Dual-Sourcing Strategies that Create Carbon Efficient Supply Chains


CALL: 2018

DOMAIN: LE - Law, Economics, Finance





HOST INSTITUTION: University of Luxembourg

KEYWORDS: Dual-sourcing; inventory; multi-echelon; sustainable supply chain management; operations management; reverse logistics

START: 2018-03-01

END: 2021-10-31

WEBSITE: https://www.uni.lu

Submitted Abstract

As a matter of course, supply chain management decisions have mostly been based on the involved parties’ economic performance. In recent years however, the environmental impact of supply chains has become important as well. Particularly carbon emissions related to supply chain activities, such as transportation and production, have received much attention on the political agenda as they are considered a major cause of the greenhouse effect. It is therefore important that companies reconsider their supply chain strategies by explicitly incorporating the environmental dimension into decision-making. In this respect, we investigate dual-sourcing strategies that consider both eco-friendly and polluting supply sources across the supply chain. We consider two frequently occurring categories of such dual-sourcing strategies. The first category considers supply chain settings with two distinct transport modes. In this category, companies across the supply chain have the option to replenish their inventory from a supplier using either a slow, but eco-friendly transport mode, or a fast, but polluting expedited transport mode. In the second category, we study supply chain settings with two distinct suppliers for each company: a supplier of recycled materials, i.e. an eco-friendly supplier, and a supplier of non-recycled materials, i.e. a polluting supplier. In this category, efficiently integrating available recycled materials into the conventional flow of non-recycled materials evidently has great environmental benefits, including reductions in carbon emissions. In this research, we develop novel control policies for these dual-sourcing strategies. These control policies decide when and how much to order from which type of source, such that supply chains are at the same time cost-efficient, provide the required service to customers and have a low negative environmental impact.

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