Organisation of reverse logistics tasks in the construction industry

The construction industry is characterized by a high material intensity and hence by a large amount and a heterogeneous mix of construction and demolition waste (C&D waste). The high and diversified amount of C&D waste is not only a today’s challenge with respect to recovery of components and materials but also with respect to the organisation of the associated logistic activities. The purpose of this paper is to sensitize for the difficulties of the design of efficient logistic processes in construction due to the characteristics of construction waste streams. Therefore, the concept of reverse logistics which has already attracted intensive research in manufacturing industry is applied to the construction industry particularly focusing on deconstruction projects. It is shown that the main structural difference between the construction industry and the manufacturing industry, regarding take-back of products, i.e. waste, does not refer to waste treatment or recovery processes, but to the organisation of the collection and the design of logistic processes from the building site to the recovery facilities. case studies, and Dowlatshahi (2005), who is developing a framework for effective design and implementation of remanufacturing/recycling operations in reverse logistics after analysing various case studies. A more recent literature review on green supply-chain management and, hence, also on reverse logistics can be found in Srivastava (2007). The construction industry, however, has not yet attracted much research concerning the organisation of reverse logistic tasks. The return or take-back of construction and demolition waste (C&D waste) at the end-of-life of a building or during repair and renovation processes has not been subject to reverse logistic concepts. Hence, the objective of the paper is to highlight challenges for the application of reverse logistics in construction, especially focusing on deconstruction projects. Therefore the remainder of the paper is organized as follows: At first, an overview on the concept of product return and of reverse logistics as applied in the manufacturing industry is given. Based on this overview, conclusions for the applicability of this concept to the construction industry are drawn. Therefore, waste streams of the construction industry are briefly discussed and resulting challenges for the organisation of the operational logistic tasks, i.e. the collection of C&D waste at the site as well as its transportation to recovery facilities or disposal sites are revealed. 2 PRODUCT RETURN AND REVERSE LOGISTICS The stages of reverse logistics can be distinguished into 1. collection, 2. inspection/selecting/sorting processes, 3. reprocessing, 4. and redistribution. All of the activities require a certain amount of operational logistic activities, i.e. transport of products or waste (cf. Dekker et al. 2004). Hereby, Fleischmann et al. (2000) state that product recovery not only reverses the product stream with the consequence that there are many supply sources (collection points, e.g. retailers) and few demand points (recovery facilities, disposal sites), but that the design is complicated by the high uncertainty in many factors. Discussing reverse logistics, the following aspects need to be taken into consideration (Dekker et al. 2004): 1. motivation of enterprises to take action in reverse logistics as well as reasons for product return, 2. processes carried out in logistics with the aim of recovering value, 3. characterisation of returned products, and 4. actors executing the reverse logistics activities. 2.1 Motivation for reverse logistics, reasons for product return and recovery processes The motivation for the involvement of companies into reverse logistic activities is differentiated into profit-oriented, legislative as well as corporate citizenship drivers (Dekker et al. 2004, Schultmann et al. 2006). The profit-oriented drivers comprise direct as well as indirect benefits. While direct benefits can be achieved from returned products used as substitute for new input materials (for instance metal scrap for steel) as well as by cost reductions for disposal and new raw materials procurement. Indirect benefits are expected from the established “green image” of the enterprise, improved customer and supplier relations as well as the anticipation of legislation. Especially the indirect benefits refer to the movement of sustainable development and the increasing awareness of different stakeholders, for instance, the government, the common public, nongovernmental institutions as well as interest groups to act environmentally friendly. Among others, typical tasks are to preserve natural resources, to reduce green house gas emissions, and to prevent global warming. This holds true especially for the legislation for end-of-life products and wastes and social acceptance of the enterprise in the public. Despite the profit-oriented drivers, legislative acts might force companies to take action in reverse logistics. This