Sustainable Solutions for SCM

5.4.4 Value chain thinking The logistics value chain is the entirety of added value given by the supply chain from the purchasing to the final customer distribution (see Figure 5.8). It has been estimated that 95% or the product’s final value originates in the production and the remaining 5% in the other functions of the supply chain. With the value chain thinking, we try to evaluate the meaningfulness of the entirety, which the product is going through during its life cycle.

Figure 5.8 Logistics value chain from the raw material source through customers to recycling (Pur. – purchasing, Pro. – production, Dis. – distribution) Including recycling into the traditional logistics value chain prolongs the value chain depending on the value of the recycling times. The recycling can be divided into two types: primary and secondary recycling (see Figure 5.9). The primary recycling means that the product can be used for its original or similar purpose again and again. In the primary recycling, the value of the product does not decrease along with recycling times. In the primary recycling, the product or material goes always back into production. A good example is the recycling of metals (aluminium, gold, copper etc.). The primary recycling is de facto eternal recycling.

Figure 5.9 Primary and secondary recycling

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