You are on page 1of 9

ARTICLE IN PRESS

Technovation 26 (2006) 11271135


www.elsevier.com/locate/technovation

Strategic alliance in a closed-loop supply chain, a case of manufacturer


and eco-non-prot organization
Sameer Kumar, P. Malegeant
College of Business, University of St. Thomas, Mail # TMH 343, 1000 LaSalle Avenue, Minneapolis, MN 55403-2005, USA

Abstract
Increasing attention is being given now a days to developing environmental management (EM) strategies for the supply chain. This
research: (1) investigates the factors leading to the development of a closed-loop supply chain, (2) describes the closed-loop supply chain
design, (3) focuses on the collection challenges companies have been facing. More specically, this paper tends to (4) show that
manufacturers can create value by implementing a partnership with an eco-non-prot community organization in the collection process
of used products for the closed-loop supply chain. This study focuses on the reuse-a-shoe program of Nike and the creation of
Throwplace.com to point out the benets of strategic alliances between manufacturers and eco-non-prot organizations.
r 2005 Elsevier Ltd. All rights reserved.
Keywords: Closed-loop supply chain; Reverse logistics; Collection; Eco-non-prot organization; Strategic alliance; Industrial ecology, environmental
management; Life cycle management

1. Introduction
In the new economy, consumers are empowered. They
can easily compare products and buy them from competitors. As a result, companies have to be pro-active in order
to satisfy the consumers.
The deterioration of the natural environment is a major
concern. In Western Europe, green parties have vigorously pressed for public action to reduce industrial
pollution. In the US, experts have documented ecological
deterioration, and watchdog groups such as Friends of the
Earth carry these concerns into political and social action.
So, how companies can benet from this changing
environment? In their book Natural Capitalism, Hawken et
al. (1999) call upon companies to practice a new type of
industrialism that will create prots and jobs while saving
the environment. They envision manufacturers relentless
efforts in recycling their products and other developments
that will reduce energy and materials consumption by 90%.
Great opportunities await companies and marketers who
can create new solutions that promise to reconcile prosperCorresponding author. Tel.: +1 651 962 4350; fax: +1 651 962 4710.

E-mail address: skumar@stthomas.edu (S. Kumar).


0166-4972/$ - see front matter r 2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.technovation.2005.08.002

ity with environmental protection. Product life cycle


management can be part of this solution. It is the process
of optimizing service, cost and environmental performance
of a product over its full life cycle. From implementing a
closed-loop supply chain; companies can generate more
value and prots. Besides ecological and economic factors,
customer awareness is creating opportunities for green
marketing. Environmental community organizations try
to nd ways to protect natural resources. They support the
implementation of green supply chain and, some of them
are offering their services to companies. Due to these
external and internal incentives, we believe that creating a
partnership with a green organization can create a lot of
value.
The literature on closed-loop supply chain explores a
wide range of areas. The study begins with reviewing the
main factors that are pushing for environmental management (EM). Next the evolution of EM to the actual life
cycle management is presented. We then describe the
closed-loop supply chain and how it creates value. Finally,
the focus shifts to the specic process of used product
collection while also presenting two case studies(i) Nike
and National Recycling Coalition (NRC, 2001) and (ii)
Throwplace.com.

