Collector Managed Inventory, a Proactive Planning Approach to the Collection of Liquids Coming from End-of-Life Vehicles

In this article, we introduce Collector Managed Inventory (CMI) as the reverse logistics counter part of Vendor Managed Inventory (VMI). The collection company takes responsibility for the inventories of cores or materials to be recycled. Experience in forward supply chain management has shown the potential of VMI by bringing the coordination of transportation and inventory decisions to the same supply chain entity. Using information technology called telemetry, we are able to monitor inventory levels at distance. We introduce a proactive planning methodology based on two types of collection orders: must- and can-orders. Every collection period all must-orders have to be collected, while can-orders are only collected if they can be combined beneficially with the must-orders. The routing problem is solved by a combination of route generation and set partitioning. The system is illustrated in a real-life case study for Auto Recycling Nederland on the collection of liquids coming from end-of-life vehicles, such as coolant and oil. In several scenarios, the old reactive approach is compared to the proactive approach resulting in cost savings up to about 19%