Exploring Reverse

8/3/2019 Exploring Reverse

1/12

Research paper

Exploring reverse supply chain management

practices in TurkeyIsmail Erol and Meltem Nurtanis Velioglu

Department of Business Administration, Faculty of Economical and Managerial Sciences, Abant Izzet Baysal University, Bolu, Turkey

Funda Sivrikaya Serifoglu

Duzce University, Duzce, Turkey

Gulcin BuyukozkanGalatasaray University, Industrial Engineering Department, Faculty of Engineering and Technology, Ortakoy, Istanbul, Turkey

Necati ArasBogazici University, Industrial Engineering Department, Faculty of Engineering, Bebek, Istanbul, Turkey

Nigar Demircan Cakar

Duzce University, Faculty of Forestry, Duzce, Turkey, and

Aybek KoruganBogazici University, Industrial Engineering Department, Faculty of Engineering, Bebek, Istanbul, Turkey

AbstractPurpose This paper aims to examine the current state of reverse supply chain management (RSCM) initiatives in several Turkish industries.Design/methodology/approach This study is based on an exploratory research regarding RSCM activities of Turkish automotive, white goods,electric/electronics, and furniture industries. The sample consists of all the companies included in the Top-500 Industrial Enterprises List of The Assemblyof the Istanbul Chamber of Industry (ISO).Findings The research findings show that the RSCM initiatives in the considered industries are still in a very early stage. Companies involvement inproduct returns is mostly due to the legislative liabilities, and system inadequacies are emphasized as the most important reason for not being able toimplement an efficient RSCM.Research implications/limitations This paper investigates the reverse supply chain practices of selected industries in Turkey and aims to enable

researchers to use this study as a building block in understanding these practices and related problems. The limitation of this study is to solely includethe medium and large-sized companies in the industries.Practical implications Reverse supply chain operations contribute to the economic sustainability by reducing waste and saving energy and material.In this research, an empirical study in the electronics, white goods, automotive and furniture industries is conducted, and potential researchopportunities are discussed to streamline reverse supply chain activities in the industries. Hence, this study can be viewed as an attempt to increase thelevel of awareness on reverse supply chain issues.Originality/value No field study has been conducted to analyze reverse supply chain activities of the industries in Turkey. This research is apioneering study and will provide a benchmark for the various research activities on related topics.

Keywords Supply chain management, Economic sustainability, Turkey

Paper type Research paper

1. Introduction

RSCM is defined as the effective and efficient management of

the series of activities required to retrieve a product from a

customer in order to either dispose of it or recover value

(Prahinski and Kocabasoglu, 2006; Defee et al., 2009).

Fleischmann et al. (2000) base the growing importance ofRSCM basically on agreements for excess products and

extended producer responsibilities. As agreements for excess

products are associated with product returns, which can be

very high in some industries experiencing returns at over 50

percent of sales, extended producer responsibilities deal with

requiring businesses to effectively manage the entire life of the

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1359-8546.htm

Supply Chain Management: An International Journal

15/1 (2010) 4354

q Emerald Group Publishing Limited [ISSN 1359-8546]

[DOI 10.1108/13598541011018111]

This research was fully supported by the Scientific and TechnologicalResearch Council of Turkey (Project No: 105K154). An early version ofthis paper was presented in International Logistics and Supply ChainCongress on November 8-9, 2007, Istanbul, Turkey.

43


2/12

product. In this respect, end-of-life take-back laws have been

enacted over the past decade both in the European Union

(EU) and the United States (Prahinski and Kocabasoglu,

2006). Directives on Waste Electrical and Electronic

Equipment (WEEE) and on End-of-Life Vehicles (ELV) are

two well-known examples (European Commission, 2004).

Due to the particular difficulties related to its application,

the RSCM approach complicates traditional supply chainnetwork design, product design, production planning and

scheduling and inventory management problems (Li and

Olorunniwo, 2008). Though these types of problems have

been extensively studied especially by European researchers,

and sophisticated models and strategies have been developed

(Van Hoek, 1999; Guide and Van Wassenhove, 2003;

Fleischmann, 2001; Dekker et al., 2003, Srivastava, 2007),

the same issues are not considered in a detailed fashion in

developing countries such as Turkey. Therefore, RSCM

initiatives are either not well-known or not investigated in

relevant industries. There exist a number of studies that

examine RSCM in Turkey from a conceptual viewpoint

(Sever and Buyukozkan, 2003; Sahin and Baki, 2004).

However, there is still a lack of empirical research focusing on

RCSM practices in various sectors. Considering legal

obligations arising with the candidacy of Turkey to EU and

the potentials involved in the forms of the aspects of

sustainability (Svensson, 2007; Keating et al., 2008; Defee

et al., 2009), it can be argued that distributors, manufacturers

and third party service providers should be actively involved

in RSCM operations and successful implementations.

Since there is no study that systematically reports the

practices of Turkish enterprises on RSCM, the goal of this

research is to conduct a field study to identify the current state

of the infrastructure regarding the RSCM operations in the

prominent Turkish industries, which are the automotive,

electric/electronics, white goods and furniture industries.

There are several research questions addressed in this

paper. The first research question is derived from the fact thatthe researchers in the field of RSCM are interested in

understanding the motivation of the companies in different

countries that have implemented specific strategies regarding

RSCM operations (Murphy and Poist, 2003; Sahay et al.,

2006; Lee, 2008; Zhu et al., 2007; Zhu and Sarkis, 2006).

Besides, owing to the factors such as the rapid globalization of

business and the economic emergence of developing

countries, there has been an increasing emphasis in recent

years on the study of logistics and supply chain in different

nations (Murphy and Poist, 2003). Therefore, in this

research, we study the main incentives of the companies in

Turkey to embrace product return strategies and compare

these incentives.

