Combining or separating forward and reverse logistics

• Pages: 216-236
• DOI: https://doi.org/10.1108/IJLM-12-2016-0299
• Published date: 12 February 2018
• Date: 12 February 2018
• Author: Zaza Nadja Lee Hansen,Samuel Brüning Larsen,Anders Paarup Nielsen,Anders Groth,Nicklas Gregers Gregersen,Amartya Ghosh
• Subject Matter: Management science & operations,Logistics

Combining or separating forward

and reverse logistics

Zaza Nadja Lee Hansen

Department of Operations Management, DTU Management Engineering,

The Technical University of Denmark, Copenhagen, Denmark

Samuel Brüning Larsen

Center for Bachelor of Engineering Studies,

The Technical University of Denmark, Ballerup, Denmark

Anders Paarup Nielsen

Department of Materials and Production, Aalborg Universitet,

Copenhagen, Denmark

Anders Groth

Toms Group, Ballerup, Denmark, and

Nicklas Gregers Gregersen and Amartya Ghosh

Department of Operations Management, DTU Management Engineering,

The Technical University of Denmark, Copenhagen, Denmark

Abstract

Purpose –While forward logistics handles and manages the flow of goods downstream in the supply chain

from suppliers to customers, reverse logistics (RL) manages the flow of returned goods upstream. A firm can

combine RL with forward logistics, keep the flows separated, or choose a position between the two extremes.

The purpose of this paper is to identify the contextual factors that determine the most advantageous position,

which the paper refers to as the most advantageous degree of combination.

Design/methodology/approach –The paper first develops a scale ranging from 0 percent combination to

100 percent combination (i.e. full separation). Second, using the contingency theory the paper identifies the

contextual factors described in RL-literature that determine the most advantageous degree of combination.

The set of factors is subsequently tested using a case study, which applies a triangulation approach that

combines a qualitative and a quantitative method.

Findings –The results show six distinct contextual factors that determine the most advantageous degree of

combination. Examples of factors are technical product complexity, product portfolio variation, and the loss

of product value over time.

Practical implications –For practitioners the scale of possible positions and set of contextual factors

constitute a decision-making framework. Using the framework practitioners can determine the most

advantageous position of the scale for their firm.

Originality/value –Much RL-research addresses intra-RL issues while the relationship between forward

and RL is under-researched. This paper contributes to RL theory by identifying the contextual factors that

determine the most advantageous relationship between forward and RL, a nd proposes a novel

decision-making framework for practitioners.

Keywords Supplier relations, Supply chain management, Reverse supply chain, Suppliers,

Reverse logistics, Case study research, Conceptual development

Paper type Research paper

1. Introduction

While the forward supply chain concerns the flow from raw materials to end products and

from manufacturer to consumer (Govindan et al., 2015), reverse logistics (RL) concerns the

reverse flow from consumer to manufacturer. RL is defined as “the process of moving goods

from their typical final destination for the purpose of recapturing value, or proper disposal”

(Rogers and Tibben-Lembke, 1998, p. 2). In this paper, the detailed definition by the Reverse

Logistics Executive Council (RLEC) is used which states “Reverse logistics is a movement of

The International Journal of

Logistics Management

Vol. 29 No. 1, 2018

pp. 216-236

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-12-2016-0299

Received 22 December 2016

Revised 21 March 2017

3 May 2017

Accepted 15 May 2017

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

216

IJLM

29,1

materials from a typical final consumption in an opposite direction in order to regain value

or to dispose of wastes. This reverse activity includes take back of damaged products,

renewal and enlargement of inventories through product take back remanufacturing of

packaging materials, reuse of containers, and renovation of products, and handling of

obsolete appliances.”Blackburn et al. (2004) and Guide and Van Wassenhove (2003)

identified five key RL processes that guide the movement and determine the value

extraction described in RLEC’s definition. These five processes are core product acquisition,

reverse transportation and inventory management, inspection and disposition,

remanufacturing, and remarketing.

Separate logistics flows mean investments in separate physical facilities and systems.

A combined flow will typically lead to increased complexity because the two flows differ

greatly in nature (Rogers and Tibben-Lembke, 2001). The reverse flow is uncertain in terms

of flow size and the condition of the returned goods, which translates into low

standardization levels and more manual labor. Forward logistics, on the other hand, can be

standardized to a higher degree and dwells on higher certainty regarding both input

condition of the goods and processes. Making the right decision in the configuration of

forward and RL can create substantial value and impacts the firm’s bottom line

(Genchev et al., 2011; Jaaron and Backhouse, 2016; John et al., 2017).

Although the RL-concept has been intensively researched in recent years and from

different perspectives (Huscroft, Hazen, Hall and Hanna, 2013; Huscroft, Hazen,

Hall, Skipper and Hanna, 2013; Narayana et al., 2014), the decision of whether to combine

forward and reverse logistical flows or keep them separated is under-researched

(Krikke et al., 2013; Antonyováet al., 2016). Fleischmann et al. (2000) questioned whether or

not to combine or separate forward and RL flows, but since then quantitative models all

assume that combined flows are the optimal solution due to the economic advantage of

using the same facilities (Difrancesco and Huchzermeier, 2016).The main body of

RL-research focuses on optimal network designs through mixed-integer linear programs or

similar mathematical models. This paper contributes with a qualitative approach for

indicating the appropriate degree of combination and separation of return and forward

logistics by introducing a number of contextual factors, which can assist in determining the

appropriate degree of combination.

This paper is based on the contingency theory which states that a firm need to find the

most advantageous degree of combination through an analysis of internal and external

factors. This means that the most advantageous course of action for a company is

dependent on the situation and the context (Luthans and Stewart, 1977). In order to

investigate the most advantageous forward and reverse logistical relationship for a firm,

the paper identifies the contextual factors that determine the most advantageous

relationship type. Specifically, the paper focuses on identifying the factors that influence the

degree of combination of a firm’s forward and RL. The resulting research question is:

RQ1. Which contextual factors determine the most advantageous degree of combination

between a firm’s forward and RL?

The paper is structured as follows: Section 2 identifies contextual factors based on a review

of RL-literature. Section 3 details the methodology for using a case study to test and refine

the identified set of contextual factors. Section 4 presents the case study results.

Section 5 presents implications for theory and practice whilst Section 6 provides conclusion,

limitations, and ideas for future research.

2. Literature review

This section develops a typology and identifies contextual factors using the contingency

theory perspective. While analyzing the reverse logistical flow of a firm, the

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Forward and

reverse

logistics