Seminar: Dr. Aybek Korugan, “Servicizing for CLSC: A Feasibility Analysis”

Servicizing for CLSC: A Feasibility Analysis

by Aybek Korugan

Worldwide consumption of durable and electronic goods is constantly increasing. While a certain portion of the consumption is directed to emerging markets and first time users, a significant amount is realized as replacement sales in mature markets of the first world. The consumerism trend in these markets is particularly disturbing, as the useful lifecycles of products are constantly getting shorter. While such a trend expands and strengthens economies it takes a major toll at the environment; waste sites in Europe are closing one by one, carbon emissions are continuously increasing, and natural resources are rapidly decreasing. Efforts have been made to reverse these effects by means of new legislation and regulations in many developed economies. Manufacturers are now required to take the responsibilities of their products at the end of their useful lives. To this end, collection and reprocessing structures are generated. Many countries enforce manufacturers to recycle or reuse at least 85% of their production.

Such efforts along with the increasing consumer awareness on environmental issues have increased the demand for refurbished products. Second hand markets are supplied by either original equipment manufacturers (OEM’s) or secondary remanufacturers, that collect, refurbish and resell durable products. In many cases remanufacturing used products have proven to be more profitable than manufacturing new ones. Consequently, in some sectors products are collected and remanufactured more than once. While in many cases refurbishing and remanufacturing products requires less energy and therefore releases less CO₂, when considering collection and inspection processes the total impact of such efforts on the environment is not clear.  Furthermore, collection rates are random and therefore increase the uncertainty in the supply system and render a major leakage in a so-called closed loop supply chain (CLSC). Thus better, more efficient supply chain designs are needed to converge to a CLSC. To this end, selling the functionality and not the ownership of products may be considered. Such systems are coined as servicizing systems in the literature and are already discussed in some business-to-business transactions to a certain extent. In this study, we aim to compare the profitability of three supply chain structures: a traditional supply chain, a supply chain with OEM also undertaking remanufacturing activities, and a supply chain with servicizing.  We model and analyze each supply chain structure using a generalized queueing network.

Date-Time: November 20, 2015 – 10.30

Place: F003

Short Bio:

Aybek Korugan has received his undergraduate degree from ITU in 1992, and his MS and PhD degrees from Northeastern University, in 1997 and 2002 respectively. He is working at the Industrial Engineering Department of Boğaziçi University since 2003. His research interests are analysis of queueing systems and queueing networks with applications to production and supply chain networks, stochastic models, and closed loop supply chains.