived by the organizations as an investment recovery as opposed to simply minimizing the cost of waste management (Saccomano, 1997). A reverse logistics program can bring cost benets to the companies by emphasizing on resource reduction, adding value from the recovery of products or from reducing the disposal costs. Guide and Wassenhove (2003) give an example of the US rm named ReCellular, which by refurbishing the cell phones, had gained economic advantage. Thus, the economic drivers of reverse logistics lead to direct gains in input materials, cost reduction, value added recovery and also in indirect gains by impeding legislation, market protection by companies, green image for companies and for improvement in customer/supplier relations. 3.2. Legislation Another important driver for the reverse logistics is legislation. Legislation refers to any jurisdiction that makes it mandatory for the companies to recover its products or accept these back after the end-oflife of the product. These may include collection and reuse of products at the end of the product life cycle, shift waste management costs to producers, reduce volume of waste generated, and the use of increased recycled materials. For example, the Waste Electrical & Electronics Equipment directive encourages a set of criteria for collection, treatment and recovery of waste electrical and electronic equipment and makes producers responsible for nancing these activities (WEEE, 2003). There has also been a restriction on the use of hazardous substances in the production processes, which facilitates the dismantling, and recycling of waste electronics. A reverse logistics decision for the EOL computers should ensure that the end-of-life products are retired in a way that is compliant with existing legislation. 3.3. Corporate citizenship Another driver for the reverse logistics is the corporate citizenship that concerns a set of values or principles that impels a company or an organization to become responsibly engaged with reverse logistics activities. Reverse logistics activities can lead to increase of corporate image (Carter & Ellram, 1998). A good example in this context would be of Paul Farrow, the founder of Walden Paddlers, Inc., whose concern of the velocity at which consumer products travel through the market to the landll, pushed him to an innovative project of a 100-percent-recyclable kayak (Farrow, Johnson, & Larson, 2000).
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In 1996, Hanna Andersson, a million direct retailer of infants and toddlers clothes developed a program called Hannadowns in which they distributed the childrens gently worn returned clothes to schools, homeless shelters, and other charities (Spence, 1998). Nike, the shoe manufacturer encourages consumers to bring their used shoes to the store where they had purchased them after their usage. They ship these back to Nike plant where these are shredded and made into basketball courts and running tracks. Nike also donates the material to the basketball courts and donates fund for building and maintaining these courts, thus enhancing the value of brand (Rogers & Tibben-Lembke, 1998). It is seen from the last two examples that few rms are acting as good corporate citizens by contributing to the good of the community and assisting the people who are probably less fortunate than their typical customers. 3.4. Environment and green issues Concern for the environment and green issues is also one of the drivers of reverse logistics. The reverse logistics lead to benets of environment (Byrne & Deeb, 1993; Carter & Ellram, 1998; Wu & Dunn, 1995). Hart (1997) proposes that the principle of the ecological footprint indicates the relevance of greening initiatives for countries. Reverse logistics has led to competitive advantage to companies which proactively incorporate environmental goals into their business practices and strategic plans (Newman & Hanna, 1996). Managers are giving increasing importance to the environmental issues (McIntyre, Smith, Henham, & Pretlove, 1998). The environmental management has gained increasing interest in the eld of supply chain management. Handeld and Nichols (1999) mention greening as a critical future avenue in this area. Murphy, Poist, and Braunschweig (1995) have found that 60% in a group of 133 managers surveyed considered the issue of the environment to be a very important factor and 82% of them expected that the importance would increase in the years to come. A green image of producing environmentally friendly products has become an important marketing element, which has stimulated a number of companies to explore options for take-back and recovery of their products (Thierry, 1997). A reverse logistics operations for EOL computers should ensure that the environmental and green issues are taken into account.
4. Dimensions of the reverse logistics In this paper, we inherit the dimensions of the balanced scorecard, which allow the managers to look at the business from four important perspectives, namely, the customer, internal business, innovation and learning, and nancial perspectives (Kaplan & Norton, 1992). Although the concept of balanced scorecard has been primarily designed for the measurement of the system performance, in this model, we have used these dimensions to evolve a holistic framework towards the conduct of reverse logistics operations for EOL computers. The four dimensions and their enablers are briey discussed below. 4.1. Customer perspective This dimension depicts what a customer expects from the reverse logistics operations. Pochampally and Gupta (2004) reported that the success of a prospective reverse supply chain depends heavily on
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the participation of three important groups, viz. customers, local government ofcials, and supply chain executives who have multiple, conicting, and incommensurate goals and thus the potentials must be evaluated based on the maximized consensus among these three groups. For the customers, they opine that the principal concern is convenience. A research study conducted on the logistics service providers in Singapore found that the voice of customer as the most important driver of the logistics management (Sum & Teo, 1999). The present day customers demand that manufacturers reduce the quantities of waste generated by their products. They demand clean and energy saving production processes from their suppliers. They want that the potentially dangerous materials used in the production process be replaced by those that minimize harm to users, more in line with the present-day eco-compatible values. Today the customers are ready to pay more for a green product. In fact, customers drive the corporation green (Vandermerwe & Oliff, 1990). There has been an increased acceptance from the customers for recycled goods and packaging due to concerns with the environment. Reverse logistics also inuences the customer service and satisfaction; as for example, the ability of companies to quickly and efciently handle the return of product for necessary repair is critical for its survival (Blumberg, 1999). Thus, it is seen that the reverse logistics operations should offer services based on the customer perspective. 4.2. Internal business perspective This dimension illustrates in what areas must the reverse logistics operations excel at so as to be able to achieve the target. Reverse logistics managers should focus on those critical internal operations that would enable them to satisfy the customer needs. Information support is one of the ways to develop linkages to achieve efcient reverse logistics operations (Daugherty, Myers, & Richey, 2002). This is due to the availability of prompt and accurate information with which the logistics managers are able to foresee the products that would be returned, thus aiding to the process of more efcient receipt and return of the products. The product recovery management is the ability of a supply chain in recovering the economic (and ecological) value of a product as reasonably as possible, thereby reducing the ultimate quantities of waste. The various product recovery options could be repairing, refurbishing, remanufacturing, cannibalization, and recycling (Thierry et al., 1995). A sincere and committed effort from the top management is essential for successful deployment of reverse logistics programs (Carter & Ellram, 1998). New technologies are also necessary. Many companies have product development programs encompassing design for environment for product recovery through disassembly. An example is the case of Xerox Europe reported by Maslennikova and Foley (2000). 4.3. Innovation and learning perspective This dimension of balanced scorecard focuses on whether the reverse logistics operations for EOL computers can continue to improve and create more value for customers by improving the efciency. Manufacturers and customers can reengineer their businesses to better serve the ultimate customers, rather than being regulated into positions that may not be of most advantageous to the channel members. This is very necessary to create competitive advantage as the customers become more environment conscious (Marien, 1998). Reverse logistics is initiated as a strategic variable for competitive reasons (Rogers & Tibben-Lembke, 1998). The environmental sustainability