ARTICLE IN PRESS
1128

S. Kumar, P. Malegeant / Technovation 26 (2006) 11271135

2. Major factors triggering environmental management


Awareness of the environmental situation leads businesses to implement EM. Enormous and growing amount
of waste creation and public pressure are two main factors
that are pushing for EM.
2.1. Waste generation
According to the United States Environmental Protection Agency, there are only three types of waste
municipal solid waste (MSW), hazardous waste (as dened
by the Resource Conservation and Recovery Act [RCRA]),
and radioactive wastewhich are tracked with any
consistency on a national basis.
MSW, commonly known as trash or garbage, is one of
the nations most prevalent waste types. In 2000, the US
generated approximately 232 million tons of MSW,
primarily in homes and workplacesan increase of nearly
160% since 1960 (US Environmental Protection Agency,
2002). During that time, the population increased 56%,
and gross domestic product increased nearly 300% (US
Department of Commerce, 2003). In 2000, each person
generated approximately 4.5 pounds of waste per dayor
about 0.8 tons for the yeara per-capita generation
increase from 2.7 pounds per day in 1960 (US Environmental Protection Agency, 2002). For the last decade, per
capita generation has remained relatively constant, and the
amount of MSW recovered (recycled or composted)
increased more than 1100%, from 5.6 million to 69.9
million tons in total.
The term RCRA hazardous waste applies to hazardous waste (waste that is ignitable, corrosive, reactive, or
toxic) that is regulated under the RCRA. In 1999, EPA
estimated that 20,000 businesses generating large quantitiesmore than 2200 pounds each per monthof hazardous waste collectively generated 40 million tons of RCRA
hazardous waste (US Environmental Protection Agency,
2001).

80% would be willing to pay more for environmentally


friendly goods (Lamming and Hampson, 1996). Note that
more recent references were not easily accessible. On a
worldwide level, a 22-country survey of environmental
attitudes (Elkington, 1994) found that in half of the
countries surveyed, the environment was considered one of
the three most serious problems. In most countries, the
majority of the citizens surveyed said that the state of the
environment affects their health, and an even greater
majority say that the environment affects the health of their
children. In 16 of the 22 countries, citizens said that they
avoid products that are harmful to the environment. Thus,
in the USA, and worldwide, there is an overall awareness
of the worsening state of the environment, as well as a
desire to reverse that trend, even if it costs more to do so.
3. Evolution of environmental management
What was the answer of the companies to these external
factors?
First companies implemented risk management, then
pollution management, and now they are moving towards
life cycle management and industrial ecology. Table 1
shows the chronology of evolution of environmental
policies and associated characteristics of such policies.
International operational guidelines and standards have
been adopted to assist organizations in implementing EM
such as ISO 14000.
3.1. End-of-life management of products
The rst step in meeting the environmental challenge for
businesses is to re-design their traditional supply chain
(shown in Fig. 1) towards a closed-loop supply chain
(shown in Fig. 2). A closed-loop supply chain consists of
the primary supply chain and one or several supply loops.
The primary supply chain starts with the extraction of raw

Distribution

2.2. Public pressure

Consumer

In the United States of America, an estimated 75% of


consumers claim that their purchasing decisions are
inuenced by a companys environmental reputation, and

Supply

Manufacturing

Retal

Fig. 1. Traditional supply chain (forward ow).

Table 1
Evolution of environmental management, designing the green supply chain (Beaman, 1999).
Stage of environmental
policy

Primary characteristic(s)

Year(s)

Risk management
Pollution prevention
Life cycle management
and industrial ecology

Waste management and pollution control.


Process improvement to reduce material use, minimize waste, and improve efciency.
Systematic product and process management to maximize protability and ensure
environmental quality. Focus on life cycle environmental effects of processes and products.

1970smid-1980s
Mid-1980searly 1990s
Mid-1990sNow

ARTICLE IN PRESS
S. Kumar, P. Malegeant / Technovation 26 (2006) 11271135

1129

End of life product non-accessible

W
Recycling
W

Product demand
and use
&
Re-distribution

W
W

Distribution
Consumer

Manufacturing

Supply

Remanufacturing/
Re-use
W

Retail

End-of-life
product
collection

No market
demand for
secondary
output

Reprocessing of
secondary
materials or
products

Collection

Fig. 2. Closed-loop supply chain. W: waste (adapted from Beaman, 1999).

