IBM is among the pioneers recognizing the benefits of closed-loop supply chains that integrate product returns into business operations. We worked on a project exploiting product returns as a source of spare parts. Key decisions concern what recovery opportunities to use, the channel design, and coordinating alternative supply sources. Our analytic inventory-control model and a simulation model showed that procurement-cost savings largely outweigh reverse logistics costs and that information management is essential. These findings provide a basis for significantly expanding the usage of the novel parts supply source, thereby cutting procurement costs.

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ERIM Top-Core Articles
Interfaces (Hanover)
Erasmus Research Institute of Management

Fleischmann, M., van Nunen, J., & Graeve, B. (2003). Integrating Closed-Loop Supply Chains and Spare-Parts Management at IBM. Interfaces (Hanover), 33(6), 44–56. doi:10.1287/inte.