Exploring the difficulties related to implementing supply

chain management strategies has also attracted several

researchers (Rogers and Tibben-Lembke, 2001; Fawcett

et al., 2008; Wycherley, 1999). They argue that for strategic

supply chains to be successful, managers and scholars must

not focus on one particular inhibitor or facilitator, but rather

consider the barriers holistically. Therefore, the obstacles for

not having a successful RSCM system in a holistic manner is

studied as the second research question in this article.

Another important research subject is to find out the level

of firms awareness on the legislation regarding a specific area.

The researchers have considered the current level of

awareness among decision makers towards policies,

legislation and measures of miscellaneous subjects since this

type of study may provide the associated benefits, barriers and

incentives to implementing strategies with respect to

legislation (Adeyeye et al., 2007, Prahins ki and

Kocabasoglu, 2006; Blumberg, 1999). Therefore, the fourth

research question aims at measuring the level of awareness of

companies on RSCM-related legislation in Turkey.

Due to the different motives, enforcements, practices andskills, different industries may have varying levels of initiatives

in RSCM and environmental practices (Connelly and

Limpaphayom, 2004; Zhu et al., 2007). In their study, Zhu

and Sarkis (2006) investigate whether the Chinese companies

in different industries have differing motives and practices as

to the green supply chain management.

Finally, there is also a substantial change in logistics

practices between supply chain partners as they struggle to

establish efficient, effective and relevant product or service

solutions for end customers and emphasize the vertical to

virtual integration. Since the problems with the vertical

integration are that it requires significant capital investment

and complex organizational structure, outsourcing supply

chain operations to third party service providers has been asource of competitive advantage for most companies. In

outsourcing process, it is argued that determining the factors

and the criteria used in selecting third party providers is vital

(Gol and Catay, 2007; McIvor, 2000). Therefore, the factors

for outsourcing the reverse supply chain operations and the

criteria used in selecting third party service providers for

RSCM activities are also analyzed in this research.

The remainder of this paper is organized as follows: a

literature review on RSCM is presented first, which is

followed by the description of the methodology used. Then,

the methodology is summarized. Finally, the data analysis is

demonstrated, and some concluding remarks are given in the

last section.

2. Literature review

Although there is no other similar field study conducted in

Turkey, there are several research studies performed in EU

member countries and North America. Moreover, the recent

membership of Peoples Republic of China (PRC) to the

World Trade Organization has resulted in an increase in the

num ber of studies concerning green supply chain

management related to PRCs industries.

A closer look at the field studies conducted on RSCM

shows that they are mostly based on mailed surveys with

return rates below 30 percent, and even this statistic implies

that there is much to do in the near future. A few important

studies are discussed in this section.

Murphy and Poist (2000) answer two questions in theirfield study: What are the popular strategies used to solve

environmentally related problems in logistics? Are there any

relations between firm characteristics and used strategies? A

questionnaire was prepared and sent to randomly chosen

Logistics Management Council members. Among them, 450

members from USA, 130 from Canada and 101 from EU

countries received the questionnaire and 133, 31 and 24

members from those regions respectively returned it. The

results showed that materials recycle, materials reuse

consumption cut and environmental audits are the most

important strategies. The least significant strategy was the

Exploring reverse supply chain management practices in Turkey

Ismail Erol et al.


Volume 15 Number 1 2010 4354

44


3/12

intensification of governmental regulations on the

environment.

After exposing the value adding process to products, related

complicating factors and solution alternatives, Guide and

Jayaraman (2000) stressed the importance of collection

activities of used products. To better understand the

difficulties arising in remanufacturing processes and product

collection, the authors prepared a 75 questions survey, andsent it to 320 remanufacturing firms which are members of

American Production and Inventory Control Society

Education and Research Foundation (APICS E&R). The

return rate was 15 percent. Face-to-face interviews were also

carried out with managers to obtain more detailed

information. Conclusions were drawn from industrial

practices on demand forecasting, balancing of product

returns with demand, resources planning and reducing

uncertainties in returns.

Rogers and Tibben-Lembke (2001) interviewed more than

150 logistics managers and analyzed logistics processes in

those visits. Before these interviews, a questionnaire was sent

to the managers to expose the questions they would face. The

survey was sent to 1,200 managers that were member ofLogistics Management Council and with a 29.53 percent

return rate, only 311 of them were found acceptable. The

contributing US firms were manufacturers, wholesalers,

retailers and from service industries. The results of this

study are summarized as follows:. firms are not against product returns from customers that

do not give their motive;. product returns have some strategic roles such as

competitive advantages, the need to develop a clear

channel system, elimination of the products according to

regulations;. widely performed reverse logistics activities are reselling,

remanufacturing, recycling, elimination, and repackaging;.

70 percent of the contributing firms use central returndepots (facilities) for inspection and classification; and

. factors affecting the performance of reverse logistics

activities are the belief that reverse logistics activities are

less important compared to other firm activities, firm

policies, system inefficiencies, top management lack of

commitment, incompetence of the employees, financial

inabilities and legal regulations.

Murphy and Poist (2003) compare US and non-US firms

with respect to select propositions regarding environmental

issues, practices and strategies. Accordingly, a survey was sent

to 450 randomly selected Council of Logistics members. A

total of 133 usable surveys were received from the USA; 31

usable surveys came from Canada; 24 usable responses from

European companies. The study results indicate that US andnon-US firms tend to share similar perspectives and practices

regarding the management of environmental logistics.

In another study, Tibben-Lembke (2004) focused on

secondary markets for recycled products. The following titles

were discussed in that study: characteristics of the products

sold in secondary markets, brokers working in those markets,

ways to recover returned products and how to choose the best

alternative, importance of central facilities and factors to be

considered in the selection of secondary market channels.

Lastly, the author stressed the need for further data collection

and detailed analysis on Internet auctions in order to

maximize the benefit the firms can achieve in secondary

markets.

Gonzalez-Torrea et al. (2004) analyzed the differences

existing in the relations between bottling/packaging firms

from the food and beverage sector and their suppliers (mainly

bottle/jar manufacturers) and their customers (end consumers

of the packaged or bottled products) in two European

countries with different characteristics: Spain and Belgium.Finally, they described some of the similarities and differences

found between Spanish and Belgian bottling/packaging firms.