materials and ends with the use phase of the products and
their nal disposal.
The supply loops collect end-of-life products and
reprocess them into secondary resources, which replace
primary resources in the forward supply chain. The whole
system is typically modeled as a set of transformation
processes and the material ows between them.
3.2. What recovery strategy can the companies implement?
End-of-life management involves those options available
to a product after its useful life.
There are ve product recovery operations aimed at
recapturing value:
Repair and reuse: the purpose of which is to return used
products in working order. The quality of the repaired
products could be less than that of the new products.
Refurbishing: the purpose of which is to bring the quality
of used products up to a specied level by disassembly to
the module level, inspection and replacement of broken
modules. Refurbishing could also involve technology
upgrading by replacing outdated modules or components
with technologically superior ones.
Remanufacturing: the purpose of which is to bring used
products up to quality standards that are as rigorous as
those for new products by complete disassembly down to
the component level and extensive inspection and replacement of broken/outdated parts.
Cannibalization: the purpose of which is to recover a
relatively small number of reusable parts and modules
from the used products, to be used in any of the three
operations mentioned above.
Recycling: the purpose of which is to reuse materials
from used products and parts by various separation
processes and reusing them in the production of the
original or other products.
4. Closed-loop supply chain
Typically reverse (or closed-loop) supply chains span the
following ve groups of activities along with constraints
shown in Fig. 3.

Product
deterioration

Inspection
&
Separation

Reprocessing not technically or


economically feasible

Fig. 3. Closed-loop supply chain: main processes and constraints.

Collection: all activities rendering used items (product,


component, or material) available and physically moving
them to some point for further treatment. This may involve
product acquisition, transportation, and storage.
Inspection/separation: results in splitting the ow for
various recovery and disposal options. This may involve
testing, disassembly, shredding, sorting, and storage.
Re-processing: reusable ows undergo the actual transformation of a used item into a reusable item of some kind.
Depending on the recovery option chosen, this comprehends various activities such as disassembly, shredding,
repair, replacements, etc.
Disposal: the non-reusable ows are disposed of to
incinerators and landlls.
Re-distribution: directing reusable items to be marketed
to new markets, and physically moving them to potential
new users. This involves sales activities, transportation, and
storage.
Various recovery and disposal options in a closed-loop
supply chain include: reuse, repair, refurbishing, recycling,
incineration, and land lling (Fig. 4). Recovery options at
the top of the pyramid are of high value, while options
close to the bottom recover less value from the products.
The following section provides an overview of how
closed-loop supply chain facilitates in creating value.
4.1. Value creation
Table 2 summarizes closed-loop supply chain business
benets (that are both service/market oriented or environment/safety oriented) and potential value creation opportunities.
So, why companies are not considering regain value
from returns?
We can list several reasons:

Lack of awareness of the closed-loop supply chain.


Companies tend to focus on their core business.

ARTICLE IN PRESS
S. Kumar, P. Malegeant / Technovation 26 (2006) 11271135

1130

Implies an initial investment to implement the closedloop supply chain. The Reverse Logistics cost model
(Jayaraman et al., 1999; Guide, 2000) for closed-loop
logistics considers different costs: acquiring, transporting, remanufacturing, transporting, and remanufacturing facility set upthat show signicant initial
investment.
Closed-loop supply chains add complexity to overall
supply chain management: key issues are product design
for recovery, re-engineering, product data management,
installed base support, and evaluating (end-of) life
scenarios, etc. (Van Wassenhove and Geyer, 2002).
Marketers fear that using used product could affect their
brand image (lower quality product, lower standards,
etc.). An interesting case is the recapping of tires (Krikke
et al., 2003). About 10% of the tires satisfy the
requirements for recapping and get a new life as a tire
since age and quality put restrictions on the recapping
opportunities. The recapping of tires was protable
business for a long time, because sales price for reuse
was around EURO 60 per tire and material recycling
brought revenues of EURO 1 per tire. However,
competition from Eastern Europe reduced the prices

Reuse
Repair

Refurbishing

Recycling

Incineration

Land filling

Fig. 4. Recovery option pyramid in the closed-loop supply chain.

of new tires considerably and as a result the market for


recapped tires is under pressure. One of the issues is
quality perception, as people often fear to drive unsafe.
Lowering secondary prices may actually feed this
feeling.
Issues of remanufacturing: Designing a closed-loop
supply chain implies dealing with uncertainty in the
timing and the quantity of returns, balancing returns
with demand, disassembly, uncertainty in materials
recovered, reverse logistics, materials matching requirements, routing uncertainty, and processing time uncertainty.
Difculty to implement a closed-loop supply chain for
some category of products, for example, perishable
products.

