more efficiently manage maintenance scheduling. A further evolution towards
circular economy would involve business-to-business servitization of assets, where
firm share centralized production and manufacturing infrastructures. In this case,
logistics services providers also stand to gain in terms of greater business-to-business flows between business locations.
4.3 Coordinated Versus Collaborative Organization
Collaborative logistics is the sharing of supply chain and distribution network
infrastructures between multiple companies to reduce logistics costs. Collaborative
logistics can be vertical or horizontal. Vertical collaboration involves different
companies managing different consecutive stages along the same supply chain.
Horizontal collaboration involves different companies that are usually competitors
sharing each other’s logistics infrastructure to reduce costs. Collaborative logistics
can also include handing over logistics operations to an independent party that does
not share sensitive operational information between the parties involved but ensures
that the part of the supply chain it is responsible for operates optimally. Allowing
such a fourth party to manage operations can be referred to as coordination and leads
to developments like supply chain control towers. Beyond reducing logistics costs,
companies who can share an existing network also improve the environmental
performance of their products (e.g. reducing travel distances and truck utilizations
and therefore the associated air emissions of the product).
Circular products can be placed on a spectrum between various different firms
working together, either in sequence or within the same stage of the supply chain and
a fully coordinated supply chain. In the CE context, traditional product manufacturing can consider shifting from an open-loop supply chain, to closed-loop supply
chain, in which case the product is returned from the customer to the initial producer,
when the consumer no longer needs the product or when the product reaches the end
of its life. The expansion of the supply chain to include a take back program of the
product can be described as integration, which can also be done vertically or
horizontally. Integration of downstream supply chain activities, such as shifting
from an open loop supply chain to a closed loop supply chain would be forward
integration. Horizontal integration between a firm and other firms operating in the
same supply chain stage that would otherwise be competitors is also possible in
closed-loop context, especially in situations where the management of reverse flows
is regulated on industry level. A well-known example is the collection of Waste
Electrical and Electronic Equipment (WEEE). Integration is an important concept
because it describes the transition of firms from open-loop supply chain towards
closed loop supply chains; however, integration is not always synonymous with
greater collaboration.
Kortmann and Piller (2016) describe two ways in which businesses are adapting
to consumer and stakeholder demands for more sustainable, as well as open,
business practices. By open business practices, they refer to firms being transparent
1 Logistics in the Circular Economy: Challenges and Opportunities
11
circular economy would involve business-to-business servitization of assets, where
firm share centralized production and manufacturing infrastructures. In this case,
logistics services providers also stand to gain in terms of greater business-to-business flows between business locations.
4.3 Coordinated Versus Collaborative Organization
Collaborative logistics is the sharing of supply chain and distribution network
infrastructures between multiple companies to reduce logistics costs. Collaborative
logistics can be vertical or horizontal. Vertical collaboration involves different
companies managing different consecutive stages along the same supply chain.
Horizontal collaboration involves different companies that are usually competitors
sharing each other’s logistics infrastructure to reduce costs. Collaborative logistics
can also include handing over logistics operations to an independent party that does
not share sensitive operational information between the parties involved but ensures
that the part of the supply chain it is responsible for operates optimally. Allowing
such a fourth party to manage operations can be referred to as coordination and leads
to developments like supply chain control towers. Beyond reducing logistics costs,
companies who can share an existing network also improve the environmental
performance of their products (e.g. reducing travel distances and truck utilizations
and therefore the associated air emissions of the product).
Circular products can be placed on a spectrum between various different firms
working together, either in sequence or within the same stage of the supply chain and
a fully coordinated supply chain. In the CE context, traditional product manufacturing can consider shifting from an open-loop supply chain, to closed-loop supply
chain, in which case the product is returned from the customer to the initial producer,
when the consumer no longer needs the product or when the product reaches the end
of its life. The expansion of the supply chain to include a take back program of the
product can be described as integration, which can also be done vertically or
horizontally. Integration of downstream supply chain activities, such as shifting
from an open loop supply chain to a closed loop supply chain would be forward
integration. Horizontal integration between a firm and other firms operating in the
same supply chain stage that would otherwise be competitors is also possible in
closed-loop context, especially in situations where the management of reverse flows
is regulated on industry level. A well-known example is the collection of Waste
Electrical and Electronic Equipment (WEEE). Integration is an important concept
because it describes the transition of firms from open-loop supply chain towards
closed loop supply chains; however, integration is not always synonymous with
greater collaboration.
Kortmann and Piller (2016) describe two ways in which businesses are adapting
to consumer and stakeholder demands for more sustainable, as well as open,
business practices. By open business practices, they refer to firms being transparent
1 Logistics in the Circular Economy: Challenges and Opportunities
11