Zhu et al.(2007) analyzed green supply chain management

( GS CM) initiatives ( im plem entation) of various

manufacturing sectors in China and examined the links

between GSCM initiatives and performance outcomes. They

conducted a survey to collect data from four typical

manufacturing industrial sectors in China, namely, power

generating, chemical/petroleum, electrical/electronic and

automobile, and received 171 valid organizational responses

for data analysis.

Chan and Chan (2008) presented the results of a pilot

survey with follow-up interviews, which was conducted for

investigating the practices of reverse logistics in this industry.

A questionnaire survey was sent to the industrial participants,

and follow-up interviews were conducted with the

respondents. They conclude that even if reverse logistics

systems are important to the industry the low level of

importance of reverse logistics relative to the other issues is

still a major barrier in realizing reverse logistics systems.

By underlying that most research in RSCM has relied on

case studies and optimization models, Prahinski and

Kocabasoglu (2006) indicated the existing opportunities to

use survey-based research methods to explain current

practices, predominant and critical issues, and managerial

techniques used to manage the reverse supply chain. They

developed ten research propositions to be studied using

empirical research methods.

In summary, researchers suggest that it is critical to performfield studies conducted in industries of miscellaneous

countries to identify the differences and similarities of the

practices and derive useful examples regarding RSCM. In this

research, therefore, the findings of an exploratory study on

RSCM initiatives of Turkish companies are provided, and

related issues are discussed.

3. Methodology

This research study is based on an exploratory data analysis

regarding RSCM applications of Turkish automotive, white

goods, electric/electronics, and furniture industries. These

industries were selected for the analysis due to the fact that

they are the leading industries in Turkey and that the products

they produce are more appropriate for product recovery

activities. Furthermore, the first legislative drafts are being

prepared by the authorities for the first three sectors

mentioned above.

The research sample consists of all the companies in these

industries included in the Top-500 Enterprises List of The

Assembly of the Istanbul Chamber of Industry (ISO), which

amounts to 40 companies. It is assumed that these companies

would be willing to comply with legislation, that they have

relatively easy access to financial resources and that they

successfully manage the human capital. It is also assumed that

there is a high possibility that they store and manage the data


Ismail Erol et al.



45


4/12

on their operations. The distribution of these 40 companies

with respect to industries is as follows: automotive (41

percent), white goods (25 percent) electric/electronics (13

percent), furniture (21 percent). Table I displays information

about the companies selected.

In this study, exploratory research is preferred since it helps

determine the best research design, data collection method

and selection of subjects by using secondary research such asreviewing available literature and/or data, or qualitative

approaches such as informal discussions with consumers,

employees, management or competitors, and more formal

approaches through in-depth interviews, focus groups etc.

(Neuman, 2006).

Data for the exploratory research are gathered by semi-

structured interviews since it is flexible and allows new

questions to be raised during the interviews based on the

response of the interviewees. For each interview, we contacted

top managers assistants for possible appointments and

provided detailed information about the study and its

objectives. Once receiving the assistants guidance, we got in

touch with some of the top managers on the phone and asked

for a convenient time for an interview. Sixteen of themanagers rejected our request to provide further information

stating that participating in such survey studies is against their

company policy. As a result, we have a total of 24 interviews

conducted with top level managers reflecting a response rate

of 61 percent.

The instrument for the semi-structured interviews contains

closed-ended, multiple choice and scale type questions as is

the case in in-depth interviews to provide room for the

individual train of thought of the respondent and allow them

to shape their opinion. Questions in the instrument mainly

cope with such issues as the main reasons for companies

involvement in product returns, the obstacles for not having

a successful RSCM system, the industries having certified

in ISO 14001, the awareness on RSCM legislation,factors for outsourcing the reverse supply chain operations,

criteria to select third party providers for RSCM activities

and sharing responsibilities for RSCM activities.

4. Data analysis

In this study, closed-ended, multiple choice and scale type

questions are processed with the usual statistical quantitative

analysis methods. Once the interviews have been conducted,returned surveys are coded, and data are entered into

Statistical Package for Social Science (SPSS 15.0). Using

SPSS, frequency and ANOVA tables are generated, and the

analyses discussed in the following paragraphs are performed.

First, the main reasons why the companies in each industry

are involved in product returns are displayed in Figure 1.

Note that companies involvement in product returns is

mostly due to the legislative liabilities. Note also that, except

for the furniture industry, competitive reasons based on

sustainability is of big importance in terms of dealing with

product returns. Furthermore, gaining cost advantages and

international legislative liabilities appear to be the main

reasons to get involved in product returns for white goods and

electric/electronic industries, respectively. This result is as

expected for these industries since the Turkish Government is

preparing legislative drafts in cooperation with the sectoral

associations and the main players in each sector. Hence, the

companies are well aware of the liabilities they will be asked to

obey in near future.

Related to the previous analysis, we also examined the

factors that prevent the companies from implementing

successful RSCM applications. As can be observed in

Figure 2, system inadequacies are emphasized as the most

important barrier to executing an efficient RSCM system.