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and ecological performance of a company also depend on the suppliers (Godfrey, 1998). So many companies have started partnering and mentoring with their suppliers such as providing guidance to set up an environmental management system (EMS) to improve the operational efciency (Hines & Johns, 2001). Strategic alliances are made with various members of supply chain as the companies are realizing that the individual attempts at product reclamation make little sense both economically or environmentally (Cairncross, 1992). The Knowledge Management may also be used for logistics network. Smirnov, Pashkin, Chilov, and Levashova (2002) describe Knowledge Source Network conguration approach (KSNet-approach) to knowledge logistics through knowledge fusion. Smirnov, Pashkin, Chilov, and Levashova (2001) present an ontology management in multiagent system for knowledge logistics. Smirnov (2001) provides a prole-based conguring of knowledge supply networks in the global business information environment. Thus, constant innovation and learning processes are necessary for the successful conduct of reverse logistics operations. 4.4. Finance perspective This dimension of balanced scorecard indicates how the reverse logistics operations cater to the shareholders nancial objectives. This indicates whether the companys strategy, implementation and execution are contributing to bottom-line improvement. This can be enabled by following reverse logistics activities of waste reduction, cost savings and recapturing value from the recovered products (Bacallan, 2000; Deere & Company, 1998; Hans & Byrne, 1993; Thierry et al., 1995). Effective reverse logistics contributes to regaining value from reusing products or parts or from recycling materials. There were more than 70,000 re-manufacturing rms in USA for jet and car engines, auto parts and copiers, total sales amounting to 53 billion USD in 1998 (Lund, 1998). Reverse logistics can improve the cost savings for the company. A research nding has reported that companies that make use of remanufacturing in the product recovery are estimated to save 4060% of the costs compared to manufacturing a completely new product (Cohen, 1988; Heeb, 1989; Toensmeier, 1992; Wilder, 1988) while requiring only 20% of the effort (Lund, 1984; Sturgess, 1992). The reverse logistics process consists of recapturing value from the recovery of products (Rogers & Tibben-Lembke, 1998). Implementing reverse logistics programs to reduce, reuse, and recycle wastes from distribution and other company processes produces tangible and intangible value (Kopicki et al., 1993). Kokkinaki, Dekker, de Koster, Pappis, and Verbeke (2001) give example of a computer company that recaptured reasonable value from the computer product by supporting alternative uses for the products.
5. Alternatives for the conduct of reverse logistics operations After review of literature and discussion with experts in the eld of reverse logistics, both from industry and the academia, some of the important selection criteria for the conduct of reverse logistics operations are identied. For the purpose of illustration of our model, we analyze three distinct alternatives. The three categories of alternatives are Third Party Demanufacturing (TPD), Symbiotic Logistics Concept (SLC), and Virtual Reverse Logistics Network for PCs (VRL). These criteria have
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been used in the proposed framework for the development of an ANP model. A brief description of these three alternatives follows in Sections 5.15.3. 5.1. Third party demanufacturing (TPD) Grenchus, Keene, and Nobs (1997) and White, Masanet, Rosen, and Beckman (2003) have opined that most computer recovery businesses engage in demanufacturing operations to process obsolete and scrap end-of-line computer products. Lieb and Randall (1999) reported that third-party executives viewed reverse logistics as an opportunity area and suggest that reverse logistics activities performed by third-party providers may become more prevalent in future. This allows the original equipment manufacturer (OEM) with the opportunity to focus on their core competencies, leaving the demanufacturing operations to private companies specializing in these functions. Spicer and Johnson (2004) proposed the concept of Third Party Demanufacturing (TPD). It is dened as an extended producer responsibility (EPR) approach in which private companies take up end-of-life responsibility for products on behalf of the OEM. In this arrangement, an OEM would pay a fee to a Product Responsibility Provider (PRP) that would ensure that the manufacturers product are disposed in a way that is environmentally responsible while compliant with EPR legislation. Each product of the OEM is marked with an identier provided by the PRP. As the products are sold in the market, the OEM pays money to its PRP for the end-of-life management of the products. Thus, the liability of end-of-life management of the products is transferred to the PRP and the manufacturer has no further nancial risk associated with the end-of-life product. After many years, when the product reaches to its end-of-life it enters a collection system. The product from the collection system is delivered to a local recycler who works in partnership with the PRP. The recycler demanufactures the product and receives payment from the PRP. They meet the environmental targets set by the EPR legislation and also return the potential components that the OEM desires for closed-loop recycling. The PRP on his part provides his recycling partner with technical support, including disassembly instructions and material and parts identication. Both the manufacturers and general public reap the benets of this system. The benets to the manufacturers from this type of system are: (i) they can focus on their core competencies and leave the demanufacturing process to the specialized companies, (ii) this approach allows them to meet their product end-of-life responsibilities while simultaneously eliminating the nancial risk associated with the end-of-life uncertainties, (iii) this provides them an opportunity to reap the benets of better design through the competitive PRP bid process, and (iv) they can also tap the potential benets derived out of the demanufacturing innovation and efciencies driven by competition in the recycling industry. The benets to the general public by this system are: (i) third party demanufacturing provides a discerning and immediate economic feedback to the product design process, driving improvements, (ii) the competition leads to the promotion of innovation in the demanufacturing industry, and
