Developing green manufacturing framework through reverse logistics using system dynamics simulation

E. Fatma & D. Jayawati

Politeknik APP Jakarta, Jakarta, Indonesia

C. P. Wulandari

National Taiwan University of Science and Technology, Taipei, Taiwan

ABSTRACT: This paper proposes to create a system simulation model to simulate e-waste management to support the development of green manufacturing framework by considering economic and environmental con­cerns.

1 INTRODUCTION

The rapid technological developments and market changes have triggered electronics manufacturers to compete in producing new products frequently. However, this development led to a shorter life cycle of electronics products. Shortened electronic life cycles may cause the product to be no longer used or depleted faster which will lead to the increase of electronic waste (e-waste). Balde et al. (2014) reported that e-waste produced globally between 2010 and 2015 has reached 48 million tons. E-waste management becomes important since various com­ponents consisted in e-waste are classified as toxic and can be harmful to the health and the environ­ment. Meanwhile, e-waste recycling processing busi­ness is profitable (Krishnadas & Radhakrishna 2014).

Fernando & Rupasinghe (2016) reveal that there is an increasing awareness about e-waste and its impact on environmental sustainability. Increasing environmental concern has led manufacturers to manage their e-waste and develop green manufactur­ing (Lu et al. 2015). On the other hand, e-waste man­agement is a complicated process due to the contents of the hazardous material composition which will affect environments (Robinson 2009). E-waste oper­ational factors which need to be considered include cost-benefit analysis, transportation, warehousing, recycling, etc. (Rahman & Subramanian 2012).

Consequently, e-waste management requires a multi-stakeholder including consumers, manufactur­ers, government, and environmentalists. Some refer­ences suggest that reverse logistics is one of e-waste management solutions. In e-waste management, reverse logistics is defined as a system for returning defective, time-consuming, or outdated electronic products to producers or suppliers for further pro­cessing (Janse et al. 2010). Activities in e-waste reverse logistics may include remanufacturing, refur­bishment or final disposal. This paper attempts to develop e-waste reverse logistics system simulation to develop sustainable manufacturing. System simu­lation will be built by considering manufacturing, regulatory, consumption, distribution and environ­mental aspect in developing e-waste management.

2 LITERATURE REVIEW

Reverse logistics is a process of planning, executing and controlling the flow of materials, and informa­tion from the point of consumption back to its begin­ning points for reprocessing or appropriate disposal (Rogers & Tibben-Lembke, 2001). Reverse logistics in electronics industry aims to return the value of reusable electronic components back to its producer or supplier, as the form of corporate environmental responsibility to the product that has been produced (Tonanont et al.

Some EU countries have implemented Waste of Electronic and Electricity Equipment (WEEE) policy since 2012. This policy requires each

Figure 1. Closed loop supply chain in the electronics industry.

producer to reprocess waste generated from their used products using environmentally friendly methods. This policy strives to increase the involve­ment of environmental performance of all parties involved in the life cycle of electronics products (Ongondo et al. 2011). The process should be man­aged efficiently to minimize the cost of the required process (Hanafi et al. 2008). The complexity of e­waste management can be considered as a dynamic process (Georgiadis & Besiou 2008).

Dynamic simulation system approach has been used to analyze the mechanisms, patterns, and trends of e-waste management, as the sequence of future events depends on the current policy (Stock 1998). System Dynamics is used to observe the structure of underlying complex situations and identify the pat­terns with the behavioral patterns generated by the system over time (Forrester 1994).

Figure 1 represents the general closed-loop supply chain system, at the beginning materials flow from supplier to consumer; which is known as forward logistics. When the product is no longer used, it expectantly flows backward to the suppliers or manufacturers. Reverse logistics facilitates the flow of returns products which include following activ­ities: collecting, recycling, processing, or disposing the material into the landfills. Various research stud­ies have been conducted in the field of e-waste reverse logistics which covers various topics includ­ing the design of logistics networks, location-alloca­tion problem, optimal allocation problem, optimal transportation route, manufacturing design and other related topics. Previous research on e-waste reverse logistics is summarized in Table 1.