Furthermore, the other important obstacle is legislative issues

for the industries except for the furniture industry. While

competition and financial resources appear to be the most

important barriers for white goods industry, the company

policy is stressed as the most important reason for not havingan efficient RSCM in electric/electronics industry. Finally, the

Table I Sample companies

Automotive White goods Electric/electronics Furniture

Ford (supplier, OEM, distributor) Istanbul Arcelik (OEM) Istanbul Beko (suppl ier, OEM) Istanbul Boytas (supplier, OEM) Kayseri

Toyota (OEM) Adapazar Vestel (OEM) Manisa Profilo Telra (OEM)- Istanbul Starwood (supplier) Inegol

Renault (OEM, Distributor) Bursa Profilo (OEM) Istanbul BSH Profilo (OEM)- Istanbul Istikbal (supplier, OEM) Kayseri

Tofas (OEM) Bursa Bosch (OEM, supplier)-Bursa Bosch (supplier, OEM) Manisa Gramer (supplier) -Bursa

MercedesBenz (Distributor) Istanbul Turk Demir Dokum (supplier, OEM)

Bozuyuk

Vestel (supplier, OEM) Istanbul Yatas (supplier, OEM) Kayseri

Hyundai (OEM) Kocaeli Arcelik-Kocaeli Siemens (OEM)- Istanbul

BMC (supplier, OEM, distributor) Izmir Indesit (OEM) Istanbul Aselsan (OEM) Ankara

Turk Traktor ve Ziraat (OEM) Ankara Alarko Carrier (supplier, OEM,distributor) Istanbul

Datateknik (OEM, distributor) Istanbul

Uzel (OEM) Istanbul Klimasan (Supplier) Izmir

MAN (OEM) Ankara Kumtel (supplier, OEM) Kayseri

Temsa (OEM) Adana

Karsan (OEM) Bursa

Honda (OEM, distributor) Kocaeli

Isuzu (supplier, OEM) Kocaeli

Otokar Arifiye

Otoyol (OEM, distributor Arifiye

Askam Istanbul


Ismail Erol et al.



46


5/12

lack of interest among top management is stated as the mainobstacle together with system inadequacies in the furniture

industry.

Another important research issue is the awareness of the

industries about the RSCM related to legislation. As given in

Figure 3, 18 percent of the companies in the automotive

industry state that they do not know the legislation.

However, 28 percent of the companies in the automotive

industry express that they know it and are in the phase of

implementing it. As to the white goods, electric/electronics

and furniture industries, all of the companies point out that

they know the legislation, and 36 percent, 33 percent, and 33

percent of the companies in these industries, respectively,

report that they know it and are in the phase of planning the

implementation. Moreover, 25 percent of the furniture

companies state that they are currently implementing the

legislation. It is somewhat surprising that the furniture

companies, although there is no legislative pressure, are ahead

of the companies in the other industries.

Once formulating a clear strategy on their involvements in

reverse supply chain operations, the companies should make

their decisions regarding whether they outsource these

activities to third party companies. Many factors affect

outsourcing decisions. In our survey, several possible factors

are provided from which the respondents are asked to choose.

The respondents are also provided the option of an open-

ended answer where they can list other factors they may

consider. In Figure 4, the proportion of the companies in theindustries that consider these factors as positive or negative

incentives are demonstrated.

Given the findings in Figure 4, the following conclusions

can be reached:. The automotive industry is mainly motivated by the

factors such as tendency to focus on core competencies,

the cost of RSCM, variety of products, returns

volume, and collaboration between the companies on

reverse supply chains.. The white goods industry employs the criteria, such as,

tendency to focus on core competencies, the cost of

RSCM, strategy to have a closed-loop chain,

collaboration between the companies on reverse supply

chains, variety of products and characteristics of theproduct.

. characteristics of the product, returns volume,

strategy to have a closed-loop supply chain, tendency

to f ocus on core com petencies, the need f or

sophisticated information system infrastructure to

manage product returns mainly give an incentive for

the electric/electronics industry.. The furniture industry considers tendency to focus on

core competencies and returns timing as sole factors

when outsourcing their RSCM operations to the third

parties.

Figure 1 The main reasons for companies involvement in product returns (the numbers denote cumulative percentages)

Figure 2 The obstacles for not having a successful RSCM system


Ismail Erol et al.



47


6/12

From Figure 4, it can also be argued that tendency to focus

on core competencies is considered as one common

important factor by 83.3, 100, 100 and 100 percent of the

companies in the automotive, white goods, electric/electronics

and furniture industries, respectively.

Once the decision with respect to outsourcing has been

made, the proper third party providers need to be selected.

The first step for any industry in this selection process should

be to identify selection criteria to make a choice. In this

research study, the companies are asked for the criteria they

employ to select a third party provider for their RSCM

activities. In Figure 5, a possible list of selection criteria and

the percentage of the companies that consider them as

important are displayed.

It is observed in Figure 5 that while level of expertise and

service cost are the prevalent selection criteria by all the

industries, service capacity is stressed as one of the main

criteria for three industries except for the companies in

electric/electronics industry. The other higher frequency

criteria are listed in Figure 5.

Companies in different industries may also differ in their

assumed and outsourced responsibilities of reverse supply

Figure 3 The industrial awareness on RSCM legislation

Figure 4 Factors for outsourcing the reverse supply chain operations


Ismail Erol et al.



48


7/12

chain activities. As displayed in Figure 6, activities such ascollection/sorting/testing, warehousing, repair and spare parts

management are currently performed by 41.7 percent, 50

percent, 58.3 percent, and 50 percent of the companies,

respectively.

On the other hand, recycling, disposal, distribution and

transportation are outsourced to the third parties by 50

percent, 45.8 percent, and 41.7 percent of the companies,

respectively.

Even though companies in different industries are observed

to have similar preferences or choices on some of the issues

investigated, there are several issues where the companies

differ from each other and where the differences are

statistically significant. In the following analysis, differences

among the industries in terms of RSCM are emphasized as

demonstrated in Table II.

The items listed in Table II are measured with 5-point

Likert-type scale being 1 Strongly disagree, 2 Disagree,

3 Neutral, 4 Agree, 5 Completely agree. The meanvalues are compared using one-way analysis of variance

(ANOVA). The analysis yields the following results as to the

statistically significant differences among industries:

Customers wish to change the product they used is of

insignificant importance in automotive industry with respect

to the reason for the companies to have interest in product

returns compared to white goods and furniture industries.

Company policy is of more significant importance in electric/

electronics industry compared to white goods and automotive

industries in terms of the obstacles preventing the companies

from implementing an efficient RSCM. In addition, lack of

interest seems to be a more important reason in the furniture

industry compared to the other industries in terms of the

same factor.

