The Reverse Supply Chain: Configuration, Integration and Profitability: Considerations Derived from a Qualitative Case Study Investigation

This thesis presents the results of a qualitative investigation that has been conducted in order to enhance knowledge of the reverse supply chain management field. Two aspects of the reverse flow need to be taken into consideration: the importance of introducing mechanisms that promote the circuitry of resources in order to protect the environment, and the increasing awareness that if strategically managed, the reverse chain represents an opportunity for profit generation and for improving the competitive position of a firm.

In the first case, the main stakeholders are represented by organisations and communities that are concerned about the deteriorating conditions of the environment, depletion of non-renewable resources, and ever increasing disposal of waste. These concerns find an answer in the approval of environmental legislations, introduced by governments in particular, in Europe, by the European Community.

The number and scope of these regulations are due to increase over time as well as the impact they have on companies. This study has particularly considered the implementation of the reverse chain that aims at recovering electrical and electronic goods, complying with the European Directive for Waste of Electrical and Electronic Equipment (WEEE).

The electrical and electronic waste represents on average 4% of the total disposed waste in Europe but it is extremely dangerous for the environment due to the materials content; furthermore, the disposing rate has increased every year within the 27 Member States, reaching approximately 14-24 Kg. per inhabitant in Western Europe and the 6-12 Kg. per inhabitant in the New Member States.

In the second case, the main stakeholder is the firm, the producer that has the possibility of exploring new opportunities to achieve a competitive advantage and generate profit by reconditioning and remarketing used products. Many different flows arise in this context: commercial returns, returns for repair, for refurbishment and for remanufacturing.

This study has considered two instances of a value driven reverse chain that recondition electronic products, and represent an opportunity for profit generation for the producer and other involved service providers. By confronting these two reverse chains (the first that has legislation as its distinctive driver, and the second that has value creation as main driver), the study presents the results of an analysis of three main aspects of the reverse chain: configuration, integration and profitability.

Configuration is defined as how to configure and structure the chain in order to efficiently support the most proper recovery option: the elements that impact the chain design have been identified, and indications in order to manage them have been provided. The argument for integration would be that by integrating the forward and reverse chain, different forms of efficiency would be guaranteed.

The study provides a frame to evaluate the level of integration and contribute to explain why integration is in general not present. Finally, the analysis around the profitability issue aims at providing indications to identify when and why the reverse chain is profitable and for whom. Furthermore, findings are interpreted in the light of two main theories: transaction costs economic theory and institutional theory.