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(iii) more importantly, it distributes the demanufacturing process to the local level, creating jobs and reduces the transportation inefciencies. Though the third-party take-back mode of EPR has the advantages described above, it suffers from few limitations. Some of the difculties associated with this system are: (i) identication of products at end-of-life, (ii) problem of dismantling products and recycling materials, and (iii) difculties faced by the local demanufacturers in nding suitable markets for the recyclable materials and parts that they have removed from a wide variety of products. The principal role of the PRP is to help solve these problems outlined above. 5.2. Symbiotic logistics concept (SLC) The hyperdictionary denes symbiosis as the relation between two different species of organisms that orgnanisms that are interdependent; each gains benets from the other. Adler (1966) had used this concept and dened the symbiotic marketing as the alliance of resources or programs between two or more independent organizations, designed to improve the marketing potential of each. A number of factors like swift pace of technological change, the impact of shifting markets and consumer tastes, the information explosion, automation, the staggering nancial burden of research and development, the internationalization of business, and the growing ferocity of competition as everyone gets into everyone elses business by means of mergers, acquisitions, an intensive new product development increases the relevance of symbiotic marketing (Adler, 1966). Turner, LeMay, and Mitchell (1994) have examined the potential benets of symbiotic relationships in reverse logistics. Symbiotic relationships assume a great importance as the competition becomes more global in the present day environment. Degher (2002) has reported the take-back and recycling programs at Hewlett-Packard Ltd and concluded that electronic manufacturers and government agencies should work together to better provide customers with environmentally responsible take-back and recycling programs. The new emphasis in business community is on forming strategic alliances (Achrol, Reve, & Stern, 1983; Bowersox, 1990; Heide & John, 1990, 1992). One of the challenges faced by the management is to build exibility in their organization, as vertical hierarchies are replaced with horizontal networks; traditional functions are linked through interfunctional teams; and strategic alliances are formed with suppliers, customers or even competitors (Hirschorn & Gilmore, 1992). The rms have realized the potential of the mutual benets arising from the working in concert rather than independently by pooling of the resources (Lambert & Stock, 1993). Symbiotic logistics is dened as the strategic alliance of two or more independent entities designed to provide the desired level of customer service in accordance with the concept of integrated logistics management (Mitchell, LeMay, Arnold, & Turner, 1993). Reverse logistics force systems designed to move goods and services forward to act in the reverse direction. Using the symbiotic concept could solve a number of problems of the reverse channels. It could provide the effective means for combating the problems created by the need to maintain the reverse channel capability. A number of factors like the political and legal, competition, technological, and economic concepts increase the relevance of symbiotic relationships in reverse logistics. Turner et al. (1994) provided two
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examples of the problems associated with reverse logistics and the ways symbiotic relationships can help them combating it. In the rst example, they illustrated a symbiotic logistics relationship that solves the reverse logistics problem by circumventing true reverse channels. In the second, they illustrated symbiotic relationships formed as a result of the environmental regulation that truly reect a reverse logistics process. An example in this regard would be the German packaging ordinance of 1991, which resulted in the companies working closely with competitors to put tough environmental policies into practice (Cairncross, 1992; Cooke, 1992). In the effective implementation of reverse logistics, companies have realized that individual attempts at the product reclamation make little sense, both economically as well as environmentally. One reason for this could be that the volume of the returned products involved is probably too small to justify individual effort. Thus, the logical solution to this problem would be to pool the resources with other rms in similar situations in order to gain economies. More importantly, the disruptive effective effects of reverse channels of distribution could be minimized by the symbiotic relationships. The main difference between TPD and SLC are the parties that are involved in the conduct of reverse logistics operations for end-of-life computers, such that these products are retried in an environmentally friendly manner. In the TPD, original equipment manufacturers outsource the demanufacturing operations to third party private companies. The companies take up the responsibility of disposing of these end-of-life products on behalf of OEMs. This approach allows the OEMs with the opportunity to focus on its core competencies, leaving the demanufacturing operations to the specialized private companies performing these functions. Thus, in this concept, only the OEM and the private companies assigned by them to carry out reverse logistics operations are involved. On the other hand, in SLC the organizations may forge strategic alliances with other rms, suppliers, customers, and may be even their competitors to achieve common business objectives. The relationships between the parties involved in this process is symbiotic in that two or more dissimilar organizations essentially pool the resources in an attempt to realize the benets of reverse logistics not available to the parties individually. The symbiotic relationships between the parties involved are necessary as the volume of products is probably too small to economically justify individual efforts at product reclamation. Thus, the parties involved can reap mutual benets that arise from working in concert rather than working independently. 5.3. Virtual reverse logistics network for PCs The Internet revolution has led to new forces of global competition, availability of increased information, educated customers, rapid innovations, and changing relationships. E-commerce may take place among the businesses (B2B) or between business and consumers (B2C). Internet encompasses a wider spectrum of potential commercial activities and offers information exchanges necessary for an electronic marketplace intermediary as shown in Fig. 1. Kokkinaki, Dekker, Lee, and Pappis (2001) have proposed a model of virtual reverse logistics network for the PCs. This network relies on e-commerce and www technologies for remote monitoring and benchmarking, instead of physical transportation and distribution. In this a conguration monitoring and benchmarking agent screens the computer that is about to enter the end-of-use stream and registers the data in the system databases. This virtual reverse logistics network regards all incoming PCs as submitted offers. In this framework, the users or agents, consider the possibility of explicitly registering requests or offers for PCs or modules that are matched automatically. A decision support module provides the recommendations for reuse, remanufacturing or recycling of the end-of use PCs. An electronic marketplace matches the requests. Bakos (1998) denes an electronic
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Fig. 1. Internet applications (Coppel, 2000).
marketplace as medium, which facilitates the exchange of information, goods, services, and payments and in the process, thus creating economic value for buyers, sellers, market intermediaries, and for society at large. The unique feature of the electronic marketplace is that it brings multiple buyers and sellers together (in a virtual sense) in one central market space. Various used products are for sale in these sites and the potential customers have a chance of getting relevant information on them online, declare their interest and the possibility of buying them. US-based electronic marketplaces (like www.ebay.com and www.onsale. com) and EU electronic marketplaces (like www.partikulier.nl and www.qxl.com) trade a wide variety of products entering reverse logistics chain, but some sectors like computers, electronics and hi-tech equipment are particularly popular (Kokkinaki, Dekker, van Nunn, & Pappis, 1999). The building blocks of the virtual reverse logistics networks for PCs are described below (Kokkinaki, Dekker, Lee, et al., 2001): (i) Repository. It holds all the application data. The persistent storage of the repository is guaranteed by the making use of a relational database system. (ii) Application server. It accepts and processes all HTTP requests. (iii) Security. It is ensured by the controls system access in conjunction with the Java Cookie technology. (iv) Mailer. It sends a notication to the appropriate recipients of the system, every time a new request or offer has been successfully submitted. (v) Presenter. It presents the appropriate JSP or html according to the user status (registered or not registered) and according to the user request.
