Operatıons Management (ENG) — Ünite 8 Soru-Cevap

Products pass through a long stream of operations before being bought by the customers. In a general setting, customers buy the products from retailers but when the products at the retail shops are depleted, they order new ones from distribution centers or warehouses. These products arrive to these distribution centers from manufacturing plants at different locations. Manufacturers need
raw materials in order to make production and they obtain these raw materials from their suppliers. 

A supply chain is composed of all of these parties involved, directly or indirectly, in satisfying the customer needs. Suppliers, manufacturers, transporters, warehouses, distribution centers, retailers and even customers are considered to be the main components of supply chains. However, some of these stages may not exist in all supply chains.

Supply chains include movement of products from suppliers to customers, but they also include movement of information, funds, and products in both directions. Supply chain operations include all operations over the life cycle of the product, beginning with the supply of raw materials, including all the production, distribution and marketing operations, continuing with after-sales
and recycling processes, and finally completed when the product is disposed by the end user. In addition, all functions within each company, involved in satisfying a customer request (e.g. product development, marketing, operations,
distribution, finance, customer service) are also considered to be parts of the supply chain (Chopra & Meindl, 2007). It should also be noted that any service delivery system can be viewed as a chain or network of activities, which involves different number of participants. Thus, service industries can also be considered as supply chains, just like manufacturing supply chains. 

Supply chain management encompasses the planning and management of all
activities involved in sourcing, procurement, conversion, and logistics management.

Supply chain management (SCM) aims to integrate different parties in the supply chain in order to satisfy the customer needs with maximum profitability. There are different definitions for supply chain management. According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes coordination and collaboration with channel partners, which may be suppliers, intermediaries, third-party service providers, or customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply chain management is also defined as a set of approaches utilized to efficiently integrate the supply chain members in
order to maximize total supply chain profitability. Supply chain management aims to produce and distribute the products to the right locations, at the right time, at the right quantities, in order to system wide profitability while satisfying
customer service levels. (Simchi-Levi, Kaminsky & Simchi-Levi, 2008). 

Supply chain management has attracted increasing attention and analyzed in further detail starting in 1990s, however its roots go back many years, back to industrial revolution and mass production operations. The first applications of supply chain management was related to logistics operations, which prove its importance and were analyzed deeply starting with World War II. In 1940s and 1950s, managers mostly focused on their transportation and logistics operations to improve their businesses. In 1960s, inventory management and cost control became to be the main focus. In 1970s, materials requirement planning (MRP) systems start to emerge and operations management tactics started to be
used in businesses. In 1980s, MRP systems became much more advanced and MRP II systems began to be used. Globalization increased at this era and many organizations started to integrate global sources into their business. The supply chain management term was first used at this era in 1982. With the advances in Japan, Just-in-Time philosophy and lean production systems also emerged at this period and companies started to modify their businesses accordingly. In 1990s, companies began to focus on their core competencies and specialization became the main focus. With these developments, the relations with other companies became much more important and the supply chains of the companies extended beyond the company walls. Companies started to integrate their purchasing, manufacturing, distribution, financials etc., with the help of
growing Enterprise Resource Planning (ERP) systems. Also, integrating other companies into core operations of the businesses led to SCM systems to emerge in this era. In 2000s, the definition of SCM has broadened to include things like supply chain strategy, co-innovation and supply chain design, and was named as SCM 2.0. In addition, with the development of Internet and e-businesses, different supply chains and management techniques developed in this period.
Real-time decision support systems, synchronized and collaborative extended supply chain networks are a few of the developments in this era. Lately, in today’s world, environmental and social considerations are becoming much more
important and managers are trying to increase sustainability in their supply chains and decrease their carbon footprints. Supply chain managers are trying to integrate the collection of end-oflife products, recycling and remanufacturing
operations into their traditional supply chains. Thus, concepts like reverse logistics, green supply chains, remanufacturing, closed-loop supply chains are widely being researched. In addition, social considerations such as worker rights, child workers, working environments etc. are also being widely considered in supply chain decisions.