In the following section, viable approaches to used


products collection are reviewed.
5. Collection of used products
Collection of used products potentially accounts for a
signicant part of the total costs of any closed-loop supply
chain. Companies have explored several options for
reducing transportation costs of the rst mile (Fleischmann, 2001).
First of all, analogous with distribution, some of the
most expensive tasks may, partly, be shifted onto the
customers. Rather than actively collecting goods, a
company may install some drop-points where customers
can hand in used products. In this way, a rst consolidation step is achieved. For example think of public glass or
paper collection boxes and of consumer electronics handed
in at retail outlets. While this strategy reduces transportation, additional storage space is required. Moreover, this
approach may be limited to relatively small, low-value
consumer products.
Another route to consolidation is in combining collection with other transportation ows. In particular, there
may be synergies in combining distribution and collection.
Typical examples include rellable soft drink bottles and
various old for new programs. However, the transportation of empty toner cartridges and reusable cameras by

Table 2
Closed-loop supply chain business benets and value creation opportunities (Thierry et al., 1995; Fidler, 2000; Stock, 1998; Rogers and Tibben-Lembke,
1998)
Service/market

Value creation opportunities

Environment/safety

Return service improves customer satisfaction


Reduced R&D timetime to market
Increased spare parts availability
Timely retrot through early take back
Improved product quality through re-engineering
Pro-active repairs
Green image

Reduced liability risk


Regain value of materials and components
Regain value of labor
Avoid disposal costs
Reduced obsolescence risk through timely return
Less new production of spare parts
Returns reduction

Reduced environment impact


Compliance with legislation
More reliable recalls of defect products

ARTICLE IN PRESS
S. Kumar, P. Malegeant / Technovation 26 (2006) 11271135

express mail, illustrates example where bypassing some


network stages on the way back appears to be a better
choice. The same holds for cases where speed does matter
in the return channel, such as in electronics remanufacturing, which faces quick depreciation.
We now present below supporting arguments to our
thesisA strategic alliance between a manufacturer and
an eco-non-prot organization in the collection process of
a closed-loop supply chain creates value for the company.
A strategic alliance with an ecologic group could be a
successful product acquisition strategy for several reasons,
such as, creates a green image; generates more prots; and
outsourcing the collection activity of the closed-loop
supply chain allows the company to focus on its core
business. Let us review each supporting reason for the
proposed strategic alliance.
Creates a green image. Through this concrete alliance
with an eco-non-prot organization, the company appears
as environmental friendly, involved with community, and
ecologically active. As it was described earlier, consumers
are more and more concerned about the preservation of the
environment, while companies are spending a lot to create
a brand image to inuence consumers about their brand
perception. Based on these arguments, a green image for a
company can improve both the sales and the value of the
company (its brand goodwill).
Generates more profits. A strategic alliance with an econon-prot organization decreases the product acquisition
cost because the company does not have to invest in:
creating its own collection networks, storage cost, transportation costs between the drop-off place and the storage
place, paying wages for a collection staff, etc.
Companies do not have to allocate many resources in the
collection process because they are using community
groups. The goal of these non-prot organizations is to
preserve the environment and not to generate more prots
for themselves. However, usually, companies offer a small
compensation to the organization such as, for instance, a
donation.
Focus on the company core business and competencies:
Companies empower their eco-partner in the collection
process, which allows them to focus on their core business.
Industry examples described in the next section show how a
company effectively manages its operation with such
partnerships.