Concerning the awareness of the legislation on RSCM, the

percentage of the companies in automotive industry stating

that they know it, but they have not implemented yet

Figure 5 Criteria for selecting third party providers

Figure 6 Responsibility for RSCM activities


Ismail Erol et al.



49


8/12

appears to be insignificant compared to the other industries.

In terms of the factors for outsourcing decisions considered

by the industries, the need for sophisticated information

system infrastructure to manage product returns is

emphasized more strongly in electric/electronics industry

than the other industries. Finally, in terms of criteria forselecting third party providers, the companies in electric/

electronics industry put little emphasis on facility capacity

than automotive, white goods and furniture industries.

5. Discussion and implications

Based on the findings in this research, it appears that the

major barriers to RSCM implementation consist of internal

and external factors and are somewhat common to the

industries. Also, the external barriers are closely linked

together and a set of comprehensive improvement measures

requiring efforts from both the government and the

companies would be required to remove the obstacles.

Identical to the findings based on Blumberg (1999), the

lack of legislations and economic incentives causes hesitation

and reluctance on the side of manufacturers to implement

RSCM in Turkey. This in turn reduces their initiatives to

invest in RSCM infrastructure and technology and limits the

scope for collaboration among supply chain partners and

competitors to attain greater efficiency through economies of

scale.

In addition to the lack of legislation and economic

incentives, based on Figure 2, company policy is stressed as

the most important reason for not having an efficient RSCM

in electric/electronics industry. In this respect, company

managers stressed that they are not interested in RSCM due

to the possibility of harming the company image, should they

recycle/recover products/materials and use them in sale and

(or) manufacturing since customers impressions of product

quality may be lower than that of a new product.

Next, observe that one of the main barriers to executing

R SCM f or all the respondent com panies is systeminadequacy, which is in line with the findings from Rogers

and Tibben-Lembke (2001). The companies face system

deficiencies that are partly brought about by inadequate

infrastructure such as information system and technology for

developing an efficient reverse supply chain. The companies

reported that the lack of information system, infrastructure

and technology prevent them from obtaining economies of

scale and significantly reduce recaptured value from product

recovery.

G iven the findings of this study, the com panies

involvement in the product returns is mainly based on two

motives: national legislative liabilities and competitive

reasons based on sustainability. In this respect, some of the

com panies state that they especially deal w ith theenvironmental aspect of sustainability, and they had been

reporting their environmental performances on the

sustainability reports for some time. The companies major

drivers for product returns are turned out to be highly

consistent with Rogers and Tibben-Lembke (2001) since they

state that competitive reasons and legal issues play a strategic

role. Chan and Chan (2008) also identify reverse systems as

strategic weapon. Accordingly, in Murphy and Poist (2003),

compliance with government regulations and control

environmental costs strategically are cited as the primary

reasons for establishing green perspectives.

Table II Differences among the industries using ANOVA

Automotive

White

goods

Electric/

electronics Furniture

Companies are involved in product returns due to:

Customers wish to change the product they used 1.25 4.00 4.20

F5 9:460 p5 0:004 n 4 n 5 n 5

The obstacles preventing the company from implementing successful

RSCM are the following:

Company policy 1.66 2.50 4.50

F5 5:068 p5 0:044 n 6 n 2 n 2

Lack of interest among top management 1.33 2.00 1.50 5.00

F5 12:836 p5 0:005 n 6 n 1 n 2 n 1

There are regulations on RSCM. With respect to the industry we are in,

we. . .

Know it, but we have not implemented it yet 1.42 3.66 5.00 5.00

F5 4:55 p5 0:038 n 7 n 3 n 5 n 1

Factors that the companies take into consideration when they make

their decision about outsourcing the RSC operations:

The need for sophisticated information system infrastructure to manage

product returns 2.40 2.0 5.00 F5 13:906 p5 0:009 n 5 n 2 n 1

Criteria for selecting third party providers:

Facility capacity 4.42 4.40 3.0 4.33

F5 4:209 p5 0:028 n 7 n 5 n 2 n 3

Note: For a level of significance of 0.05, the differences among the industries are found to be significant


Ismail Erol et al.



50


9/12

As stated by Prahinski and Kocabasoglu (2006), legislation

has been used as an impetus for establishing reverse supply

chain networks to divert the used product from the waste

stream and extend its useful life. This is in line with the fact in

our research findings that most of the companies in the

industries point out the national legislative liabilities as the

main reason for being interested in product returns. However,

none of the companies indicates that it has an effective RSCMsystem in place. Since most of the regulations in the legislative

body are only a rough draft, it may be conjectured that the

companies are most probably waiting for the final version of

the legislation. They are also expecting that the changes they

are trying to impose on the legislative bodies either

individually or through industrial organizations are taken

into account in the final version of the legislation. In addition,

due to the fact that the economy of Turkey has rapidly grown

in the last six years, the government may not be keen to

impose severe environmental legislations to restrain economic

growth. After all, manufacturers competing on cost will find it

difficult to maintain their competitive advantage or even

survive if they are mandated to set up costly RSCM systems

to handle returns. Given the current uncertainty, they are

reluctant to invest in infrastructure related to RSCM which

they all consider as a cost driver. For long-term sustainable

development and competitiveness in the global market,

however, the governmental bodies have to set up regulations

as soon as possible to promote, control, and standardize

RSCM practices.

Despite the fact that reducing production cost is reported in

the literature as one of the driving forces (Chen, 2001;

Srivastava and Srivastava, 2006), none of the companies agree

in the electric/electronics and furniture industries that this is

the case in Turkey as shown in Figure 1. In fact, they suggest

that to establish an effective product recovery system in

Turkey incurs high cost, and little profit can be made from

product recovery. Therefore, it can be suggested that there is

still a long way to the use of RSCM system to recover assets inTurkey.

It is also observed from the analysis that the sample

companies in the electric/electronics industry do not have any

initiative in regard to the RSCM despite the high product

returns from their customers due to the promotional

campaigns in which customers used product is changed

with a new one. The company managers argued that the main

rationale for this abnormality is the company policy.

