Specifics Of Closed Loop Supply Chain Management In The Food Sector
The concept of closed loop supply chain management is a very popular direction of research and companies' activities. It is associated with efforts like managing production residues (by products and waste) in such a way as to minimize the level of waste transferred to landfills or incinerators. This article relates to the use of this concept in the food industry, which by its very nature, generates a lot of challenges for logistics management, also in the area of reverse flows. The article characterizes aforementioned concept and provides examples of its use in the food sector. Introduction The concept of sustainable development is one of the most often discussed topics in the context of enterprise and supply chain management. For many years, attempts have been made to determine the optimal combination of corporate social responsibility and sustainable business development. According to most concepts, sustainable supply chain should take into account a reverse chain, in which recycling and utilization are implemented in so called "closed loop" including operations in a traditional and reverse chain. Caring for the environment, especially for shrinking nonrenewable natural resources, has become particularly important for the world community in the last twenty years. Entrepreneurs' environmental awareness has been greatly improved, what was compounded by a number of directives aimed at tightening environmental policies of countries and international organizations. Caring for the environment began to be seen as a source of financial benefits associated with the reuse of resources and their saving. Activities related to the improvement of eco efficiency will finally lead to the transformation of the current (brown) economy into a green economy1. Achievement of those objectives must be supported also by international organizations, national authorities and local government. In recent years there has been a significant intensification of work on amendments to the EU directives on waste management. A statement of the European Union published in 2014 entitled Towards a circular economy: a zero waste programme for Europe should have an impact on changing these directives, but its acceptance was blocked by several member states, including Poland. Subsequent attempts to change these directives will be made in 20172, which unfortunately will considerably delay the introduction of changes in the management of waste. The aim of this article is to present the specifics of Closed Loop Supply Chain Management (CLSCM) implementation in the food industry. This industry generates a lot of challenges for logistics management, because in many cases includes goods with a short shelf life and expiration date. The task of logistics in this sector is not only the proper implementation of the resources flow from suppliers through manufacturers, wholesalers and retailers to the final consumer, but also the return flow, including among others production residues and unsold goods. CLSCM concept is widely described in the scientific and professional literature. Nevertheless, there is little research about the specifics of CLSCM in the food industry. The author suspects that this is due to the huge internal differences in this industry, both in terms of products, technology and production residues. Despite this, the article attempts to universalize the approach to CLSCM in this sector, which could be a starting point for further, more detailed analyzes. Journal of Reverse Logistics 1/2016 (2) p. 14 19 82 LoGISTYka odZYSku LIPIEC wrZESIEn 2016 The concept of Closed Loop Supply Chain Management The concept of Closed Loop Supply Chain Management is the result of perceiving the value of the resources that have been treated so far as waste that need to be utilized. Development of a sustain approach to supply chain management has resulted in a number of solutions, which paid attention to the environment and it is obvious that waste undoubtedly influenced it negatively. Therefore, it was necessary to find a solution for reducing waste level. Keep in mind that utilization is a process generating costs, so the waste is not constituted in traditional approaches as having potential to generate revenues but only costs. Paying attention to the ecological and economic potential, which lies in them, led to the development of reverse logistics and finally the concept of closed loop supply chain. There is a growing importance of the materials flow from the customer (final consumer) to the manufacturer. Managers take into account the possibility of recovering value or disposal of the product. Recovered materials are a good source for material stream, which flows into the production department. This allows for closing the supply chain loop. CLSCM takes into account the causes and consequences of activities having environmental, social and economic nature, while the traditional supply chain management typically focuses solely on economic efficiency3. The concept of closed loop consists of four main areas of action: green design, green production, green distribution and waste management (see Table 1) Achieving a state where there is no waste seems to be impossible, but there are concepts that disprove this view (e.g. cradle to cradle philosophy4) This is not possible without the involvement of the client in the reverse flow. A challenge for manufacturers is to convince the customer (regardless of whether it is the manager of the store, or the end user) that it is worth to return the used or unsold product to a collection point (gatekeeping point) This point should be located as close as possible to the customer to have to pay a low cost of delivery of the product to be recycled. It is important to remember that the customer is the recipient of a product made from recycled materials. Therefore creating the awareness of taking care of the environment gives a feedback in the form of cash twice during the life cycle of the product. Often, the very fact of taking care of the environment by the manufacturer has a positive effect on the recognition and awareness of his brand among current and potential customers. Besides, reverse logistics and the CLSCM concept grew out of market laws, and more specifically of customers' requirements5. Today, consumers are demanding more and more from producers of goods and services. These include: after sales service, warranty, quick repair, replacement of a new product, obtaining a substitute model for the repair time, fast complaint handling, and finally return of a product that did not meet their expectations. In addition, environmental requirements dictate manufacturers to continuously improve the management of resources and waste. Therefore, technological (remanufacturing) and marketing change (increase brand awareness and loyalty, improving company's image) are inevitable. 6 table 1. Basic elements of CLSCM concept Activities category Characteristics green design product design, which will enable the regeneration and re use of the product product design with minimal negative impact on the environment product design with parts that can be reused in another product designing production process so as to obtain as little residue, and if there is no possibility of reduction so they can be used in other processes design of product life cycle, taking into account environmental issues green production use of clean technologies that do not pollute the environment or create waste products impossible to recycle and reuse green distribution use of means of transport with low environmental impact education of economical driving techniques buying eco efficient fleet use of fuels with low environmental impact establishing emission standards implementation of improved models to predict demand in order to reduce the amount of unsold goods waste management waste reduction at source (also at the end customer location) waste collection waste selection transport of waste to the place of processing or disposal pre treatment of waste waste sales waste processing cooperation with authorities and the local community establishing emission standards and emission reduction plan environmental education SoUrCE: own preparation with use of: M. Starostka Patyk, Zarzadzanie lancuchem dostaw. op. cit. M. Starostka Patyk, Logistics management of waste flows. Second edition. Valahia University Press. Targoviste, 2012, p. 65; d. Blumberg, Introduction to management of reverse logistics and closed loop supply chain processes. CrC Press, Florida, USA, 2005, p. 202 204. There are many differences in describing the concept of closed loop in the supply chain, but it is undoubtedly closely related to reverse logistics. Here can be presented two approaches: European and American7. Americans define closed loop as a stream of products that have been returned by a customer for various reasons8. Largely returns refer to full value products, but, however the client resigned to use them. Europeans, in turn, to a greater extent focus on the reverse stream of packages9. So this flow consists primarily of defective, damaged products and their packaging. This is due to the fact that in Europe, much more is said about caring for the environment. The consumerism took in Europe another dimension than in America10. I think that in many sectors the concept of CLSCM should include both of these approaches and differentiate pro environment activities in relation to the finished products and packaging. Closed loop in the supply chain includes flow within a chain including four main areas of logistics activities: supply, production, distribution and reverse flow (see Fig. 1) There are several possible configurations of Journal of Reverse Logistics 1/2016 (2) p. 14 19 LoGISTYka odZYSku 83 3/2016 (20) closed loop in the supply chain. The simpliest closed loop may include only the manufacturer (internal recycling) Then it use