6. The decision environment A graphical representation of the ANP model and decision environment is shown in Fig. 2. It can be seen that the overall objective is to carry out reverse logistics processes for EOL computers for the critical business process dened as conduct operations. The determinants of reverse logistics (economic factors, legislation, corporate citizenship and environment and green issues) described in
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Fig. 2. ANP model for the reverse logistics operations for EOL computers.
Section 3 are modeled to have dominance over the dimensions of reverse logistics. The reverse logistics attribute enablers are those that assist in achieving the controlling dimension of reverse logistics. Thus, these are dependent on the dimension. Also, there are some interdependencies among the enablers, hence the arrow arching back to the enablers decision level (Fig. 2). For example, CSF (customer satisfaction) and GP (green products) are interdependent to some degree. In order to achieve customer satisfaction, green products need to be produced by companies. The reverse logistics implementation alternatives in this model are the specic projects or policies that a decision maker wishes to evaluate, given the various attribute levels of the reverse logistics. The various alternatives available to the decision maker in this example include third party
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demanufacturing, symbiotic logistics concept and the virtual reverse logistics network for PCs. In Section 7, we briey describe the benets of the ANP process and apply it to a small company example in PC manufacturing to explain the ANP methodology.
7. Methodology: the analytic network process ANP (Saaty, 1996) is a comprehensive decision-making technique that captures the outcome of the dependence and feedback within and between the clusters of elements. Analytical Hierarchy Process (AHP) serves as a starting point of ANP. The ANP is a coupling of two parts, where the rst consists of a control hierarchy or network of criteria and sub-criteria that controls the interactions, while the second part is a network of inuences among the elements and clusters. In fact, ANP uses a network without a need to specify levels as in a hierarchy. The main reason for choosing the ANP as our methodology for selecting the reverse logistics operations is due to its suitability in offering solutions in a complex multicriteria decision environment. Some of the fundamental ideas in support of ANP are (Saaty, 1999): ANP is built on the widely used AHP technique, ANP allows for interdependency, therefore ANP goes beyond AHP, the ANP technique deals with dependence within a set of elements (inner dependence) and among different sets of elements (outer dependence), the looser network structure of the ANP makes possible the representation of any decision problem without concern for what criteria comes rst and what comes next as in a hierarchy, the ANP is a non-linear structure that deals with sources, cycles and sinks having a hierarchy of linear form with goals in the top level and the alternatives in the bottom level, ANP portrays a real world representation of the problem under consideration by prioritizing not only just the elements but also groups or clusters of elements as is often necessary, and the ANP utilizes the idea of a control hierarchy or a control network in dealing with different criteria, eventually leading to the analysis of benets, opportunities, costs, and risks. 7.1. ANP as a qualitative tool ANP is a multi-attribute, decision-making approach based on the reasoning, knowledge, and experience of the experts in the eld. ANP can act as a valuable aid for decision making involving both tangible as well as intangible attributes that are associated with the model under study. ANP relies on the process of eliciting managerial inputs, thus allowing for a structured communication among decision makers. Thus, it can act as a qualitative tool for strategic decision-making problems. Sarkis and Sunderraj (2002) used the ANP model to conduct a comprehensive evaluation of qualitative and quantitative factors for hub location at Digital Equipment Corporation. 7.2. Advantages of ANP ANP is a comprehensive technique that allows for the inclusion of all the relevant criteria; tangible as well as intangible, which have some bearing on decision-making process (Saaty, 1996)
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AHP models a decision-making framework that assumes uni-directional hierarchical relationship among decision levels, whereas ANP allows for more complex relationship among the decision levels and attributes as it does not require a strict hierarchical structure. In decision-making problems, it is very important to consider the interdependent relationship among criteria because of the characteristics of interdependence that exists in real life problems. The ANP methodology allows for the consideration of interdependencies among and between levels of criteria and thus is an attractive multi-criteria decision-making tool. This feature makes it superior from AHP which fails to capture interdependencies among different enablers, criteria, and sub-criteria (Agarwal & Shankar, 2003). ANP methodology is benecial in considering both qualitative as well as quantitative characteristics which need to be considered, as well as taking non-linear interdependent relationship among the attributes into consideration (Meade & Sarkis, 1999). ANP is unique in the sense that it provides synthetic scores, which is an indicator of the relative ranking of different alternatives available to the decision maker. 7.3. Disadvantages of ANP Identifying the relevant attributes of the problem and determining their relative importance in decision-making process requires extensive discussion and brainstorming sessions. Also, data acquisition is a very time intensive process for ANP methodology. ANP requires more calculations and formation of additional pair-wise comparison matrices as compared to the AHP process. Thus, a careful track of matrices and pair-wise comparisons of attributes is necessary. The pair-wise comparison of attributes under consideration can only be subjectively performed, and hence their accuracy of the results depends on the users expertise knowledge in the area concerned.