Therefore, it may be suggested that companies main

motivation for collecting the used products in this industry

is to increase their market share instead of using the returned

products for product recovery. Some of the company

managers also reported that the high percentage of the

product returns may be ascribed to increased level of warranty

claims and service processes. Then, it can be concluded that

this type of return has nothing to do with the environmental

liabilities.

Furthermore, our research findings suggest that while

awareness of sustainable development is relatively high for the

corporations, public awareness of environmental protection

and conservation needs to be enhanced as product returns

from consumers for product recovery are still relatively small.

The low public awareness and the lack of environmental

legislations may be positively correlated. In any case, higher

public awareness and participation in product recovery should

help increase the amount of product returns to the

manufacturers through reverse supply chain and thus

achieve economies of scale to reduce operating cost

(Prahinski and Kocabasoglu, 2006). In this regard, the

government can improve the situation by educating citizens

on the need for waste reduction and recovery and promoting

the use of environment-friendly products.

Based on Figure 3, observe that 33 percent of the

companies in electric/electronics industry reported that theyare currently planning their RSCM implementation projects.

They stated that the most important step in this process is to

decide if they can handle reverse activities independently by

taking into account such criteria as cost, economies of scale,

flexibility, profit and speed. They also stated that they have

been scrutinizing the possibility of performing RSCM

activities under the responsibility of a consortium along with

a number of leading companies in the industry since it does

not seem to be cost effective to manage reverse supply chain

activities alone. This finding is in line with the fact that

volume influences the degree of RSC involvement at the firm

level (Prahinski and Kocabasoglu, 2006; Johnson, 1998).

As indicated in Figure 3, 28 and 25 percent of the

companies in automotive and furniture industries,

respectively, have been implementing RSCM. However,

those companies also emphasized that these implementation

processes are in a very early stage and continue slowly since

the directives in question have not been enacted yet.

As to the assumed responsibilities, companies suggest that

they wish to outsource collection/sorting/testing and

warehousing to third party providers in the future. Similarly,

it can be expected that transportation and distribution will

also be increasingly outsourced in upcoming years (Efendigil

et al., 2008; Min and Ko, 2008). Based on the findings,

municipalities currently are not involved in any RSCM related

activities since they are not ready yet to handle most of the

RSCM activities. However, the company managers state that

the municipal organizations in Turkey have been making a

great deal of progress and, most probably in a very nearfuture, they would be able to assume some of the reverse

supply chain responsibilities. It can be argued that policy

makers can stimulate the municipal bodies to take part in the

industries improved product return strategies by considering

municipalities and their tasks in the legislation. Thus, new

directives can put pressure on the municipalities to further

adopt certain strategies to help the industries better

implement the reverse supply chain policies.

Given the results in Figure 1, the importance of product

recovery in the companies business strategy based on

sustainability (Svensson, 2007; Keating et al., 2008) plays a

significant role in determining and applying the RSCM

system. On the other hand, since such system considerations

consist of heavy investment due to the needs for special

equipment and facilities, the companies show unwillingness in

implementing RSCM. Outsourcing, however, may help shift

the risk to the third party providers and save the company

significant equipment and infrastructure costs. Accordingly, it

is suggested that the use of third party logistics for RSCM to

comply with environmental laws and regulations can reduce

risk (Efendigil et al., 2008; Min and Ko, 2008).

6. Conclusion

Due to the increasing environmental concerns, expanding

sales opportunities in secondary markets, proliferation of take


Ismail Erol et al.



51


10/12

back laws particularly in the European Union, and growing

consumer pressure for environmentally friendly operations,

supply chain management must expand from its traditional

focus on the forward flow of materials, components and

products to explicitly address the disposal, recycling,

reprocessing and remanufacturing of used products.

Therefore, the reverse supply chain management was coined

to refer to the series of activities necessary to retrieve a usedproduct from the consumer in order to either dispose of it or

recover the remaining value. However, researchers suggest

that investment in the RSCM should not be made in isolation,

but instead must be integrated with investments selected to

improve the forward supply chain (Kocabasoglu et al., 2007).

Reverse supply chain management has gained increasing

popularity in last two decades among researchers, and a rich

literature has piled up for various aspects within this

important field. One reason of this popularity is the

economic value gained back by the recovery processes.

Another one is the directives passed by the EU Commission

on waste reduction and product returns. As a candidate

country targeting full membership of EU, Turkey is also

planning to pass similar environmental directives prepared by

The Ministry of Environment and Forests. Despite these

developments, there are no research papers or reports on the

reactions of Turkish industrial companies to the new and

enhanced responsibilities. Therefore, this paper aims to fill

this gap and to disseminate the information gathered from a

field study on the topic to industrial companies, academia and

decision makers in general. This research also provides a

benchmark for all the following studies, a reference point

against which the future developments in the investigated

industries can be compared to.

The key findings of this research are as follows:. Implementation of RSCM in Turkey is still in an infant

stage.. The fact that legislation with respect to RSCM has not

been enacted yet brings about the companies reluctancein leading industries in Turkey. Most of the companies in

automotive, white goods and electric/electronics indicated

that the absence of legislative issues is a barrier to

executing RSCM. Therefore, it is argued that legislative

regulations should be finalized and enacted in Turkey

urgently if RSCM is to fully and successfully be

implemented by the industries.. It seems that one of the most important reverse supply

chain problems faced by the industries in Turkey is to

figure out whether companies can cope with product

returns independently. In this respect, a feasibility study of

establishing a consortium should be screened out since the

companies state that it does not seem to be cost effective

to manage reverse supply chain activities alone. In

addition, this study should be performed based on the

interaction between forward and reverse supply chain. In

other words, the notion of closed-loop supply chain

should be taken into consideration in order to establish an

effective network.. All of the respondents in automotive, electric/electronics

and white goods industries express that sustainability plays

a vital role in their existing or future reverse supply chain

operation plans.. System inadequacies are emphasized as the most

important barrier to executing an efficient RSCM

system. In this regard, the lack of an information

system, infrastructure and technology prevents the

companies from obtaining economies of scale and

significantly reduces the economic value from product

recovery.. A comprehensive plan involving collaborative efforts of

the governmental bodies and the companies is needed to

encourage RSCM initiatives for the industries in Turkey.. The lack of publicity and knowledge of RSCM inhibits

public awareness of product recovery activities and their

effects on the environment.