also comprises extended producer responsibility (EPR) where producers, in their role as manufacturer of goods, are legally obliged to take back and recycle goods. Examples in Europe are regulations for electrical and electronic equipment WEEE (European Parliament 2003) as well as the manufacturers’ responsibility for the take back of batteries and cars. In addition to profit-oriented and legislative drivers, an enterprise is also dependent on the “license to operate” issued by its stakeholders. This especially refers to the expectation of the companies environment that enterprises behave social as well as environmental conscious. Disregarding this issue might result in unfavourable influences on companies’ business operations by its environment, i.e. its stakeholders. However, not just the take back of end-of-life products is subject to economic, legislative and social drivers. Reverse logistics in general comprises the reverse flow of goods from the end consumer back to the manufacturer, i.e. including processes after take back of products. This might happen because of several reasons. Generally, three return stages of products can be differentiated: manufacturing returns, distribution returns, and customer returns. Manufacturing returns comprise returns because of a material surplus, returns from quality controls or production leftovers or by-products. Distribution returns might be product recalls, business-to-business (B2B) commercial returns (e.g. unsold products, damaged delivery), and functional returns, such as distribution items or packaging. In comparison, customer returns are, e.g., reimbursement guarantees, i.e. business-to-consumer commercial returns, warranty or service returns (maintenance and repair), or end-of-use (e.g. returnable bottles or leased cars) and end-of-life returns (Dekker et al. 2004). The latter may also apply to C&D waste. After return, the value in these products or waste can be recovered by various actions. Recovery actions are, for instance, reuse or resale, repair, refurbishing, recycling or incineration. For an overview as well as complete definitions of recovery actions for used products and waste it is referred to (Thierry et al. 1995, Dekker et al. 2004). 2.2 Characterisation of returned products Performing reverse logistic activities depends on the characteristics of the returned product. These include the following (Dekker et al. 2004): 1. composition, 2. deterioration, and 3. use pattern. The product composition describes factors like the presence of hazardous materials, the material heterogeneity of the product and the size of the product. The size of the product has significant impact on the transport and handling of the product, e.g. choice of appropriate mode of transportation as well as means of transport. Deterioration of a product considers the intrinsic deterioration of a product, i.e. aging during its use, the homogeneity of deterioration, i.e. if all parts age equally, and the economic deterioration, which addresses the decline of the value of the product, for instance, outdated products like old computer technology. The use pattern of a product is especially relevant for the collection phase of the product. It comprises issues like the location, i.e. different locations and effort for collection (individual or institutional use, collection point or individual take back), intensity and duration of use. 2.3 Actors and responsible parties in reverse logistic activities A distinction of actors in reverse logistics activities can be made between (e.g. Dekker et al. 2004, Fuller & Allen 1995): − forward supply chain actors, − specialised reverse chain actors, and − opportunistic actors. In particular, responsible parties can be, among others: original equipment manufacturer (OEM), wholesalers or retailers, independent intermediaries, specialised recovery enterprises, third party reverse logistics service providers, and governmental institutions, like municipalities taking care of waste collection. 3 REVERSE LOGISTICS IN CONSTRUCTION Applying reverse logistics concepts from the manufacturing in the construction industry, one faces numerous difficulties. These difficulties mainly arise from the more complex nature of the forward supply chain as depicted in Figure 1. Figure 1. Forward construction supply chain (Lowe & Leiringer 2006). In comparison to the products of the manufacturing industry, such as electrical and electronic equipment, the “products” of the construction industry, i.e. civil objects, like houses, bridges or roads, have a long life cycles and are immobile. Due to their size and immobility the recovery of civil objects usually takes place on-site (Dekker et al. 2004). Concluding, reverse logistics operations in the so called reverse supply-chain are more difficult due to the higher number of actors (contractor, supplier, sub-supplier) and materials of different composition, degree of deterioration, and use pattern. An example of different recovery options for C&D waste is depicted in Figure 2. Figure 2. Recovery options for C&D waste (Schultmann & Sunke 2006).