Exploring value creation and appropriation in the reverse clothing supply chain

• DOI: https://doi.org/10.1108/IJLM-10-2016-0241
• Date: 12 February 2018
• Pages: 90-109
• Published date: 12 February 2018
• Author: Erik Sandberg,Rudrajeet Pal,Jukka Hemilä
• Subject Matter: Management science & operations,Logistics

Exploring value creation and

appropriation in the reverse

clothing supply chain

Erik Sandberg

Department of Management and Engineering,

Division of Logistics and Quality Management,

Linköping University, Linköping, Sweden and

Department of Business Administration and Textile Management,

Faculty of Textiles, Engineering and Business, University of Borås, Borås, Sweden

Rudrajeet Pal

Department of Business Administration and Textile Management,

Faculty of Textiles, Engineering and Business,

University of Borås, Borås, Sweden, and

Jukka Hemilä

Department of Business Ecosystem Development,

VTT Technical Research Centre of Finland Limited, Espoo, Finland

Abstract

Purpose –The purpose of this paper is to explore the processes of value creation and appropriation among

companies in a reverse clothing supply chain.

Design/methodology/approach –This research is based on an inductive case study approach at fashion

retailers, charity organisations, commercial recyclers, and specialised sorting companies involved in

take-back schemes for used clothes in the reverse clothing supply chain.

Findings –Value creation and appropriation processes are illustrated for different members of the reverse

clothing supply chain. Results of different types of value and value co-creation explain the relatively high

degree of collaboration among members in the “beginning”of the reverse supply chain. Here, collaboration

outmanoeuvres the traditional value appropriation mechanism of price negotiation.

Research limitations/implications –This research does not cover all tiers in this global industry, and

practices among different regions may hamper the generalisability of the findings presented.

Practical implications –This research allows a comprehensive picture of the members in the reverse

clothing supply chain and outlines some of the major processes involved, decisive for value creation,

and appropriation.

Originality/value –The research draws upon the value concept and combines processes of value creation

and appropriation in one, single empirical study. By doing that, the research disseminates the reverse clothing

supply chain in a new way and facilitates improved understanding of the structure and rationales for

members taking part in it.

Keywords Case study, Europe, India, Value creation, Clothing, Value appropriation, Reverse supply chain

Paper type Research paper

1. Introduction

In accordance with improved efforts towards environmental sustainability among end

consumersas well as society in general,there has been anincreased interestin reverse clothing

practices among practitioners as well as academics (Brooks, 2013; Hvass, 2014; O’Reilly and

Kumar, 2016). Inspired by other industries, in wh ich regulations for extended producer

responsibility have forced manufacturers to take a life-cycle approach to their products

and manage the reverse handling of their product line-up (e.g. Fleischmann et al., 2004;

Jayaraman and Luo, 2007; Hvass, 2014), many fashion retailers have taken similar initiatives,

often together with partner companies such as charity organisations.

The International Journal of

Logistics Management

Vol. 29 No. 1, 2018

pp. 90-109

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-10-2016-0241

Received 25 October 2016

Revised 22 June 2017

8 September 2017

Accepted 4 November 2017

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

www.emeraldinsight.com/0957-4093.htm

90

IJLM

29,1

The reverse clothing supply chain consists of a complex, global network of members,

including fashion retailers and charity organisations, but also commercially oriented

international recyclers and specialised sorting companies at different tiers in the supply

chain (Brooks, 2013; O’Reilly and Kumar, 2016). Through a series of complex reverse

activities, typically including acquisition, grading, re-processing, and re-distribution

(Fleischmann et al., 2004), waste clothes are renewed with a new value for new purposes and

customers. The customers to this “new”supply chain typically range from high-street

vintage clothes customers to charity receivers. In addition, retailers and their manufacturers

also become customers to the reverse clothing supply chain as recycled textile fibres are

increasingly used as raw material in new products.

In recent years, it has been recognised that the reverse supply chain offers opportunities

for value creation among its members ( Jayaraman and Luo, 2007). Aspects such as

improved customer satisfaction (Skinner et al., 2008; Fleischmann et al., 2004; Jayaraman

and Luo, 2007; O’Reilly and Kumar, 2016), improved brand image ( Jayaraman and

Luo, 2007; Fleischmann et al., 2004), information about demands and behaviour of the end

customer (Bernon et al., 2011; Jayaraman and Luo, 2007), and access to recycled raw material

(Hvass, 2014) are suggested in literature. However, so far, there is little in-depth analysis and

empirical evidence on the value creation in reverse supply chains (Schenkel et al., 2015;

Bernon et al., 2011). This is valid also for the reverse clothing supply chain, which here forms

an interesting, information-rich empirical basis to the research.

As in other industries, value creation processes have so far been discussed at a

superficial level, despite their obvious importance for the existence of, and rationale behind,

reverse clothing supply chains. In addition, the value appropriation among different supply

chain members, i.e. how the value created is captured among involved supply chain

members, is not well understood (Brooks, 2013). Therefore, as a means to better understand

the reverse clothing supply chain, the purpose of this paper is to explore the processes of

value creation and appropriation among companies in a reverse clothing supply chain.

Value creation as well as value appropriation can be addressed at different levels of

analysis (Lepak et al., 2007). For the purpose of this paper, the focus is on the organisational

level, i.e. the involved companies in the reverse supply chain. Based on interviews and other

field observations at Swedish fashion retailers, Nordic charity organisations, international

commercial recyclers, and Indian specialised sorting companies, this paper explores the

processes of value creation and appropriation involved in the take-back scheme[1] for used

clothes. For practitioners, it allows a comprehensive picture of the members in the reverse

clothing supply chain and the major processes involved. Theoretically, the research draws

upon the value concept and combines the processes of value creation and appropriation in

one, single empirical study. By doing that, the research disseminates the reverse clothing

supply chain in a new way and facilitates improved understanding of the structure and

rationales for members taking part in it.

The remainder of this paper starts with a theoretical overview of value creation and

appropriationin the reverse clothing supplychain, and continues with a methodology section

in which the research approach is explained. Thereafter, findings and analysis in terms of

value creation and appropriation at the four types of investigated supply chain members

(retailers, charities, commercial recyclers, and specialised sorting companies) are presented.

Finally, conclusions from the study are drawn and future research areas are developed.

2. On the value concept in the reverse clothing supply chain

2.1 The value concept

Despite its central role in theory building, the value concept still suffers from a multitude of

competing perspectives and theoretical groundings, blurring the core of the concept and

making it difficult for practitioners and scholars to grasp. A definition for “value”as a

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Reverse

clothing

supply chain