Circular Economy of Plastic: Revisiting Material Requirements Planning Practices for Managing Uncertain Supply

Regulation and customer awareness pressurize manufacturers to use recycled plastic (RP) in the production system to reduce the negative environmental impact of plastic waste for sustainable production. Compared to virgin materials, the RP available in the market shows high variation in quality, composition, and properties, and often experiences higher variability in lead time. This renders the supply chain of RP and the production systems more vulnerable, making it difficult for material requirement planning (MRP) to decide the optimal quantity and reorder time. This paper first examines the RP supply chain and the sources of variations therein, identifies the associated uncertainties for operations management, reviews the current MRP design elements in managing supply uncertainty, and finally aligns strategies and design elements with the dimensions of the uncertainties. A set of valuable propositions is drawn for the plastic firms to manage variation from upstream suppliers and promote a high-value chain of plastic circularity. MRP practices at the operational level including safety stock, optimization techniques, and alternative bills of material are proposed to mitigate the variations in the supply chain. The work provides a conceptual foundation for the circular economy of plastic, which opens a new paradigm of future research in managing RP in the production system for sustainability.