1131

present the recent initiative of a non-prot organization to


connect businesses and donors of used items.
We select the case of Nike and the reuse-a-shoe program.
The company has created a strategic alliance with an econon-prot organization National Recycling Coalition in
order to collect used tennis shoes.
6.1.1. Industry trend
Although marked by heated competition and priceconscious consumers, 2003 was a fairly positive year, and
US footwear consumption continued to grow in the rst
half of 2004 (Standard and Poors, 2004). Strong economic
growth, particularly in the rst quarter of 2004, and
rebounding consumer condence have likely boosted shoe
sales. Americans appear to be less focused on homecentered spending and are turning toward replenishing
their apparel and shoe collections. Consumers spent $50.7
billion on footwear in 2003, up 2.8% from $49.3 billion in
2002 (US Department of Commerce, 2004). For the rst
half of 2004, consumer spending on clothing and shoes
grew about 7.3% over the comparable period in 2003.
Prices, however, remained soft. In the rst 6 months of
2004, the average price of footwear decreased slightly after
a sharper drop in 2003. The US Department of Labors
consumer price index for footwear dipped to 119.0 in June
2004 as shown in Fig. 5.
Nike Inc. remains by far the largest footwear manufacturer, with revenues of about $12.3 billion in the scal year
ended May 2004. The runners-up were Adidas-Salomon
AG and Reebok Inc., with net sales of $7.7 billion and $3.5
billion, respectively, in 2003. Other major manufacturers
include Fila USA Inc., K Swiss Inc., New Balance, Puma
AG, Sketchers USA Inc., Steven Madden Ltd., the
Timberland Co., and Wolverine World Wide Inc.
Nike and Reebok, the top two in terms of US footwear
market share, continued to seek growth by expanding into
new segments (like apparel and sporting goods) and
international markets. With an eye to cashing in on the
popularity of retro shoes, Nike acquired Converse Inc., a
maker of classic-styled footwear, in September 2003.
Because these US footwear makers have a signicant
presence in Europe, the dollars weakness vis-a`-vis the euro
has boosted their results.

consumer price index for footwear

6. Industry examples
123

In this section, we present examples of Nike and


Throwplace.com. Both organizations are involved in used
products collection.

122
121
120
119

6.1. Alliance between Nike and NRCthe reuse-a-shoe


program

118
117
2001

We will study the case of the reuse-a-shoe program, a


strategic alliance with an eco-non-prot organization, and

2002

2003

2004

Fig. 5. The US Department of Labors consumer price index for footwear


(The US Department of Labor, 2004).

ARTICLE IN PRESS
S. Kumar, P. Malegeant / Technovation 26 (2006) 11271135

1132

For branded apparel companies, customer relationship


management (CRM) is on the forefront. Apparel brand
executive managers realize that they must establish an
emotional connection with the consumer. Thus, attention to
psychographic triggers and making product messages resonate with the shopper are key (Standard and Poors, 2004).

Nike contractor shoes manufacturing plant


New shoes
Consumer
Used shoes
NRC

Nike store

Direct Mail

Nike Recycling plant

6.1.2. The partners


Nike is involved in the design, development, and
worldwide marketing of footwear, apparel, equipment,
and accessory products. As of May 31, 2004, Nike sold its
products to about 28,000 retail accounts in the US and
through a mix of independent distributors, licensees and
subsidiaries in over 120 countries. Independent contractors
manufacture virtually all products. In 2004, the sales of the
company represent $12,253,100,000 for a net income of
$945,600,000 as shown in Fig. 6.
Founded in 1978, the National Recycling Coalition, Inc.
(NRC) is a non-prot organization representing all the
diverse interests committed to the common goal of
maximizing recycling to achieve the benets of resource
conservation, solid waste reduction, environmental protection, energy conservation, and social and economic
development. Its 4500 members include recycling and
environmental organizations; large and small businesses;
federal, state and local governments; and individuals.

Nike goals are to generate prots and to build an


environmental friendly image.
The NRCs main goal is the environmental protection.

