Sustainable Sourcing with Recycling: A Contribution towards Circular Economy

Raw materials provide an essential basis especially to the electronics industry for the production of high-tech products in the area of consumer and industrial electronics. The increasing demand for such products like mobile phones and at the same time decreasing life cycles lead to growing waste streams. The European Union therefore considers supply and use of specific raw materials used for these products, i.e. critical materials, a strategic challenge. Certain legislative initiatives already propose concepts to be implemented at companies to cope with these challenges, become more sustainable and overcome problems of resource scarcity. One recent and promising suggestion is the idea of the circular economy, where measures are proposed that try to close the material loop and further develop the take-make-dispose economy with the aim of resource efficiency and circularity of material flows through recycling and waste management. The aim of this dissertation is to discuss how the integration of recycling material into the sourcing strategy impacts the economic and environmental performance of a manufacturer. We assume a sustainable sourcing strategy of a manufacturer, who operates in a dual sourcing environment with one contract supplier and a second reactive supplier to receive virgin and recycled raw material. The recycling of critical materials is addressed as it is associated with high complexity, immature processes and complex compositions of final products. A single-period inventory model considering uncertainties with respect to final demand, recycling quantity and material price as well as related dependencies is taken into account and results are analyzed. Managerial implications in terms of economic, environmental and social contributions are addressed. We provide insights on the effects of different economic parameters on the ordering decision. In an extensive numerical analysis we then study the impact of correlation on our results in order to derive managerial implications. Designing a supply chain that facilitates the achievement of sustainability goals is a significant challenge. The aim of this research is moreover to explore the impact of digitalization as a driver for transformation processes in supply chains. We tackle the transformation from traditional, linear supply chains (make-use-dispose) towards more circular, sustainable supply chains in the context of the triple bottom line, which comprises economic, environmental and social aspects.