An integrated model for analysis of risks in outsourcing to third-party for sustainable reverse logistics implementation by SMEs

Abstract

Reverse logistics (RL) creates a number of opportunities for electronic equipment manufacturing enterprises and helps to augment the sustainability of a supply chain (SC). In India, outsourcing to Third Party Reverse Logistics Providers (3PRLPs) is a prominent initiative for a successful RL business model. However, small and mid-size enterprises (SMEs) face a number of risks in outsourcing RL activities. In this context, this study fills the literature gap by identifying and analysing the risk factors associated with outsourcing to 3PRLPs by SMEs in electronics sectors in India for a successful and sustainable reverse supply chain (RSC). Initially, 30 risk factors in the context of RL outsourcing are identified and clustered into 6 risk categories, namely “relationship and competence risks”, “economic risks”, “operational risks”, “organizational risks”, “social risks”, and “environmental risks”. Then, a weighted influence non-linear gauge system (WINGS) is used to understand the level of importance of each risk category and, simultaneously, they are also classified in cause and result groups. Similarly, risk factors within each risk category are evaluated. The findings indicate that SMEs in the electronics sector in India encounter several risks in outsourcing RL activities like uncertainty in returns, financial burden, stiff competitions, 3PRLP opportunism, and many more. Hence, an immediate intervention is recommended for SMEs in the electronics sector in India to overcome the risk factors under the “economic” and “relationship and competence” risk categories to implement sustainable and business efficient RL through outsourcing to 3PRLP. The implications drawn from the study will guide the RL team experts of SMEs to deal with risks in the course of outsourcing to 3PRLP.