Examining the impact of reverse logistics disposition strategies

Abstract

Purpose The objective of this paper is to empirically examine the impact that different disposition strategies have on strategic performance in the reverse logistics process. This research also includes the role of the returns policy in the customer decision‐making process as a foundation for determining the appropriate disposition strategy. Design/methodology/approach A general review of the literature and depth interviews with logistics professionals following commonly employed investigative techniques provided the foundation for the study. A survey was developed and mailed to the senior supply chain operations professional at 400 companies in the auto parts industry resulting in 118 usable responses. Findings The current research shows that under instances of active resource commitment to reverse logistics programs, operations and supply chain managers may expect superior performance by choosing destroying, recycling, refurbishing, and/or remanufacturing of product. Practical implications If firms focus on reverse logistics activities as a must do, a strategic approach that examines outcomes rather than day‐to‐day operations is suggested. If managers do not have adequate resource support for reverse logistics, they should destroy the product. The other disposition options all require significant resources in order to reclaim value from returns. Originality/value Traditional strategy research has focused on the importance of a strategic fit between a firm's internal strengths and weaknesses and the external environment. In contrast, a resource approach stresses internal aspects of the firm. This study combines the two views along with examining the effects of resource commitment.