Nike and NRC have created an alliance around a


common goal: reprocessing used tennis shoes. The NRC
takes care of the logistics of collecting the shoes, leaving
Nike to focus on the end uses for the resulting Nike Grind
material. Their short-term goal is to have at least one
athletic shoe collection center in every state in the
continental US and to recycling 125,000 pairs/year (Nike
Environmental Responsibility, 2004).
Nike does pay the NRC for its service. The company
simply provides each organization with communications
tools to promote its collection effort, including customizable radio spots, media releases, posters, and print ads.
Three $20,000 grants will be awarded to participating

15,000,000,000

Nike Inc.: Sales and Net Income

10,000,000,000
NET INCOME
SALES

5,000,000,000
0
2000

2001

2002

2003

Re-processing
Grind Rubber

Grind Foam

Grind Fluff

Fig. 7. Nike closed-loop supply chain organization.

Is there a collection partner in your area?


No: send your shoes by mail directly
to the Recycling center

Yes:
Do you give fewer than 10 pairs ?
NO:
NRC

Yes

Local store

NRC

Fig. 8. Collection options.

recycling organizations that successfully apply to the Nike


reuse-a-shoe and NRC grant program in 2004.

6.1.3. Goals of Nike versus NRC


Both Nike and NRC have different goals:

Separation

2004

Fig. 6. Sales and net income of Nike Inc (Nike Inc. annual report, 2004).

6.1.4. Nike closed-loop supply chain


Fig. 7 illustrates the Nike closed-loop supply chain.
In this section, various activities, presented in Fig. 7, of
the Nike closed-loop supply chain are described.
6.1.4.1. Collection of used products.
collected are the shoes:




The used products

Post-consumer, non-metal containing athletic shoes of


any brand.
Nike shoes that are returned due to a material or
workmanship aw.

Nike gives the different drop-off locations on its website.


The collection process offers different options as shown in
Fig. 8.
The process of collection depends on the geographic
location and number of items. The potential donor can
send his used shoes by mail directly to the recycling plant,
or give his shoes to some Nike local stores or to an econon-prot organization that is a member of the NRC.
However the number of drop-off locations is limited.
Indeed, right now, there is an average of only 3 drop-off
locations for the 19 participating states in the US (Table 3).
Using the Nash theory of game, we can note that:

The rst option, sending the shoes by mail, is a winlose


strategy for Nike. The company just focuses on the

ARTICLE IN PRESS
S. Kumar, P. Malegeant / Technovation 26 (2006) 11271135

1133

Table 3
Benets and disadvantages of the three collection options offered by the reuse-a-shoe program
Collection option

Nike

Donor

Benets

Disadvantages

Benets

Disadvantages

1.Mail
2.Local store

No transport or storage costs


None

None
Transport and storage costs

Hassles: packaging
None

3.Recycle partner

No product acquisition cost

Limited transport cost

None
Convenience
No cost
Convenience
No cost

remanufacturing issues while the potential donor has to


pay to send his used tennis shoes directly to the recycling
plant. There is no disadvantage for the company;
however, there are packaging hassles and expenses
incurred by the donor.
The second option is a losewin strategy for Nike. This
option is convenient for the donors but it increases the
production acquisition costs for the company. That is
why the company has limited this option to few local
stores and to a maximum of 10 shoes/donor. This option
is convenient for the donor while it is complicated to
manage for Nike.
The third option would be a winwin strategy for Nike.
The company relies on its partner network to acquire the
tennis shoes. Once a member of the NRC has collected
5000 pairs of shoes, Nike will arrange for the shoes to be
picked up by roadway and shipped free of charge to its
reuse-a-shoe recycling facility in Wilsonville, Oregon. So,
it is the best strategy for both.

None

6.1.5. Gains realized by Nike from its closed-loop supply chain


In 2004, on the continental US, 125,000 pairs of shoes are
expected to be recycled. Since 1993, more than 15 million
pairs of shoes have been processed. They are also expanding
reuse-a-shoe efforts in the UK, Asia and Australia. In 2003,
the reuse-a-shoe program started in Australia, one year it
was launched in London and Nike Japan will adopt the
program in 2006. This remanufacturing process allows the
multinational company both to create more prots and to
improve its public relations: reuse-a-shoe plays an important role in Nikes long-term commitment to help increase
the physical activity of young people to improve their lives.
In addition, reuse-a-shoe is also a key component of Nikes
long-term commitment to reduce its impact on the
environment by helping to close the loop on the life cycle
of literally millions of pairs of old, worn-out or otherwise
unusable athletic shoes. Since the reuse-a-shoe program
began in 1993, Nike has helped donate more than 150 sport
surfaces to communities around the world.
6.2. Throwplace.com