Cycle view of supply chains analyze the processes between two successive stages in a supply chain as a cycle. In every supply chain there are different relations between the supply chain members. A supply chain can be analyzed as
a combination of these relations.  According to this view, the operations between the customers and the retailers are named as the Customer Order Cycle.
In this cycle, customers place the orders and the retailers aim to satisfy these orders. Customer Relationship Management (CRM) approaches are mostly utilized at this cycle. In order to satisfy the customer orders, the retailer needs to replenish the inventories from the distributors. The relation between the retailers and distributors is analyzed through the Replenishment Cycle. Distributors obtain the products from the manufacturers and this relation is named as the Manufacturing Cycle. Finally, manufacturers need raw materials in order to produce their products and they obtain these raw materials from the suppliers. The operations between the suppliers and manufacturers are analyzed via the Procurement Cycle. Supplier Relationship Management (SRM) approaches are widely utilized in this cycle.

A pull system is a reactive one and execution is initiated in response to a customer order. On the other hand, a push system is a speculative one and execution is initiated in anticipation of customer orders.

Push/Pull View: According to push/pull view, processes in a supply chain are divided into two groups depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push). A pull system is a reactive one and execution is initiated in response to a customer order. On the other hand, a push system is a speculative one and execution is initiated in anticipation of customer orders. A make-to-order system in which manufacturing is done according to customer orders is an example of a pull system. In this system, first the customer makes the order and specifies the product characteristics and then the manufacturing processes start. The product
is delivered to the customer after a certain time period, called as the lead time. On the other hand, a retail store that places the products on the shelves and waits customers to come and buy them is an example of a push system. In this system, products are manufactured and delivered to retail stores first, and then the customers arrive to the system and buy the products. Both systems have their advantages and disadvantages. In a pull system, customers need to wait for some time in order for their products to be prepared and they can only get the product after a certain time. However, they can specify the product characteristics as they want and customized production can occur. In addition, companies do not carry any finished goods inventory and they do not have any risk of unsold products. Thus inventory and wastage costs are minimized. On
the other hand, in a push system, customers can obtain the product immediately since products are already produced and ready for sale at the stores. However, customers might not find exactly what they are looking for and they need to select among the alternatives in the store. Due to the uncertainty in demand, some of the products might be unsold leading to losses for the supply chain and some of the products might be out of stock if there is higher demand than expected, leading to high inventory and wastage costs. Every supply chain needs to design its processes according to their customers’ expectations. For example, since customers will not be willing to wait to buy products like bread, detergent, drinks etc., these products are produced in a push setting such that they are ready to be sold at the stores. However, custom-made furniture manufacturers
operate in a pull setting such that customers first specify the characteristics of the furniture that they want and the furniture is manufactured afterwards according to customer needs. Customers in this system are willing to wait for some time in order to obtain exactly what they want. Similarly, in a business-to-business setting, when manufacturers order parts from their suppliers with certain specifications, these parts are not ready at the suppliers and suppliers start to produce these parts only after they get the orders. Such businesses are
examples of pull systems. It is also possible that a portion of the supply chain operates in a push setting and the other portions on a pull setting. Push/pull boundary separates push processes from pull processes in the supply chain.

Strategic fit is the consistency between customer expectations and supply chain
capabilities and supply chain strategies. Companies need to understand the customer expectations and their supply chain capabilities in order to design the appropriate strategy and to achieve strategic fit. Customer’s expectation is the
main building block of the competitive strategy of a supply chain. The performance of supply chain will be closely related with the supply chain strategy in responding to the established competitive strategy. A company’s competitive strategy is its basic method of satisfying more of the customer’s expectations than its competitors. The competitive strategy of a company includes its target customers and their specific needs, such as the product type, orders, information, special services, and so on. To achieve strategic fit, a company must ensure that its supply chain capabilities support its ability to satisfy the targeted customer segments (Chaharsooghi and Heydari, 2011). 

A supply chain’s responsiveness is measured by its ability to respond to wide ranges of quantities demanded, meet short lead times, handle a large variety of products, build highly innovative products, meet a high service level and handle supply uncertainty.