Our findings about the reluctance of firms to be engaged in

RSCM activities are in parallel with the observations

published in the literature. For example, it is mentioned in

Hauser and Lund (2008) that among 2000 remanufacturing

firms considered only 6 percent are Original Equipment

Manufacturers (OEMs). The others are third-party

remanufacturing firms which are mostly small or medium-

sized and do not manufacture new products. Among others,

the foremost reason why OEMs are not actively involved in

RSCM activities is the profitability issue. The level of the

competition between new products and remanufacturedproducts is also a determining factor from the perspective of

the companies. For example, Hauser and Lund (2008) report

that remanufactured products in the automotive parts

industry f ace a significant com petition f rom other

remanufactured parts, which is a motivation for an OEM in

this industry to engage in product recovery. On the other

hand, in office furniture and some electrical products such as

power tools and pumps, the major competition occurs

between new and remanufactured products. An OEM in

these industries can therefore compete with its new products

against the remanufactured products of third-party

remanufacturers without being involved in product recovery

operations. As a result, the existence of secondary markets of

remanufactured versions of products and the cannibalization

effect of the secondary market on the new products

determines the bottom-line of RSCM initiatives in the

different industries.

Furthermore, based on the findings of this research, it is

concluded that overseas organizations considering Turkey as a

base or trading partner should consider the fact that RSCM

initiatives and RSCM-related legislative issues in Turkey are

in infant stage. With this in mind, these organizations may

add several RSCM-related items to the contracts made with

Turkish suppliers and/or OEMs to reassure RSCM

requirements. Strategic partnerships could also be

established between organizations in order to improve

Turkish suppliers and/or OEMs RSCM capabilities tosatisfy RSCM needs.

The results of this study can be further utilized to suggest

several directions for future research. A field study can focus

on investigating what consumers demand would be for

recovered products. Several respondents, especially in the

white goods and electrics/electronics industry, suggested that

the Turkish customers would not be willing to buy a

remanufactured product. As there is no field study on this

interesting issue, it is not possible to say if this conjecture

reflects the truth, and to what extent or under which

conditions it is true.


Ismail Erol et al.



52


11/12

References

Adeyeye, K., Osmani, M. and Brown, C. (2007), Energy

conservation and building design: the environmental

legislation push and pull factors, Structural Survey,

Vol. 25 No. 5, pp. 375-90.

Blumberg, D.F. (1999), Strategic examination of reverse

logistics and repair service requirements, need, market size,and opportunities, Journal of Business Logistics, Vol. 20,

pp. 141-59.

Chan, F.T.S. and Chan, S.K. (2008), A survey on reverse

logistics system of mobile phone industry, Hong Kong

Management Decision, Vol. 46 No. 5, pp. 702-8.

Chen, K.Z. (2001), Development of integrated design for

disassembly and recycling in concurrent engineering,

Integrated Manufacturing Systems, Vol. 12 No. 1, pp. 67-79.

Connelly, J.T. and Limpaphayom, P. (2004), Environmental

reporting and firm performance: evidence from Thailand,

The Journal of Corporate Citizenship, Vol. 13, pp. 137-49.

Defee, C.C., Esper, T. and Mollenkopf, D. (2009),

Leveraging closed-loop orientation and leadership for

environmental sustainability, Supply Chain Management:An International Journal, Vol. 14 No. 2, pp. 87-98.

Dekker, R ., F leischmann, M., Inderfurth, K . and

Van Wassenhove, L.N. (Eds) (2003), Reverse Logistics:

Quantitative Models for Closed-Loop Supply Chains, Springer

Verlag, Berlin.

Efendigil, T., Onut, S. and Kongar, E. (2008), A holistic

approach for selecting a third-party reverselogistics provider

in the presence of vagueness, Computers & Industrial

Engineering, Vol. 54, pp. 269-87.

European Commission (2004), Waste electrical and

electronic equipment, available at: http://ec.europa.eu/

environment/waste/weee/index_en.htm, http://ec.europa.eu/

environment/waste/elv_index.htm

Fawcett, S.E., Magnan, G.M. and McCarter, M.W. (2008),Benefits, barriers, and bridges to effective supply chain

management, Supply Chain Management: An International

Journal, Vol. 13 No. 1, pp. 35-48.

Fleischmann, M. (2001), Quantitative Models for Reverse

Logistics, Springer Verlag, Berlin.

F le is ch ma nn , M ., K ri kk e, H. R. , D ek ke r, R. a nd

Flapper, S.D.P. (2000), A characterization of logistics

networks for product recovery, Omega, Vol. 28, pp. 653-66.

Gonzalez-Torrea, P.L., Adenso-Diaz, B. and Artiba, H.

(2004), Environmental and reverse logistics policies in

European bottling and packaging firms, International

Journal of Production Economics, Vol. 88, pp. 95-104.

Gol, H. and Catay, B. (2007), Third-party logistics provider

selection: insights from a Turkish automotive company,Supply Chain Management: An International Journal, Vol. 12

No. 6, pp. 379-84.

Guide, V.D.R. Jr. and Jayaraman, V. (2000), Product

acquisition management: current industry practice and a

proposed framework, International Journal of Production

Research, Vol. 38 No. 16, pp. 3779-800.

Guide, V.D.R. Jr and Van Wassenhove, L.N. (Eds) (2003),

Business Aspects of Closed-Loop Supply Chains, Carnegie

Mellon University Press, Pittsburgh, PA.