3 RESEARCH FRAMEWORK

This research uses system dynamics simulation to create a framework for developing green manufac­turing policy through reverse logistics.

Table 1. Previous research related to e-waste management.

formulation of the whole system will be discussed.

3.1 System definition

The development of a closed loop supply chain in e­waste management requires involvement and cooperation from various parties to ensure its effect­iveness. The observed system is a combination of various activities, for instance, material procurement, production, distribution, utilization, e-waste collec­tion, which include sorting, recycling and final dis­posal. In this model, the system was grouped into several sub-models to facilitate system behavior analysis and to see linkages between activities. This system involves several parties, such as suppliers, manufacturers, distributors, retailers, consumers, recyclers and governments.

In supply chains, suppliers act as raw materials source to producers. In e-waste management, sup­pliers are forced to take the role of using parts of recycled or reused component, extracted from e-waste. Since some parts of electronics devices are extracted from non-renewable natural resources, these recycling and reusing efforts will possibly help to preserve natural resources and the environment. Manufacturers are also having responsibilities for their e-waste processing. Some developed countries have implemented Extended Producer Responsibility regulation that forces manufacturers to have a great responsibility to organize and operate their own e­waste management (Gottberg et al. 2006), so it will not be harm the environment.

Distributors and retailers have a role in delivering finished products from producers to end-consumers. As a point that is directly connected to consumers, retailers can act as an e-waste collection center by offering a promotion to some products that may appeal to end-consumers. It will make some amount of e-waste are entering back the e-waste manage­ment system (Tonanont et al. 2008).

The end-consumer is also considered as a central point of e-waste management. Consumer behavior can be measured subjectively through the consumer awareness regarding preserving the environment. Consumers with high awareness will consciously recycle or reduce their e-waste (Chen & Chai 2010).

The government, as a regulator, has a role in the making of e-waste management policy and regula­tion. In some countries, governments play a substan­tial role, not only in the formulation of legislation but also engaging in the implementation; meanwhile, in other countries, governments only play a small role, and further encourage the voluntary mechanism of the company (Balde et al. 2014). The government can give an incentive to industry to promote and encourage e-waste management or have a firm regu­lation about pollution.

E-waste recycling actors can be grouped into informal and formal recyclers. Kumar et al. (2011) reveals that most e-waste collections are through informal channels. E-waste is then dismantled and reused in the market, while its non-functional com­ponents are disposed of. High-value components are then sold to the processing industries to recover or recycle those materials to supply industrial needs. Recyclers engage in the collection, pre-processing/ recycling of any raw materials. A small proportion of this informal sector may contribute to negative impacts on human health and into the environment due to its unhealthy processing techniques. Problem arise from informal sector is that the volume of pro­cessed e-waste is not properly documented any may use unsafe e-waste processing methodology.

Community service or non-governmental organ­izations play a significant role in raising public awareness of problems caused by e-waste. Organiza­tions may have a good collaboration with others par­ties. This initiative should come from various stakeholders, especially from governments, sup­pliers, producers, recyclers, as well as the con­sumers, to provide a broader e-waste management system. Based on the movement of e-waste and the involvement of each actor within, the closed supply chain of electronic products can be drawn into a causal loop system as illustrated in Figure 2.

3.2 Model development

The causal-loop in Figure 2, was then developed into system dynamics stock-flow diagram. The system dynamics structure contains both level and auxiliary variables. The level is defined as the accumulation of values occurring in the system, while the variable represents the movement of flow in the system (For­rester 1994). The flow is generated from the deci­sion-making process and other conditions that may influence or be influenced by decisions made (Fatma 2015). Figure 3 shows the system dynamics of e-waste activity framework. The arrows in Figure 3 illustrate the relationship between variables and the arrows show the direction of its influence. The (+) or (-) sign at the top of the arrows indicates the effect of each activity. The (+) sign shows that the Vari­ables will change to the same value; if the sign is (-), variable changes to the opposite value. Figure 3

Figure 2. Causality diagram of the green manufacturing development framework.

