Industry Terminology – Closed Loop Production

A common term we often hear in the industrial supplies space is “closed loop production”.

Closed loop production is a manufacturing resource planning model that incorporates returned products as part of the supply chain. In this model, the original equipment manufacturer (OEM) takes responsibility for the return loop process. Product returns often come directly from customers or retail channels, but they can also come from production facilities in the form of manufacturing by-products or components that fail to meet the manufacturer’s quality control criteria. Returned products are counted as inventory because they can be inspected and resold, refurbished or used for parts. By closing the loop and managing the product lifecycle in a holistic manner, the manufacturer has more control over both supply chain and manufacturing planning. Closed loop production is often credited to IBM.

Source: Techtarget.com