The role of returns management orientation, internal collaboration, and information support in reverse logistics

Abstract

While reverse logistics has gained significant interest in recent years, the research on its antecedents is still far from comprehensive. The current study utilizes data collected from China to empirically test a conceptual model that is developed based on the resource based view of the firm. It is proposed that returns management orientation, internal collaboration, and information support are important predictors of reverse logistics performance. The structural equation modeling analysis supports these proposed relationships. Furthermore, the current study also confirms the positive relationship between a firm’s reverse logistics performance and market performance. INTRODUCTION There is an increasing appreciation of the importance of reverse logistics in recent years due to the value related to effective reverse logistics management. Improving reverse logistics can reduce supply chain costs and create revenue and profit at the same time. Reverse logistics has created a growing industry by running returns backwards through the supply chain. Bloomberg Businessweek calls reverse logistics “from trash to cash” (Anonymous, 2008). As an example, when Lenovo outsources its reverse logistics process to GreenDust, the company is able to reap significant value from the refurbished products (CRN Network, 2012). Reverse logistics is defined as “the process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, inprocess inventory, finished goods, and related information from the point of consumption to the point of origin for the purpose of recapturing or creating value or proper disposal” (Rogers and Tibben-Lembke, 2001, p. 130). As reverse logistics looks into situations when the resource or material goes at least one step back in the supply chain, return products are processed moving from the typical end destination of customers back to the distributor or to the manufacturer. In other words, all business processes and activities after sale of the product are part of reverse logistics. Every manufacturer, distributor, reseller and retailer is involved in reverse logistics in order to develop efficient solutions. While reverse logistics encompasses a wide range of processes and activities such as recycling and reuse (of both products and materials), repair services, disposal, etc.; returns management is often considered a critical element of reverse logistics. Returns management refers to the management of returned products for the purpose of capturing value or proper disposal. Returns management is the focus on the current study. Studies in the reverse logistics literature have examined various industries, including automobiles (Daugherty, Richey, Hudgens and Autry, 2003), computer hardware (Ravi, Shankar and Tiwari, 2005), retailing, and third-party logistics (Chen, Tian, Ellinger and Daugherty, 2010; Bernon, Rossi and Cullen, 2011). Several researchers have examined modeling perspectives for reverse logistics (Rogers, Melamed and Lembke, 2012). Empirical work on reverse logistics includes using qualitative discussion data (Ravi, Shankar and Tiwari, 2005; Bernon, Rossi and Cullen, 2011), case