Creating Competitive Advantages Through New Value Creation: A Reverse Logistics Perspective

Vaidyanathan Jayaraman · Yadong Luo

316 citations0/0 files storedAcademy of Management Perspectives

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Sustainable Supply Chain Management Supply Chain and Inventory Management Logistics and Transportation Systems

Abstract

Conventional wisdom in value chain strategy assumes a one-directional flow of primary activities, starting from inbound logistics to operations, outbound logistics, marketing and sales, and finally to service. Our recent study, extensive discussions with executives, and on-site visits suggest that this wisdom may not be complete for certain industries or products. Customers on average return about 6% of everything they buy. Companies need to view this as an opportunity to give this returns pile a new lease of life. Yet many companies are not used to thinking that the things they expel such as products, waste, and resources actually have value. In fact, few retailers and suppliers capture the wealth of information that is locked inside a box that has been returned to the warehouse. Elevating the returns process to a new marketing opportunity builds a loyal customer base and also attracts new ones. In this paper, we present a redefined value chain strategy that entails a closed-loop system for industries in which reverse chain activities (reuse, repair, refurbishing, recycling, remanufacturing, or redesign of returned products from the end user) may create additional competitive advantages for the firm. Firms that do not recognize the importance of an effective reverse logistics strategy as part of their value chain risk damaging customer relations and may seriously jeopardize their brand image and reputation. A good reverse logistics program can be a differentiator and provides a means of gaining market advantage. In our perspective, a redefined value chain should be a part of the overall business strategy for manufacturers or retailers who handle product returns.

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References

1991Firm Resources and Sustained Competitive Advantage 2004Firm resources and sustained competitive advantage 1984A resource‐based view of the firm 1993The cornerstones of competitive advantage: A resource‐based view 2000Issues in Supply Chain Management 1997What is the Right Supply Chain for Your Product 2016Strategic Management Journal 2018Journal of Business Logistics

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2009Remanufacturing for the automotive aftermarket-strategic factors: literature review and future research needs 2011Sustainable supply chain management: Review and research opportunities 2018From a literature review to a multi-perspective framework for reverse logistics barriers and drivers 2020Remanufacturing for the circular economy: Study and evaluation of critical factors 2015Strategic orientations, sustainable supply chain initiatives, and reverse logistics 2018Product-service systems business models for circular supply chains

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