8. A small PC manufacturing company example The ANP model that is presented in this research has been evaluated in an actual computer manufacturing company, which was interested in the implementation of the reverse logistics practices. Due to the limited budget constraints, the company wanted a systematic way to determine the best possible option for conducting the reverse logistics operations. The case experience helps us to understand in a better way the advantages and disadvantages of the methodology from a practical point of view. The analysis and the implementation of the ANP model are presented in the following nine steps. 8.1. Step 1. Model development and problem formulation In this step, the decision problem is structured into its important components. The relevant criteria and alternatives are chosen on the basis of the review of literature and discussion with few both from industry and academia. The relevant criteria and alternatives are structured in the form of a control hierarchy where the criteria at the top level in the model have the highest strategic value. The top-level criteria in this model are economic factors (ECO), legislation (LEGI), corporate citizenship (CC), and
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environmental and green issues (EGI). These four criteria are termed as the determinants. In the second level of hierarchy, four sub-criteria termed as dimensions of the model is placed which supports all the four determinants at the top level of hierarchy. These are customer perspective (CP), internal business perspective (IBP), innovation and learning perspective (IBP), and nancial perspective (FP). For example, good internal business processes helps in achieving the four determinants of ECO, LEGI, CC, and EGI. Similar relationships are valid for CP, IBP, and FP. In this ANP model, each of the four dimensions has some enablers, which help achieve that particular dimension. For example, the dimension IBP is supported by the enablers IT, PRO, CTM, and NTE. These enablers also have some interdependency on one another. For example, in the dimension IBP, enablers CTM and NTE are interdependent as a sincere commitment by the top management would be necessary for procuring new technologies. The degree of interdependency may vary from case to case and would be captured in later steps. The strength of the ANP model is that the feedback and the network structure of the ANP makes possible the representation of the decision problem without much concern for what comes rst and what comes next in a hierarchy. The objective of this hierarchy is to select the best possible alternative that will best meet the goals of conducting effective reverse logistics in a computer industry. The ANP model so developed is presented in Fig. 2. The alternatives that the decision maker wishes to evaluate are shown at the bottom of the model. The opinion of the logistics manager of the company was sought in the comparisons of the relative importance of the criteria and the formation of pair-wise comparison matrices to be used in the ANP model. In this paper, mainly for the purpose of brevity, we present and illustrate the results only of the legislation determinant. The results of all the four determinants would be used in the calculation of reverse logistics overall weighted index (RLOWI), which indicates the score assigned to a reverse logistics operation. 8.2. Step 2. Pair-wise comparison of four determinants In this step, the decision maker is asked to respond to a series of pair-wise comparisons where two components at a time are compared with respect to an upper level control criterion. These comparisons are made so as to establish the relative importance of determinants in achieving the case companys objectives. In such comparisons, a scale of 19 is used to compare two options (Saaty, 1980). In this a score of 1 indicates that the two options under comparison have equal importance, while a score of 9 indicates the overwhelming dominance of the component under consideration (row component) over the comparison component (column component) in a pair-wise comparison matrix. In case, a component has weaker impact than its comparison component, the range of the scores will be from 1 to 1/9, where 1 indicates indifference and 1/9 represents an overwhelming dominance by a column element over the row element. For the reverse comparison between the components already compared, a reciprocal value is automatically assigned within the matrix, so that in a matrix aijajiZ1. The matrix showing pair-wise comparison of determinants along with the e-vectors of these determinants is shown in Table 1. The e-vectors (also referred to as local priority vector) are the weighted priorities of the determinants and shown in the last column of the matrix. In this paper, a two-stage algorithm (Saaty, 1980) is used for computing e-vector. For the computation of the e-vector, we rst add the values in each column of the matrix. Then, dividing each entry in each column by the total of that column, the normalized matrix is obtained which permits the meaningful comparison among elements. Finally, averaging over the rows is
V. Ravi et al. / Computers & Industrial Engineering 48 (2005) 327356 Table 1 Pair-wise comparison of determinants Determinants Economic factors Legislation Corporate citizenship Environment and green issues ECO 1 7 1/6 1/3 LEGI 1/7 1 1/5 1/2 CC 6 5 1 3 EGI 3 2 1/3 1
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e-vector 0.2378 0.5433 0.0610 0.1579
performed to obtain the e-vectors. These e-vectors would be used in Table 9 for the calculation of reverse logistics overall weighted index (RLOWI) for alternatives. 8.3. Step 3. Pair-wise comparison of dimensions In this step, a pair-wise comparison matrix is prepared for determining the relative importance of each of the dimensions of reverse logistics (CP, IBP, ILP and FP) on the determinant of reverse logistics. In the model, four such matrices would be formed one for each of the determinant. One such matrix for the legislation determinant is shown in Table 2. From this table, the results of the comparison (e-vectors) of the dimensions for the legislation determinant are carried as Pja in Table 8. 8.4. Step 4. Pair-wise comparison matrices between component/enablers levels In this step, the decision maker is asked to respond to a series of pair-wise comparisons where two components would be compared at a time with respect to an upper level control criterion. The pair-wise comparisons of the elements at each level are conducted with respect to their relative inuence towards their control criterion. In the case of interdependencies, components within the same level may be viewed as controlling components for each other, or levels may be interdependent on each other. For a determinant, pair-wise comparison is done between the applicable enablers within a given dimension cluster. The pair-wise comparison matrix for the dimension IBP under the LEGI determinant is shown in Table 3. For the pair-wise comparison, the question asked to the decision maker is, what is the relative impact on internal business perspective by enabler a when compared to enabler b, in improving the legislation? In Table 3, the relative importance of CTM when compared to IT with respect to IBP, in achieving the legislation, is ve. From Table 3 it is also observed that for the case company, the enabler CTM has
