Production, Manufacturing and Logistics
Reverse logistics network design for the collection of End-of-Life Vehicles in Mexico

https://doi.org/10.1016/j.ejor.2008.04.041Get rights and content

Abstract

This paper seeks to describe several features of establishing a closed-loop supply chain for the collection of End-of-Life Vehicles in Mexico. To address this task, the problem is handled through Reverse Logistics and is modelled through an Uncapacitated Facility Location Problem. The solution of this model is obtained using software SITATION©. Furthermore, this work also presents a brief description of the current Mexican ELV management system and the future trends in ELV generation in Mexico. The main result is the configuration of three collection networks within Mexico, which correspond to three possible scenarios that consider 100%, 90% and 75%, respectively, of collection coverage. Regions with high ELV generation are identified as well as relevant factors affecting total costs in the reverse supply chain.

Introduction

Growing concern for environmental problems has led to a range of product-oriented policies that affect various industrial sectors. One of these affected industries is the automotive one that is currently facing several challenges to accomplish the requirements of Directive 2000/53/EC in the European Union (EU) (Reinhardt, 2005); some essential elements of this Directive are the producer responsibility and waste prevention that oblige manufacturers to guarantee and finance product take-back and recycling.

Since this policy, stakeholders along the automotive chain, upstream and downstream, are moving towards the fulfilment of the EU requirements, thus the recovery of value from vehicles at their End-of-Life (EoL) stage is an essential element. In this context, the level of efficiency in the management of reverse supply chains sets the economic success of reprocessing component and material streams from End-of-Life Vehicles (ELV).

Currently, most of the countries addressing the improvement of ELV recycling processes are industrialized countries, with a high national based automotive industry, and especially those competing in European automotive markets.1 However, several sectors in the recycling industry are expanding worldwide in order to integrate technologies, processes and markets to improve the value recovery of EoL products (Gesing, 2006). Moreover, problems caused by ELV are not exclusively faced by industrialized countries. The implementation of strict product-oriented legislation will sooner or later become of paramount interest in developing countries (Togawa, 2006).

Developing countries like Mexico, with an incipient and non-consolidated recycling industry, need to improve their structure and their activities, so as to face the challenges and opportunities arising from the growing concern for environmental problems and the management of EoL products. The establishment of networks to carry out reverse logistics activities are crucial to ensure the efficient recovery value from ELV (for passenger cars and light trucks). This work issues the strategic network design for ELV collection in Mexico. The collection network is thought to maximize the ELV incorporation so as to reverse supply chain activities. Reverse logistics modelling is done through an Uncapacitated Facility Location Problem, and solved using SITATION©, for three different scenarios that consider varied percentage of collection.

Section snippets

Reverse logistics and EoL vehicle management

Supply chains have traditionally been considered as linear structures, addressing the movement of goods through distribution channels from suppliers to manufacturers, wholesalers, retailers, and finally to consumers (see Fig. 1). Nowadays, complex industrial relationships prove the existence of material flows going upstream,2 during the production, distribution and consumptions stages; hence, the

ELV management in Mexico

The state of ELV management in developing countries, such as Mexico, is very different from that in the EU and other industrialized countries. The management of products at their EoL stage has not yet been addressed by environmental authorities as an important issue. In the case of ELV, there is the absence of specific legislation and plans to manage this kind of products at their EoL stage, besides the scarcity of relevant data about the Mexican vehicular fleet.

Definition of the problem

A logical solution for a network carrying out vehicles’ take-back would be locating a take-back center at the same places where ELV are generated; thus, every locality would have a facility offering take-back, de-pollution and dismantling services to cover the demand.10 However, from an operational point of view, the optimal solution is not feasible. Therefore, another configuration should be found, in

SITATION© data requirements

The basic data required by SITATION© is the following:

  • (a)

    Node number

  • (b)

    Longitude (miles)

  • (c)

    Latitude (miles)

  • (d)

    Demand (ELV)

  • (e)

    Fixed costs (USD/year)

  • (f)

    Transport costs (USD/ELV-mile).

Results and discussion

The implementation of SITATION© facilitates the comprehension of fixed, transport and total costs behavior for this problem. Fig. 4 shows the variation of these costs with the number of facilities to cover the demand for Scenario-1 in year 2007. This process is performed for every scenario and every number of ELV presented in Table 2.

The solution of this model through the implementation of SITATION©, set the following configurations for considered scenarios:

  • (a)

    Scenario-1. This scenario establishes

Conclusions

Legal incentives implemented by industrialized countries have triggered several reactions from the recycling industry worldwide. The recycling industry in those countries are expanding and integrating with other sectors in order to keep their competitiveness in the market. This effect is reaching developing countries, and Mexico will be affected sooner or later. Therefore, the Mexican recycling industry should issue the improvement of their structure and their activities, in order to face the

Acknowledgements

The author expresses his special gratitude to the German Academic Exchange Service (DAAD), for the economic support given during the development of this work, and to Prof. Mark S. Daskin from Northwestern University, for his kind provision of facility location software SITATION©, which was a tool of core importance in the development of the present work.

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