In addition to customer expectations, companies also need to understand their supply chain capabilities and build the strategy such that its competitive strategy and supply chain strategy are aligned. Supply chains want to minimize their costs but they also want to be responsive to demand. According to Chopra and Meindl (2007, p.30), supply chain responsiveness is defined as the supply chain’s ability to
• respond to wide ranges of quantities demanded
• meet short lead times
• handle a large variety of products
• build highly innovative products
• meet a high service level
• handle supply uncertainty
The supply chain is said to be more responsive if it has more of these abilities. However, increasing responsiveness requires a higher cost. For example, to build highly innovative products, higher expenses need to made for research and development which increases the costs of the company. Besides being responsive, companies also want to minimize their costs and want to be efficient. Supply chain efficiency can be defined as the cost of making and delivering the product to the customer. The definition of efficiency does not say
anything about improving customer service or effectiveness of the supply chain. A supply chain might be very efficient that minimizes costs but if it leads to unhappy customers and if it does not meet customer expectations, it will not
be an effective supply chain. Effectiveness of a supply chain is about how well the supply chain is meeting the expectations and demands of the customers. 

There is no single right strategy for every supply chain but instead there is a right strategy for a supply chain depending on the needs of its target customers, characteristics of the products and the capabilities of the supply chain.

Companies generally need to position themselves at a certain point between extremely efficient and extremely responsive standings. Increasing responsiveness results in higher costs that lower efficiency. Depending on the customer expectations and supply chain capabilities, companies need to find the best position for them in order to achieve strategic fit. There is no single right strategy for every supply chain but instead there is a right strategy for a supply chain depending on the needs of its target customers, characteristics of the products and the capabilities of the supply chain.

Supply chain management requires a systems approach that includes all operations and related revenue and cost factors in the supply chain.

The objective of supply chain management is generally to maximize profitability across the entire system. Supply chain managers aim to maximize total system wide profitability which is mainly the difference between the revenues from
sales and the system costs which include material costs, transportation and distribution costs, manufacturing costs and inventory costs among others. Thus, supply chain management does not simply aim to minimize transportation cost or reduce inventories but instead requires a systems approach that includes all operations and related revenue and cost factors in the supply chain. There are various decisions that need to be made for effective supply chain management, such as the structure of the supply chain, relations between facilities, the number of facilities, their function and capacity, type of operations at each facility, locations of these facilities, locations and quantity of inventory, customers to be served from each facility, transportation arrangements etc. There are also various cost factors associated with these decisions throughout the supply chain. Supply chain management encompasses the company’s
activities and decisions at many levels. These  decisions can be classified as strategic, tactical and operational level decisions depending on their significance and the time span that they cover. 

Strategic level decisions are long-term decisions that are generally about the structure of the supply chain and made by top level managers.

Strategic Level Decisions: These decisions are long-term (over several years) decisions and they are generally about the structure of the supply chain.
Locations and capacities of facilities, products to be manufactured, information systems to be used, modes of transportation are some examples of such
decisions. These decisions are mostly made by the top level managers. Since these decisions are about the structure of the supply chain, it is difficult to
change them once they are implemented. When a strategic decision is made, it would be in use for the next several years, and it would be very costly to
reverse them in the short run. Thus, these decisions need to be analyzed carefully considering future uncertainties. For example, when a facility is built
at a certain location, that location will be used for many years and changing that location would not be easy in the short term. These decisions also need
to be made such that they support the strategic objectives of the supply chain.

Tactical Level Decisions: Tactical decisions in supply chains are a set of policies that govern medium term (generally between 6 months and 2 years) decisions and they are constrained by the strategic decisions. Which locations will supply
which markets, inventory policies, when and how market promotions will be made, subcontracting and backup decisions are a few examples of tactical
decisions. Companies need to consider the factors like demand uncertainty, competition and changes in the system over time when making these
decisions. Generally, medium level managers are involved in these decisions.

Operational Level Decisions: Operational decisions are generally daily or weekly decisions that need to be made to operate daily activities. When making these decisions, strategic and tactical decisions are fixed and operating policies are
already determined. The main goal is to implement the operating policies as effectively as possible. Deciding order due dates, setting production and
delivery schedules, assigning jobs and workers to machines, allocating orders to inventory or production, allocating an order to a particular shipment, generating pick lists at a warehouse, placing replenishment orders are some examples
of operational decisions. Since these decisions are short term decisions, there is much less uncertainty in the system when they are made. These decisions are generally made by low level managers.  Facility decisions, manufacturing decisions, inventory decisions, transportation decisions, information decisions, sourcing decisions, pricing and marketing decisions are just some of the decisions that need to be considered by supply chain managers. Each of these decisions will be based on the supply chain strategy as explained below.