Table 2 Pair-wise comparisons of dimensions Legislation CP IBP ILP FP CP 1 6 1/3 1/2 IBP 1/6 1 1/5 4 ILP 3 5 1 1/6 FP 2 1/4 6 1 e-vector 0.2375 0.3931 0.1889 0.1805
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Table 3 Pair-wise comparison matrix for internal business perspective under the legislation determinant Internal business perspective IT PRO CTM NTE IT 1 2 5 2 PRO 1/2 1 3 1/3 CTM 1/5 1/3 1 1/2 NTE 1/2 3 2 1 e-vector 0.0993 0.2497 0.4914 0.1596
the maximum inuence (0.4914) on IBP in improving the legislation. Similarly, IT has the minimum inuence (0.0993) on IBP in improving the legislation. The number of such pair-wise comparison matrices depends on the number of determinants and the dimensions in the ANP model. In this model, 15 such pair-wise comparison matrices are formed. The e-vectors obtained from these matrices are imported as AD in Table 8. kja 8.5. Step 5. Pair-wise comparison matrices of interdependencies Pair-wise comparisons are done to consider the interdependencies among the enablers. One such comparison is presented in Table 4. It represents the result of LEGIIBP cluster with IT as the control attribute over other enablers. The question asked to the decision maker for evaluating the interdependencies is when considering IT with regards to increasing legislation, what is the relative impact of enabler a when compared to enabler b? For example, when considering IT, with regards to increasing legislation, what is the relative impact of PRO when compared to CTM? From Table 4, it is observed that PRO (0.6249) has the maximum impact on IBPLEGI cluster with IT as the control enabler over others. It is also observed that the impact of NTE on IT in LTRLEGI cluster is minimum (0.0916). Therefore, NTE is not a problem for the user company and it will have little impact on information technologies in IBPLEGI cluster. For each determinant, there will be 15 such matrices at this level of relationship. The e-vectors from these matrices are used in the formation of super matrices. As there are four determinants, 60 such matrices will be formed. The e-vectors from matrix in Table 4 have been used in sixth column of the super matrix in Table 6. 8.6. Step 6. Evaluation of alternatives The nal set of pair-wise comparisons is made for the relative impact of each of the alternatives (TPD, SLC and VRL) on the enablers in inuencing the determinants. The number of such pair-wise
Table 4 Pair-wise comparison matrix for enablers under legislation, internal business perspective and information technologies Information technologies PRO CTM NTE PRO 1 1/5 1/3 CTM 5 1 1/7 NTE 3 7 1 e-vector 0.6249 0.2835 0.0916
V. Ravi et al. / Computers & Industrial Engineering 48 (2005) 327356 Table 5 Matrix for alternatives impact on enabler in inuencing determinant IT TPD SLC VRL TPD 1 5 7 SLC 1/5 1 4 VRL 1/7 1/4 1 e-vector 0.0692 0.2437 0.6871
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comparison matrices is dependent on the number of enablers that are included in each of the determinants. In our present case, there are 15 enablers for each of the determinants, which lead to 60 such pair-wise matrices. One such pair-wise comparison matrix is shown in Table 5, where the impacts of three alternatives are evaluated on the enabler IT in inuencing the determinant LEGI. The e-vectors from this matrix are used in columns 68 of compatibility desirability indices matrix in Table 8. The columns 68 in Table 8 correspond to TPD, SLC and VRL, respectively. 8.7. Step 7. Super matrix formation The super matrix allows for a resolution of the interdependencies that exist among the elements of a system. It is a partitioned matrix where each sub-matrix is composed of a set of relationships between and within the levels as represented by the decision makers model. In this model, there are four super matrixes for each of the four determinants of reverse logistics hierarchy network, which need to be evaluated. One such super matrix M, shown in Table 6, presents the results of the relative importance measures for each of the enablers for the legislation determinant of the reverse logistics. The values of the elements of the super matrix M have been imported from the pair-wise comparison matrices of interdependencies (for example, Table 4). As there are 15 such pair-wise comparison matrices, one for each of the interdependent enablers in the legislation, there will be 15 non-zero columns in this super matrix. Each of the non-zero values in the column is the relative importance weight associated with the interdependent pair-wise comparison matrices. In the next stage, the super matrix M is made to converge to obtain a long-term stable set of weights. For convergence to occur, super matrix needs to be column stochastic, i.e. the sum total of each of the columns of the super matrix needs to be one. Raising the super matrix M to the power 2kC1, where k is an arbitrarily large number, allows for the convergence of the interdependent relationships (Meade & Sarkis, 1999). In this example, convergence is reached at M55. The converged super matrix is shown in Table 7. 8.8. Step 8. Selection of the best alternative for a determinant The selection of the best alternative depends on the outcome of the desirability index. The desirability index, Dia, for the alternative i and the determinant a is dened as (Meade & Sarkis, 1999)
J Kja XX jZ1 kZ1
Dia Z
Pja AD AI Sikja ; kja kja
(1)
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Table 6 Super matrix M for legislation before convergence CON CON CS GP CSF IT PRO CTM NTE COM MOS FSA KM WR CSA REV 0 0.0880 0.7173 0.1947 CS 0.0745 0 0.7471 0.1784 GP 0.1947 0.0881 0 0.7172 CSF 0.2199 0.0873 0.6928 0 0 0.6249 0.2835 0.0916 0.4837 0 0.3487 0.1676 0.5106 0.3728 0 0.1166 0.0848 0.7144 0.2008 0 0 0.2179 0.7247 0.0574 0.1383 0 0.6957 0.1660 0.6093 0.3112 0 0.0795 0.5936 0.3124 0.0940 0 0 0.1428 0.8572 0.875 0 0.125 0.8333 0.1667 0 IT PRO CTM NTE COM MOS FSA KM WR CSA REV