Figure 3. Reverse logistics for electronics industry framework.

shows the relationship between variables in the development of sustainable electronics industry through reverse logistics system of e-waste. Based on the proposed model, it can analyze what factors can be done to develop green manufacturing through reverse logistics of e-waste.

3.3 Manufacturing sub-model

Market demand determines the number of raw materials needed for production. If demand increases, the number of raw materials needed will increase as well. Consequently, the existing source of raw materials for electronics will be exploited, and its availability in nature will decrease. It encour­ages the manufacturer to utilize recycled raw mater­ials, which come from e-waste. Increased recycling may increase the availability of recycled raw mater­ials. On the other hand, the recovery process requires a processing cost that may impose a manufacturer (Andel 1997). However, if a company can manage their reverse logistics correctly, the company will get economic and environmental profits by performing it (Stock 1998).

3.4 Government sub-model

The Government regulations might encourage pro­ducers and suppliers to procure recycled materials as their raw materials. They allow manufacturers to take advantage of e-waste for recycling before re­entering the manufacturing process (King et al. 2006). This sub-model affects the environment sub­model which triggers manufacturers to utilize recycled raw materials. In the causality model, it was assumed that there is a flow of information that describes the effect of regulation on the actions of the manufacturer, consumers, and distributors. Con­sistency and firmness in the implementation of the government regulations will enhance the companies, consumers or others compliance of in e-waste treatment. This compliance must be offset by the collection and treatment capacity of the related par­ties (Kang 2013).

3.5 Distribution and consumption sub-models

Consumers play an essential role in a closed supply chain system of e-waste. It is revealed that con­sumers tend to dispose of electronics products even though the product is still feasible to use. Consump­tion has a positive relationship between the con­sumption of electronics and an increase in the amount of e-waste. This behavior is also driven by the manufacturers that keep on increasing electronics product sales.

Manufacturers can also raise consumer environ­mental awareness of their users concerning on the dangers of e-waste. Increasing awareness of the users will reduce e-waste in the environment; on the other hand, it will increase the volume of e-waste processed by the processing facility, which needs to be considered and prepared by both producer or government.

3.6 Recycle provider sub-model

E-waste collected form the end-consumer is trans­ported to recycle provider for further processing. After the recovery process, e-waste is transported to its original producers or other producers which use recycled materials (Georgiadis & Vlochos 2004). In e-waste reverse logistics, recycle provider may act as a storage site operator where e-waste is sorted or classified based on its conditions, they will classify e-waste either to recycle or process it into a final treatment and landfill for final disposal (Wang & Yang 2007). Recycling process involves cost and revenue that may encourage recyclers to process e-waste (Das & Dutta, 2013). E-waste processed by recycle provider is constrained by its processing capacity.

3.7 Environmental sub-model

Awareness of environment and sustainability is one of the success drivers of e-waste reverse logistics. Reverse logistics brings a competitive advantage to manufacturers that combine business goals and environmental sustainability. In addition, “green manufacturer” image is an important marketing element which might drive the increase in their sales (Chen et al. 2012). Reverse logistics is per­formed to ensure that environmental protection from e-waste has been done. Manufacturers will no longer rely on new raw materials, instead, they may use recycled materials. Increasing e-waste volume leads to a positive loop on the use of raw materials and reduces the exploitation of natural resources to acquire new materials which simultaneously leads to a negative loop for the environment (Amankwaa 2013).

4 CONCLUSION

This study has identified some perspectives involved in developing green manufacturing in electronics industries. A conceptual model to develop green manufacturing development through reverse logistics has been constructed. The causal-loop and-flow dia­grams were constructed using previous studies and qualitative method of system dynamics. The pro­posed model represents flows of e-waste and its reverse logistics network to develop green manufac­turing policy which involves multiple parties. Reverse logistics process provides reuse, repair, recycling and refurbishes option in controllable e-waste management.

Based on the developed model, it is shown that Government regulation and consumer awareness play an important role to encourage the development of e-waste reverse logistics. In addition, particular emphasis should be performed to the relations among the chain members themselves and commit­ment from all manufacturers, retailers to work col­lectively, in terms of e-reverse logistics processing and costs sharing. Further model development is needed by using statistical data to capture real system in e-waste management.

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