Opportunistic versus life-cycle-oriented decision making in multi-loop recovery: an eco-eco study on disposed vehicles
- Harold Krikke
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Multinational companies have recently been encouraged by government policies to implement Extended Producer Responsibility. One objective is to stimulate high-level recovery, and the other is to introduce life cycle thinking. This paper studies decision making in recovery, comparing opportunistic decision making with short-term profit maximization (usually leading to one loop) versus a life-cycle perspective (leading to multiple loops). The question is (1) which business benefits this brings as well as reduction of environmental impact and (2) whether companies should be inclined to think multi-loop and if so how governments could stimulate this.
After comparing the problem with the literature, a non-linear optimization model is presented optimizing NPV of revenues and calculating environmental impact with cumulative energy demand and cumulative recovery rates. The environmental indicators chosen are motivated based on literature research in the area of streamlined LCA. Sensitivity analysis tests solutions on various sources of uncertainty. We study a real-life case with real data.
Results and discussion
Based on the results, we can formulate the following insights for industry. Firstly, cascade markets for reuse may appear attractive but new sales cannibalization compromised margins. To neutralize this effect, returns should be remanufactured to equal-to-new quality hence no difference should exist between new and recovered items. Companies must suppress their natural instincts of maximizing short-term profits and delay some of the revenues by implementing multi-loop models in order to maximize total life-cycle profit. Environmental impact improves as well according to both indicators. Feasibility of returns should be maximized which for example implies careful collection and storage of wrecks, preventing damage and corrosion, etc. Product design changes may further enhance feasibility. However, the concept requires that all loops are controlled well by one actor. For governments the following advices apply. As mentioned, most EPR-based systems in place today maximize single loop 3. Using alternative steering principles instead of target quota on recovery and collection could stimulate multi-loop solutions that prove more robust, more profitable, and have better footprint.
It is concluded that multi-loop recovery is preferred both economically and environmentally. But both industry and governments must improve their policies. Therefore, future research is mapped based on handles and delineations of the study.
- Opportunistic versus life-cycle-oriented decision making in multi-loop recovery: an eco-eco study on disposed vehicles
- Open Access
- Available under Open Access This content is freely available online to anyone, anywhere at any time.
The International Journal of Life Cycle Assessment
Volume 15, Issue 8 , pp 757-768
- Cover Date
- Print ISSN
- Online ISSN
- Additional Links
- Automotive case study
- Environmental impact
- Life cycle
- Net present value
- Streamlined LCA
- Industry Sectors
- Harold Krikke (1)
- Author Affiliations
- 1. CentER, Tilburg University, 5000 LE, 90153, Tilburg, the Netherlands