Facility Decisions: Facility decisions are among the most important decisions in supply chains. Where to locate the facilities, what should be their capacities, what is going to be done at these facilities are some of the most critical decisions in supply chains. Global companies that produce multiple products decide to produce some items at one location while producing others at other
locations. Which products should be produced at which facility, which customers should be supplied from which facilities are a few of the most critical strategic level decisions. Location and capacity decisions about the facilities also should be in line with the supply chain strategy. For example, a company might need to decide between these two alternatives: building many distribution
centers with small capacities or building only one distribution center with a high capacity. Each alternative has advantages and disadvantages. If there are many distribution centers at different locations, then these locations will be closer to
the customers and products can be delivered to the customers in shorter times, leading to a more responsive supply chain. However, operating multiple facilities will cause higher costs. On the other hand, if these multiple facilities are combined as a single larger facility, the operating and fixed costs of these facilities will be decreased due to economies of scale, and a more efficient supply
chain can be obtained. However, since there will be only one facility, this facility can be very far away from some customers and delivery times of the products will increase and the responsiveness of the supply chain will decrease. 

Manufacturing Decisions: Manufacturing is one of the main operations in a supply chain and there are various decisions around it. Which products to manufacture for the target customers, how should the products be designed, when, where and how much to produce, what type of machines and manufacturing methods will be used, what should be the production plan and production schedule, how will the demand be forecasted, what should be the quality control, maintenance, research procedures to be used for production are some of the most critical decisions that need to be made in supply chains. Manufacturing decisions are affected by the supply chain strategy such that depending on the target customers, the types, quantities and qualities, the innovation level in products, operating procedures might change. In a responsive supply chain which target high-end customers, highly innovative products with better quality control, and faster and highly automated production methods
can be chosen. However, for an efficient supply chain that aims to minimize costs, standard products with lower quality might be acceptable.

Inventory Decisions: Companies in a supply chain keep inventories mainly because of the reasons stated as below:
• Uncertainties in demand and supply: Companies keep inventories as a precaution for unexpected changes in demand and supply. Inventory kept above the expected level of demand is defined as the safety inventory and is used to satisfy the demand if demand happens to be above expectations.

Economies of scale: Materials and products are bought at large quantities due to fixed order and transportation costs and to benefit from quantity discounts. The inventory used to satisfy demand between receipts of supplier shipments is defined as the cycle inventory.
• Production smoothing: If demand varies at different periods, companies sometimes produce more than the demand at low demand seasons and use the remaining inventory at high demand seasons if production capacity is insufficient. The inventory built up at low demand seasons and used up at high demand seasons is defined as the seasonal inventory.
• Anticipations about price changes: Companies sometimes buy more than what they need if they anticipate a price increase in the near future.

Companies need to decide when, how much and which materials to order or produce for replenishing their inventories to satisfy customer demand at minimum cost. Inventory decisions are also affected by the supply chain strategy. If a supply chain aims to be a responsive one, then higher amounts of inventory should be kept at closer locations to customers to increase customer service levels. However, keeping inventory brings a cost to the company. Thus, a
company that aims to be an efficient one might choose to work with lower levels of inventories.

