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Traditional / Open Loop / Forward Supply Chain

The returns process has typically been handled and is separate and distinct from the forward supply chain. Recently, however, there has been more discussion of integrating forward and reverse supply chains (Diener, 2004).

Information about Traditional / Open Loop / Forward Supply Chain

In the open-loop supply chain, which is the traditional supply chain system, products do not return to the original producer. Unlike in the closed-loop or reverse supply chain, here the products are either recovered by other parties willing and able to reuse the materials or products, or are disposed in landfills (Andel, 1997). In the closed-loop system, materials are returned and reused by the same originator, as suppliers or manufacturers bring products back in and remanufacture or refurbish them before resale to the secondary market.

The complexity of a traditional supply chain is defined by a number of echelons or cost centres, where an echelon is a place for holding inventory. Usually each echelon is characterised by a perceived demand for products, a production (value-adding) process, information on current performance, disturbances (e.g. breakdowns, delays), decision points where the information is brought together, transmission lags for all activities and decision rules based on all company procedures, for example, changing stock levels, placing new orders, production requirements (McKinnon et al., 2010).

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