Table 7 Super matrix M for legislation after convergence CON CON CS GP CSF IT PRO CTM NTE COM MOS FSA KM WR CSA REV 0.1621 0.0807 0.4142 0.3430 CS 0.1621 0.0807 0.4142 0.3430 GP 0.1621 0.0807 0.4142 0.3430 CSF 0.1621 0.0807 0.4142 0.3430 0.2996 0.3549 0.2316 0.1139 0.2996 0.3549 0.2316 0.1139 0.2996 0.3549 0.2316 0.1139 0.2996 0.3549 0.2316 0.1139 0.3149 0.2150 0.3857 0.0844 0.3149 0.2150 0.3857 0.0844 0.3149 0.2150 0.3857 0.0844 0.3149 0.2150 0.3857 0.0844 0.4576 0.1335 0.4089 0.4576 0.1335 0.4089 0.4576 0.1335 0.4089 IT PRO CTM NTE COM MOS FSA KM WR CSA REV
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where Pja is the relative importance weight of dimension of reverse logistics j on the determinant of reverse logistics a, AD is the relative importance weight for reverse logistics attribute enabler k of dimension of reverse kja logistics j in the determinant of reverse logistics control hierarchy network a for the dependency (D) relationships between component levels, AI is the stabilized relative importance weight (determined by the super matrix) for reverse logistics kja attribute enabler k of dimension of reverse logistics j in the determinant of reverse logistics control hierarchy network a for interdependency (I) relationships within the reverse logistics attribute enablers component level, Sikja is the relative impact of reverse logistics implementation alternative i on reverse logistics attribute enabler k of dimension of reverse logistics j of reverse logistics control hierarchy network a, Kja is the index set of reverse logistics attribute enablers for dimension of reverse logistics j in for reverse logistics determinant control hierarchy a, and J is the index set for the dimensions of reverse logistics (same for all control hierarchies). Table 8 shows the desirability indices for the compatibility determinant (Di legislation). It is based on the legislation hierarchy using the relative weights obtained from the pair-wise comparison of alternatives, dimensions and weights of enablers from the converged super matrix. These weights are used to calculate a score for the determinants of reverse logistics overall weighted index (RLOWI) for each of the alternative being considered. In Table 8, the values of second column are imported from Table 2, which are obtained by comparing the relative impact of the dimensions on the legislation determinant. For example, in improving the legislation, the role of internal business perspective is found to be most important (0.3931), which is followed by CP (0.2375), ILP (0.1889), and
Table 8 Legislation desirability indices Dimensions CP CP CP CP IBP IBP IBP IBP ILP ILP ILP ILP FP FP FP Pja 0.2375 0.2375 0.2375 0.2375 0.3931 0.3931 0.3931 0.3931 0.1889 0.1889 0.1889 0.1889 0.1805 0.1805 0.1805 Enablers CON CS GP CSF IT PRO CTM NTE COM MOS FSA KM WR CSA REV AD kja AI kja S1kja 0.1865 0.1004 0.0692 0.2569 0.0692 0.6248 0.0839 0.1007 0.6307 0.3089 0.0670 0.0549 0.2795 0.2377 0.1130 S2kja 0.1265 0.2256 0.2437 0.2942 0.2437 0.2834 0.2110 0.2255 0.2717 0.3584 0.6612 0.2897 0.3570 0.1551 0.6519 S3kja 0.6870 0.6740 0.6871 0.4489 0.6871 0.0918 0.7051 0.6738 0.0976 0.3327 0.2718 0.6554 0.3635 0.6072 0.2351 TPD 0.0007 0.0001 0.0045 0.0045 0.0008 0.0218 0.0038 0.0007 0.0052 0.0020 0.0026 0.0001 0.0148 0.0004 0.0024 0.0644 SLC 0.0005 0.0001 0.0158 0.0051 0.0029 0.0099 0.0094 0.0016 0.0023 0.0023 0.0261 0.0007 0.0189 0.0003 0.0141 0.1099 VRL 0.0025 0.0004 0.0446 0.0078 0.0080 0.0032 0.0315 0.0048 0.0008 0.0021 0.0107 0.0017 0.0192 0.0010 0.0051 0.1435
0.0952 0.1621 0.0328 0.0807 0.6593 0.4142 0.2127 0.3430 0.0993 0.2996 0.2497 0.3549 0.4914 0.2316 0.1596 0.1139 0.1399 0.3149 0.1590 0.2150 0.5421 0.3857 0.1590 0.0844 0.6406 0.4576 0.0669 0.1335 0.2925 0.4089 Total desirability indices
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FP (0.1805). The values in the fth column of Table 8 are the stable independent weights of enablers obtained through converged super matrix (Table 7). The next three columns are from the pair-wise comparison matrices giving the relative impact of each of the alternatives on the enablers. The nal three columns represent the weighted values of the alternatives (Pja !AD !AI !Sikja ) for each of kja kja the enablers. For the purpose of illustration, the value corresponding to TPD for CON is 0.0007 (0.2375!0.0952!0.1621!0.1865Z0.0007). The summations of these results, for the legislation of each of these alternatives, are presented in the nal row of Table 8. These results indicate that the VRL with a value of 0.1435 has maximum inuence on the legislation. It is followed by SLC (0.1099) and TPD (0.0644). Till this step, the analysis has been conducted only for the legislation determinant. Similar analysis is carried out for other three determinants. In the next step, an index would be calculated to capture the achievement of overall goal of selecting an alternative. 8.9. Step 9. Calculation of reverse logistics overall weighted index (RLOWI) The RLOWI for an alternative i (RLOWIi) is the summation of the products of the desirability indices (Dia) and the relative importance weights of the determinants (Ca) of the reverse logistics overall weighted index. It is represented as: X Dia Ca RLOWIi Z For example, the RLOWI for VRL is calculated as: RLOWIVRL Z 0:2378 !0:1687 C 0:5433 !0:1435 C 0:061 !0:1697 C 0:1579 !0:1707 Z 0:1554: The nal results are shown in Table 9. It is observed from Table 9 that VRL is the most-suited alternative for the reverse logistics operations for the case company. SLC and TPD follow this alternative. It is observed from Table 9 that legislation plays a major role in the conduct of reverse logistics operations. It is also observed from the second column of this table that VRL (0.1687) is found to be more economic as compared to SLC (0.0821) and TPD (0.0423). The difference among these can probably be attributed to increased information availability and other advanced IT capabilities which virtual reverse logistics network offers. These can be used to diminish uncertainty on conguration, condition and place of origin, thus enabling better planning and control of the reverse logistics networks. These results should be seen in the light of the characteristics of the case company and the inputs provided by its logistics manager in the pair-wise comparison.