Hauser, W. and Lund, R. (2008), Remanufacturing: Operating

Practices and Strategies, Boston University, Boston, MA.

Johnson, F. (1998), Managing value in reverse logistics

systems, Transportation Research Part E (Logistics and

Transportation Review), Vol. 34, pp. 217-27.

Keating, B., Quazi, A., Kriz, A. and Coltman, T. (2008),

In pursuit of a sustainable supply chain: insights from

Westpac Banking Corporation, Supply Chain Management:

An International Journal, Vol. 13 No. 3, pp. 175-9.

Kocabasoglu, C., Prahinski, C. and Klassen, D.R. (2007),Linking forward and reverse supply chain investments:

the role of business uncertainty, Journal of Operations

Management, Vol. 25, pp. 1141-60.

Lee, S. (2008), Drivers for the participation of small and

medium-sized suppliers in green supply chain initiatives,

Supply Chain Management: An International Journal, Vol. 13

No. 3, pp. 185-98.

Li, X. and Olorunniwo, F. (2008), An exploration of reverse

logistics practices in three companies, Supply Chain

Management: An International Journal, Vol. 13 No. 5,

pp. 381-6.

McIvor, R. (2000), A practical framework for understanding

the outsourcing process, Supply Chain Management:

An International Journal, Vol. 5 No. 1, pp. 22-36.Min, H. and Ko, H. (2008), The dynamic design of a reverse

logistics network from the perspective of third-party

logistics service providers, International Journal of

Production Economics, Vol. 113, pp. 176-92.

Murphy, P.R. and Poist, R.F. (2000), Green logistics

strategies: an analysis of usage patterns, Transportation

Journal, Winter, pp. 5-16.

Murphy, P.R. and Poist, R.F. (2003), Green perspectives

and practices: a comparative logistics study, Supply Chain

Management: An International Journal, Vol. 8 No. 2,

pp. 122-31.

Neuman, W.L. (2006), Social Research Methods, Pearson

Education, Upper Saddle River, NJ.

Prahinski, C. and Kocabasoglu, C. (2006), Empirical

research opportunities in reverse supply chains, Omega,

Vol. 34 No. 6, pp. 519-32.

Rog ers , D.S. an d Tibb en-Lembke, R. (2001),

An examination of reverse logistics practices, Journal of

Business Logistics, Vol. 22 No. 2, pp. 129-48.

Sahay, B.S., Gupta, J.N.D. and Mohan, R. (2006),

Managing supply chains for competitiveness: the Indian

scenario, Supply Chain Management: An International

Journal, Vol. 11 No. 1, pp. 15-24.

Sahin, C. and Baki, B. (2004), The conceptual framework:

critical factors in integrating reverse logistics systems,

paper presented at International Logistics Congress, Izmir,

December 2-3, Vol. 1, pp. 486-97.

Sever, F. and Buyukozkan, G. (2003), A reverse logistics

system proposition for recycling sector in Turkey, paperpresented at International Logistics Congress, Istanbul,

June 30-July 1, pp. 19-24.

Srivastava, R.K. and Srivastava, S.K. (2006), Managing

product returns for reverse logistics, International Journal

of Physical Distribution & Logistics Management, Vol. 36

No. 7, pp. 524-46.

Srivastava, S.K. (2007), Green supply-chain management:

a state-of-the-art literature review, International Journal of

Management Reviews, Vol. 9 No. 1, pp. 53-80.

Svensson, G. (2007), Aspects of sustainable supply chain

management (SSCM): conceptual framework and


Ismail Erol et al.



53


12/12

empirical example, Supply Chain Management:

An International Journal, Vol. 12 No. 4, pp. 262-6.

Tibben-Lembke, R.S. (2004), Strategic use of the secondary

market for retail consumer goods, California Management

Review, Vol. 46 No. 2, pp. 90-104.

Van Hoek, R. (1999), From reversed logistics to green

supply chains, Supply Chain Management: An International

Journal, Vol. 4 No. 3, pp. 129-35.Wycherley, I. (1999), Greening supply chains: the case of the

Body Shop International, Business Strategy and the

Environment, Vol. 8 No. 2, pp. 120-7.

Zhu, Q. and Sarkis, J. (2006), An inter-sectoral comparison

of green supply chain management in China: drivers and

practices, Journal of Cleaner Production, Vol. 14 No. 1,

pp. 472-86.

Zhu, Q., Sarkis, J. and Lai, K-H. (2007), Initiatives and

o ut com es o f g re en s up pl y c ha in m an ag eme nt

implementation by Chinese manufacturers, Journal of

Environmental Management, Vol. 85 No. 1, pp. 179-89.

Further reading

BEYSAD (2008), BEYSAD, available at: www.Beysad.Org.Tr/Index_Eng.Asp (accessed June 10, 2008).

Blumberg, D.F. (2005), Introduction to Management of Reverse

Logistics and Closed Loop Supply Chain Process, Taylor and

Francis, Boca Raton, FL.

Dowlatshahi, S. (2000), Developing a theory of reverse

logistics, Interfaces, Vol. 30 No. 3, pp. 143-55.

Fassoula, E.D. (2005), Reverse logistics as a means of

reducing the cost of quality, Total Quality Management,

Vol. 16 No. 5, pp. 631-43.

IGEME (2008), IGEME, available at: www.igeme.org.tr

(accessed June 10, 2008).

Porter, M. and Van Der Linde, C. (1995), Green and

competitive, Harvard Business Review, Winter, pp. 120-34.

Rogers, D.S. and Tibben-Lembke, R. (1999), Going

Backwards: Reverse Logistics Trend and Practices, RLEC

Press, Pittsburgh, PA.

Corresponding author

Ismail Erol is the corresponding author and can be contactedat: [email protected]


Ismail Erol et al.



54

To purchase reprints of this article please e-mail: [email protected]

Or visit our web site for further details: www.emeraldinsight.com/reprints

Documents

Exploring Reverse