Academic journal article Journal of Transportation Management

Developing Reverse Logistics Programs: A Resource Based View

Academic journal article Journal of Transportation Management

Developing Reverse Logistics Programs: A Resource Based View

Article excerpt

INTRODUCTION

Delivering product to the customer does not always end the business cycle. Products are often returned and must be reclaimed from downstream trading partners. Historically, the sheer volume of returns has been staggering. For example, in the magazine publishing industry, half of all products are returned, and return figures of 30% are not unusual in the book publishing, greeting cards, and retail catalog industries (Rogers and Tibben-Lembke, 1999). More recent examples are almost as extreme. L.L. Bean reports that out of 48 million products shipped out to customers, 6 million were returned (Bodenburg, 2007).

Return rates of 11 to 20% are reported in the consumer electronics industry (Arar, 2008). Recalls of products as disparate as toothpaste, pet food, laptop batteries, spinach, and contact lens solution are becoming everyday news (Kator, 2007).

Returns negatively impact the bottom line. Across all industries, returns can reduce profits by as much as 30 to 35% (Rodriguez, 2007). Lost sales, transportation, handling, processing, and disposal expenses directly attributable to returns are estimated at $100 billion per year (Blanchard 2009). Added to the actual costs of handling returns are mounting pressures from different government entities and the society as a whole toward environmentally-friendly, "green" organizational practices. Rodriguez (2008) illustrates the strategic role of reverse logistics (RL) under the growing corporate ecological responsibility drive:

As companies launch new environmental initiatives to mitigate their impact on the world's climate, they are finding that mishandling reverse logistics may leave them open to fines from regulatory agencies, and to a potentially negative reaction from customers that could affect future business. (p. 4)

Hence, designing efficient and effective reverse logistics (RL) is critical, and substantial resource commitments may be required to ensure organizational competitiveness and survival in the long run (Jayaraman and Luo, 2007).

A Resource-Based View (RBV) of firm competencies (see Barney, 1991; Wernerfelt, 1984), suggests that focused resource commitments are associated with successful organizational performance outcomes. At the same time, insufficient resource commitment to reverse logistics is cited as one of the biggest problems in developing successful returns programs (Walsh, 2006). Moreover, as managers of reverse logistics programs are well aware, resource commitments alone do not guarantee success. Indeed, critics claim that attributing success to the allocation of resources is too often made retroactively, i.e. after the investments have proven worthwhile. A better understanding of how resource commitments translate into performance outcomes seems important to both theory and practice. Framed differently, it is vital to understand how reverse logistics capabilities arise. It is argued that only in combination with the development of processes will dedicated resources result in maximizing reverse logistics performance. Processes can be used to form a reverse logistics competency that enhances the resources' contribution to the creation of reverse logistics capabilities.

The current research utilizes case studies to explore the relationships among resources, competencies, and capabilities applied in the context of RL operations. RL program development and implementation has not been incorporated into a broader theoretical perspective (such as RBV). The framework introduced represents our attempt to address this gap.

The manuscript begins with a literature review that is presented to help convey the theoretical grounding of the study's qualitative insights. The second section then focuses on the method of collecting qualitative information. Third, a conceptual framework is presented illustrating the relationship between resource commitments, reverse logistics processes, and the reverse logistics capabilities of firms. …

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