Transportation Decisions: Decisions about the movement of products between the facilities in the supply chain are in scope of the transportation decisions. Which mode of transportation (air, truck, rail, ship, pipeline or electronic transportation) to use, which routes should be selected, what should
be the logistics network between the facilities, should the products be shipped directly to the customers or should different distributors be used, should a third party logistics company be utilized or should logistics operations be done with in-house vehicles, are some of the decisions that need to be made related to transportation operations. Each of these decisions are also related with the supply chain’s strategy. For example, if responsiveness is more important for the company then airways can be used as a mode of transportation which is much
faster than the other modes but also more costly. On the other hand, if efficiency is more important, to decrease the costs, railways, ships or trucks can be used rather than using airways, since they are cheaper but delivery takes a longer time.
Information Decisions: Information systems have a significant effect in the coordination between different parties in the supply chain. A healthy and fast communication between the members of the supply chain is critically important for smooth completion of the operations. In order tomake good decisions, companies need to have the necessary information as quickly and as correctly
as possible. Information systems is the backbone of the supply chains. What type of information systems to use, which companies should share what
kind of information with the others, how should the information be communicated are some of the critical decisions related to information systems in supply chains. A good information system can help the supply chains to be responsive and efficient at the same time. With the growing technology in today’s world, there are different information systems that are utilized by the companies. Electronic Data Interchange (EDI) systems, Internet, Enterprise
Resource Planning (ERP) systems, Supply Chain Management (SCM) systems, Barcode and Radio Frequency Identification (RFID) systems are some of the mostly used information systems in supply chains that help companies make better decisions and continue their operations in a better and faster manner.
Sourcing Decisions: Sourcing can be defined as the processes to obtain or buy goods or services. Sourcing is concerned with what needs to be purchased, where it should be purchased from, when and why it should be purchased. There are various decisions related to sourcing in supply chains. Supplier selection and evaluation, outsourcing, supplier contracts, single or multiple sourcing are some of these decisions. Quality, timeliness in delivery, price, reliability, past performances, technical competency, research and innovation capabilities, guarantee and return policies, production capacity and flexibility are some of the major factors that affect supplier selection. Supply chain members need to evaluate their suppliers and make decisions regarding which suppliers to work
with for what types of products, what types of contracts to make with them and how to improve the relations with suppliers. Suppliers are an integral part of the supply chain and a good relationship with the suppliers is critically important for the success of the supply chain. Supply chain decisions are also related with the supply chain strategy. If responsiveness is more important for the supply
chain, then suppliers which are faster and more flexible in delivery might be chosen even if they are more expensive. However, if efficiency is more important, then lower price suppliers can be more suitable to work with. In addition, some companies choose to work with a few number of suppliers and
build strong relationships with them, while others choose to buy from many different suppliers at the same time to distribute the risk. Supplier selection
is one of the most critical decisions for a company and the choice of a wrong supplier might hurt the supply chain significantly.

Pricing and Marketing Decisions: Pricing is an important decision that affects the customers whether to buy the product or not. Pricing decisions will directly affect the demand and the sales of the company, which later on affect all the other production, distribution, inventory or sourcing related decisions. Pricing and marketing decisions can be used as very effective strategies to increase supply chain profitability. Depending on the customer expectations and supply chain
capabilities, prices can be increased or decreased at different times in order to match supply and demand. For example, if demand is higher than the production capacity, then prices can be increased to obtain more profit from sales. On the other hand, if demand is lower than expected and if there is excess inventory at hand, prices can be decreased in order to sell the inventory at hand and obtain
some revenue. This is a general procedure that can be observed in fashion retail stores. It is commonly seen that there are certain discounts at certain unsold items especially at the end of the sales season. Promotions also affect the customer behaviors and companies commonly use these strategies to attract
customers at certain periods. Different pricing and revenue management strategies are commonly used by different companies in order to increase
their profits. Dynamic pricing approaches used by airlines or hotels are just a few examples of such strategies. Companies devise their own strategies depending on their supply chain strategy. For example, some companies, like BİM and A101 markets in Turkey, employ everyday low pricing strategy but they generally have low product availability. Other companies might use other
strategies like high-low price strategy but they generally have higher product availability with higher varieties. Most of the decisions stated above are actually
related with each other. A decision about one of the factors might affect the decisions about others. Improving one part of the system without considering others might lead to unwanted results. For example, if the prices are decreased in order to increase sales, it might lead to higher revenues at first, however, it will also require higher inventories and higher manufacturing and transportation
costs. In addition, the production capacity might not be enough to satisfy the increased demand, leading to stock-outs and unhappy customers in the system. Thus, a supply chain system need to analyze all of these decisions together in an
interrelated setting using a systems approach. For example, the facility location decisions should also consider transportation, distribution and inventory decisions as well among others, since different routes and distribution strategies will be required depending on the facility locations. Similarly, if the pricing strategy is changed, the production inventory and sourcing decisions will
all be affected. A supply chain manager needs to understand the effects of the decisions on all parts of the supply chain and make these decisions accordingly in order for the supply chain to be successful.

Seasonal inventory is the inventory built up at low demand seasons and used up at high demand season.