Table 9 Reverse logistics overall weighted index (RLOWI) for alternatives Alternatives Weights TPD SLC VRL ECO 0.2378 0.0423 0.0821 0.1687 LEGI 0.5433 0.0644 0.1099 0.1435 CC 0.061 0.0717 0.1069 0.1697 EGI 0.1579 0.0717 0.1189 0.1707 RLOWI Normalized values for RLOWI 0.1894 0.3260 0.4846
0.0607 0.1045 0.1554
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9. Discussion and managerial implications In this section, we rst discuss the results of the model. Later, we present few suggestions to the prospective users of this model. Finally, we discuss the managerial implications of this model and some generalization of results. The major contribution of this research lies in the development of a comprehensive model, which incorporates diversied issues for conducting reverse logistics operations for EOL computers. It considers a balanced view on four perspectives namely customers, internal business, innovation and learning, and nancial for the conduct of reverse logistics. This is similar to the balanced scorecard proposed by Kaplan and Norton (1992) who had emphasized the measurement of the performance systems based on these four perspectives. The proposed ANP model in this paper, not only guides the decision makers for the efcient conduct of reverse logistics operations but also enable them to visualize the impact of various criteria in the arrival of the nal solution. Further, the interdependencies among the various criteria can be effectively captured using the ANP technique, which has rarely been applied in the context of the conduct of reverse logistics on EOL computers. For the case undertaken in this study, the results indicate that VRL is the rst choice of the case company, which is followed by SLC and TPD. The choice of the case company towards VRL may be attributed to the advanced IT, supply chain solutions and change management capabilities. In the computer industry, IT-enablement and distribution planning can lead to enhanced competitiveness. It is relevant to discuss here the priority values of the determinants of reverse logistics, which inuence this decision. From Table 1, it is seen that legislation (CaZ0.5433) is the most important determinant for the conduct of reverse logistics operations. Economic factors (0.2378), environment and green issues (0.1579), and corporate citizenship (0.0610) follow it. In fact legislation and the economic factors put together had virtually determined the conduct of reverse logistics operations for EOL computers. These implications are straightforward as the legislation and enactment of laws like the extended producer responsibility has forced the companies to reuse the products and also seek secondary markets for their products after the end of the product life cycle. Virtual reverse logistics networks enable higher visibility on products data, even before products enter the return ows. Also, information ows in virtual reverse logistics networks enable coordination among multi-echelons of reverse logistics networks and take advantage of economies of scale for transportation. The results also favor to environmental and green issues. By giving importance to the environmental and green issues in their production practices, the company is assuming the role of a corporate citizen for a social cause. Table 9 shows the RLOWI for the alternatives. It is observed from the table, that VRL excels over the other two alternatives for all the four determinants. It is also observed that VRL is found to be more economical than SLC and TPD. Though, in the illustrated example, the model has been described for three distinct alternatives, it can accommodate more than three at the cost of complexity. Further, the same model presented here can be used for comparison when these alternatives belong to only one category or from two different categories. In the light of the results obtained for the case company, it is to be noted that the results obtained are valid for the case company in its own decision environment. Therefore, these results do not establish the supremacy of one alternative over another. More importantly, it is the decision environment of the user, which makes one alternative superior to other. Though the proposed ANP model is based on a sound algorithm for systemic decision-making, care must be taken in its application, the reason being that the user has to compare the reverse logistics operations on a number of pair-wise comparison matrices.
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Despite illustrative example deriving data set from a case company some generalization of results are possible. The corporate environment is fast moving towards an environment-conscious supply chain and reverse logistics is an obvious candidate for being managed better. Information technology and information sharing are of prime importance in the effectiveness of reverse logistics. Virtual logistics networks provide superiority due to this reason. Products like PCs, which are recongurable need to be suitably managed in the reverse logistics. The criteria and dimensions identied in the proposed model are quite generic and with marginal adjustments can be used for different product also.
10. Conclusion The reverse logistics practices may cost in millions of dollars for company. The implementation of these may be a risky endeavor for the top management as it involves nancial and operational aspects, which can determine the performance of the company in the long run. However, with the legislative measures tightening up, there are not many options. The question now is not whether to go for it or not but which framework to pick up. This research is relevant in this sense. The ANP model presented in this paper structured the problem of conduct of reverse logistics for EOL computers in a hierarchical form and linked the determinants, dimensions, and enablers of the reverse logistics and the alternatives available to the decision maker for a computer industry. It can aid the top management in the evaluation of the various alternatives available with them as it measures the relative strengths of impacts between elements in the hierarchical model. Previously, the rms had overemphasized short-term nancial performance. But no single measure can provide a clear performance focus on the critical areas of business (Kaplan & Norton, 1992). The same can be applicable to the conduct of the reverse logistics operations, as sole emphasis on the nance (economic) aspect would not provide a complete picture of the real situation. The model presented in this paper gives a holistic view of the various criteria affecting reverse logistics operations for EOL computers. It is holistic in the sense that it inherits the principle of balanced scorecard, which measures the performance of a rm in the four dimensions of customer, internal business, innovation and learning, and nance (Kaplan & Norton, 1992). Although the concept of balanced scorecard has been primarily designed for the measurement of the performance, we in this model have used these dimensions, in the dimension hierarchy of the ANP model in order to obtain a holistic framework towards the conduct of reverse logistics operations. It thus provides the decision makers with a balanced framework for reverse logistics for the conduct of reverse logistics operations, thus enhancing the value and clarity of the decision-making process needed by the top management. Thus, a combination of balanced scorecard and ANP approach proposed in this paper can provide to the decision maker a more realistic and accurate representation of the problem for conducting reverse logistics operations for EOL computers. A major contribution of this research study lies in its linkage of various issues of the reverse logistics in a single systemic framework. It is an attempt in this regard to aid the decision makers in the complex task of prioritizing their options. This decision model integrates and relies upon the various characteristics of reverse logistics of determinants, dimensions, enablers and their relationships. The utility of the ANP methodology in integrating both quantitative as well as the qualitative characteristics, which need the attention of the decision maker in arriving at the best possible solution, assumes tremendous value.
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The model developed in this paper has a few limitations as well. The formation of the pair-wise comparison matrices and data acquisition is a tedious and time-consuming task. In this case, 141 pair-wise matrices are formed. Also, more importantly, the results reported in this research are based on the opinion of the logistics manager of the case company. Thus, the pair-wise comparison of the criteria always depends on the users knowledge and familiarity with the rm, its operations, and its industry. Therefore, the biasing of the manager to some criteria might have inuenced the results. Although, we have tried to minimize this by checking the consistency of comparison using method of consistency-ratio check as suggested by Saaty (1980). Hence, the identication of the relevant attributes to the problem under consideration, the determination of their relative importance in comparison to others require extensive brainstorming sessions, and the accumulation of expertise and knowledge within the organization. Since many of the issues in the pair-wise comparisons are crossfunctional in nature, a team of managers from various functional departments should be assigned the responsibility of comparison. Delphi method may also be a promising technique that may be explored in this regard. The logistics manager in this case computer company considered the approach to lead to an objective analysis of the situation and is currently implementing the virtual reverse logistics networks for PCs as an approach to the conduct of reverse logistics operations for EOL computers in their organization. The balanced view of all the four dimensions of the customer, internal business, innovation and learning, and nancial with their enablers in the reverse logistics has enhanced the clarity of the decision making by the logistics manager. A possible extension of this research study might be to study the preferences of the user companies corresponding to different sizes and sectors, where these criteria may be modeled as per the choice of companies. The model may also be subjected to sensitivity analysis. User-friendly software may also be developed on the basis of the model.
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Computers & Industrial Engineering 48 (2005) 327356

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