6.1.4.2. Separation of material. NRC organizes separation of three main materials, and arranges to grind them
up. Nike recycles and reuses 100% of the materials from
post-consumer and defective athletic shoes that are
currently able to be recycled.
6.1.4.3. Reprocessing of material. Through a chemical
process in their Wilsonville recycling plant in Oregon,
they obtain three distinct types of Nike Grind
material (upper fabric, midsole foam and outsole rubber).
Each are used in a different way to make new sports
surfaces like soccer and football elds, basketball and tennis
courts, tracks and playground surfacing. The new products
are:
Nike grind rubber, from outsoles and manufacturing
byproducts, helps make football, baseball and soccer
elds, as well as golf products, weight room ooring
and running tracks. (Nike licensee Field Turf uses
Nike grind material from manufacturing byproducts
exclusively.)
Nike grind foam, from midsoles, is used in synthetic
basketball courts, tennis courts and playground surfacing.
Nike grind fluff, from textile and leather uppers is used
for padding under hardwood basketball oors.

We want to present another alternative to the used


products collection. Throwplace.com is an eco-non-prot
organization to connect both businesses and donors. The
organization, through its website, promotes and facilitates
recycling and reuse by providing a nation-wide venue for
everyone to post and nd excess inventory and possessions.
Goods can be listed for donation to charities and nonprots or to businesses and individuals for reuse, recycling
and refurbishing. Throwplace.com is a resource for
businesses engaged in recycling and refurbishing to locate
equipment to tune up and resell or to use for parts. The
website offers a forum for recyclers and collectors to place
ads for specic parts, goods or user group participation.
Individuals and businesses can take or donate items for
reuse and recycling, such as computers, ofce supplies,
furniture, and appliances; Businesses are just required to
pay the nominal subscription fee to take from the Business
section in order to support the site (Table 4).
Moreover, business subscribers will get listed in the
Business Directory and show potential customers they are
environmentally responsible and community-minded.
Businesses such as Lomangino Studio Inc. (DC) in the
advertising industry, Unitz LLC (VA) in the computers

ARTICLE IN PRESS
S. Kumar, P. Malegeant / Technovation 26 (2006) 11271135

1134

References

Table 4
Subscription fees on Throwplace.com
Account type

Monthly
subscription

Annual
subscription

Business (annual revenue


under $1 million)
Business (annual revenue
$110 million)
Business (annual revenue
$1025 million)
Business (annual revenue
over $25 million)

$15

$165

$20

$220

$30

$330

$50

$550

Advertising and Design

13%

Computers/Communication

37%

Entertainment Industry
Multimedia Development

24%
Retail

13%

13%

Fig. 9. Repartition of the business registered on Throwplace.com


(October, 2004).

industry, Cambrian Films, Inc. (CA) in the entertainment


industry, Magic Box Communications, Inc. (NY) in
multimedia industry or axis (DC) in the retail industry
are listed in the websites as partners. Fig. 9 shows relative
proportion of participation by companies in different
industries interested in this collection solution.
7. Conclusion
We consider that a strategic alliance between a
manufacturer and an eco-non-prot organization in the
collection process of a closed-loop supply chain is a good
strategy that benets the manufacturer. It creates more
value for the manufacturer than to set up its own collection
network. The manufacturer can focus on its core business,
reduce its collection costs and reinforce with more strength
its green image.
There is sufcient evidence in the literature as described
in this paper that adopting product life cycle management
and closed-loop supply chain management approaches
strengthens a companys competitiveness. This is already
discovered by pioneers such as Kodak, Oce Technologies,
Mercedes Benz, Xerox, ReCellullar, Philips, Volkswagen,
IBM, Estee Lauder, Genco, and many others. It is
clear from the analysis presented that closed-loop
supply chain creates value in different ways for the
stakeholders.