Quality, timeliness in delivery, price, reliability, past performances, technical
competency, research and innovation capabilities, guarantee and return policies,
production capacity and flexibility are some of the major factors that affect supplier selection.

According to CSCMP, logistics management is defined as the part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements. Logistics operations are about the transportation and distribution of raw materials, semi-finished goods and finished goods between the facilities up to the customers. Harrison and Van Hoek (2008) define logistics as the task of coordinating material flow and information flow across the supply chain.The part of the logistics operations that are about supplying the materials needed
for manufacturing from the suppliers to the manufacturers are called inbound logistics and the part that are about delivering the finished goods from the manufacturers to the customers are called outbound logistics. The logistics operations that are performed inside the manufacturing facility are called manufacturing logistics.
Logistics decisions aim to satisfy customer expectations at minimum cost. Broadly speaking, its mission is to provide the right materials at the right place and at the right time, while optimizing a given performance measure subject to a given set of constraints. Logistics costs are mainly composed of transportation, warehousing, inventory, order processing and administrative costs.  

Logistics management is the part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements.

The mission of logistics is to provide the right materials at the right place and at the right time, while optimizing a given performance measure subject to a given set of constraints.

Cross-docking is a logistics system in which materials from incoming vehicles are directly redistributed to outbound vehicles with minimum handling or storage in between.

The structure of the supply chain defines the length, width and dimensions of the chain as well as the number of facilities in the chain and their relations with each other.

A supply chain in which independent companies make their own decisions in order to maximize their own profitability is called a decentralized supply chain.

Supply chains can be classified as centralized and decentralized supply chains based on the collaboration between supply chain members. If each party in a supply chain makes their own decisions in order to maximize their own profitability, it’s called a decentralized supply chain. On the other hand, in a centralized supply chain, the members of the supply chain act in a collaborative manner such that all the decisions of different entities are made by a central agency in order to maximize total supply chain profitability.

In a decentralized supply chain, companies might have different objectives that might conflict with each other. For example, retailers want the manufacturers to be flexible and be able to produce a lot of varieties of the product in order to satisfy the customer demand. However, manufacturing different varieties and keeping stocks of different items at the same time will bring a high cost to
manufacturers and thus manufacturers want to produce high amounts of the same products with as little variety as possible in order to minimize costs. Manufacturer’s objective of making large production runs might also conflict with the distributor’s objective of minimizing inventory and minimizing inventory might imply an increase in transportation costs. Similarly, suppliers want
manufacturers to order large quantities in stable volumes with long delivery dates. However, manufacturers generally want their suppliers to be flexible and want to order small quantities and want to have them in very short times in order to satisfy changing customer demand.

The phenomena that small changes in customer demand at the end of the supply chain propagate to the beginning of the supply chain with significantly increased order variations is called the Bullwhip Effect.

One of the most interesting dynamics observed in supply chains is called the Bullwhip Effect. It is observed that small changes in customer demand at the end of the supply chain propagate to the beginning of the supply chain with significantly increased order variations.

Closed-loop supply chain management refers to the integration of forward and
reverse supply chain activities and improves the sustainability of supply chains.

Closed-loop supply chain management, product recovery, recycling, refurbishing, remanufacturing and reverse logistics concepts received considerable attention in the last years and are becoming especially important in the context of sustainable development.

Remanufacturing is the process of collecting used items, extracting the useful parts and reusing these parts in the production of new products.

Remanufacturing is the process of collecting used items, extracting the useful parts and reusing these parts in the production of new products. Remanufacturing has both economical and environmental consequences. In addition to saving from direct material costs, companies also save from disposal and energy costs through remanufacturing (Kaya, 2010). Studies have shown that the unit cost of remanufacturing can be about 40–60% of the unit manufacturing cost of an original product in some industries. This means that the remaining value in used products may reach significant levels. In addition to 14 million tons of material savings per year worldwide, an estimated 120 trillion BTUs/ year of energy are saved from remanufacturing globally, accounting for about 16 million barrels of crude oil and about $500 million in energy costs
(Giuntini and Gaudette, 2003). Xerox obtained over $80 million with the implementation of a remanufacturing program in 1997 (Maslennikova and Foley, 2000) and is a successful example of the benefits that can be achieved by remanufacturing and closed-loop supply chain management.