Question

What is a closed loop supply chain and what are what are the key activities in a closed loop supply chain? Briefly discuss also one example of a real life closed loop supply chain.

Answer 1

Closed loop supply chain is that supply chain network that includes forward logistics in the chain as well as the reverse logistics in the chain that pertains to collection and processing of returns. Essentially a closed loop supply chain involves operation of a supply chain system so that maximum value is created over the entire life cycle of a product. The focus of a closed loop supply chain is on dynamic recovery of value from returns over time.

The key activities in a closed loop supply chain are collection, inspection and separation, re-processing of the goods, disposal and re-distribution of the goods.

One example of a real life closed loop supply chain can be seen in case of PepsiCo. The beverages and cola company makes use of reverse logistics to recycle and reuse its PET bottles for its different beverages products. Pepsi makes use of closed loop supply chain to recollect the used PET bottles from the market to ensure that they are properly recycled and hence to ensure that the PET bottles do not pose an environmental threat.