Beaman, B.M., 1999. Logistics Information Management 12 (4),


332342.
Elkington, J., 1994. Towards the sustainable corporation: winwinwin
business strategies for sustainable development. California Management Review 36 (2), 90100.
Fidler, B., 2000. Returns a cost of doing business? You need to
hear this! Presentation at Genco Life Cycle Conference, Lake Tahoe,
September.
Fleischmann, M. 2001. Reverse logistics network structures and design.
ERIM Report Series Reference No. ERS-2001-52-LIS, Erasmus
University Rotterdam, Netherlands, September.
Guide, V.D., 2000. Production planning and control for remanufacturing:
industry practice and research needs. Journal of Operations Management 18, 457483.
Hawken, P., Lovins, A.B., Lovins, L.H., 1999. Natural Capitalism:
Creating the Next Industrial Revolution. Little, Brown and Company,
Boston, MA.
Jayaraman, V., Guide, V.D.R., Srivastava, R., 1999. A closed-loop
logistics models for remanufacturing. Journal of the Operational
Research Society 50 (5), 497508.
Krikke, H.R., le Blanc, H.M., Van de Velde S., 2003. Creating
value from returns: the impact of product life cycle management
on circular supply chainsand reverse. Working Paper
No. 2003-02, Center Applied Research, Tilburg University,
Netherlands, January.
Lamming, R., Hampson, J., 1996. The environment as a supply chain
issue. British Journal of Management 7, s45s62.
National Recycling Coalition, 2001. US recycling economic information
study conducted by R.W. Beck, Inc. July. Available at http://www.nrcrecycle.org/
Nike Environment Responsibility, 2004. October. Available at http://
www.nike.com/nikebiz/nikebiz.jhtml?page=27
Nike, Inc., 2004. Nike annual report. Available at www.nike.com
Rogers, D.S., Tibben-Lembke, R.S., 1998. Going backwards: reverse
logistics trends and practices. Executive Council of Reverse Logistics
Available at www.rlec.org.
Standard, A., Poors, A., 2004. Industry surveys: apparel and footwear 16
September.
Stock, J.R. (Ed.), 1998. Development and Implementation of
Reverse Logistics Programs. Council of Logistics Management,
USA.
Thierry, M., Salomon, M., Van Nunen, J., Van Wassenhove, L.V., 1995.
Strategic issues in product recovery management. California Management Review 37 (2), 114135.
Throwplace website, 2004. October. Available at www.throwplace.com
US Department of Commerce, Bureau of Economic Analysis, 2003. GDP
and other major NIPA series, 19292002. US Department of
Commerce, Washington, DC, USA, February.
US Department of Labor, 2004. Consumer Price Index for Footwear. US
Department of Labor, Washington, DC, USA.
US Environmental Protection Agency, 2002. Municipal Solid Waste in the
United States: 2000 Facts and Figures. US Environmental Protection
Agency, Washington, DC, USA.
US Environmental Protection Agency, 2001. The National Biennial
RCRA Hazardous Waste Report. US Environmental Protection
Agency, Washington, DC, USA.
Van Wassenhove, L., Geyer, R., 2002. The impact of constraints in closedloop supply chains: the case of reusing components in durable goods.
In: Proceedings of the 10th LCA Case Studies Symposium on
Recycling, Closed-Loop Economy and Secondary Resources, December 23, Barcelona, Spain.

ARTICLE IN PRESS
S. Kumar, P. Malegeant / Technovation 26 (2006) 11271135

Sameer Kumar is currently a Professor and Qwest Endowed


Chair in Global Communications and Technology Management
in the College of Business, University of St. Thomas, Minneapolis, MN. Major areas of research interests include optimization
concepts applied to various aspects of global supply chain
management, information systems, technology management,
product and process innovation, and capital investment justications.

1135

Patrice Malegeant has worked for Spanish and Canadian


governmental agencies in the export area in Spain and the
United States. He has a BS in Finance from University of
Nantes, France and a Master in French American Business from
University of Caen, France.