Optimal strategies for reverse logistics network construction: A multi-criteria decision method for Chinese iron and steel industry

Reverse logistics is an important business process in the iron and steel industry for the collection, recycle, and reuse of scrapped metals. Focusing on the contradiction between the strong potential and the backward practice status of recycling scrapped steel, this paper establishes a decision framework in an attempt to help steel companies choose the best RL modes and effectively use the resource of scrapped steel. Recognizing that companies are facing intense market, political, and social pressures to improve their reverse logistic practices, we propose a comprehensive framework that encompasses six dimensions: economic, social, environmental, government policy, internal management practices, and external market competition. By working with major Chinese iron and steel companies, we first identify key decision factors along these dimensions. A multi-criteria decision-making method then is applied to analyze dependency and feedback among these decision factors and to suggest the most suitable reverse logistic strategy among the alternatives. The results indicate that governmental policy making has an outsized impact on incentivizing companies to invest in reverse logistic systems. We also find that external market and economic factors provide important feedback for shaping government policies. •Establish a comprehensive framework for reverse logistics (RL) evaluations.•Sustainability, polices, internal management and external market are considered.•Both tangible and intangible factors for RL strategy are considered and ranked.•Use a multi-criteria decision method to select the optimal strategy.•Cases of unique setting of China's iron and steel companies show benefits of RL.