Creating value through reverse logistics in a multi-echelon used clothing chain

Rudrajeet Pal, Jukka Hemilä, Manoj K. Paras, Erik Sandberg

    Research output: Chapter in Book/Report/Conference proceedingConference article in proceedingsScientific

    Abstract

    Purpose of this paper: Reverse logistics in retail value chains is an increasingly emerging phenomenon yet under-explored in research. The literature becomes shallower while discussing value creation opportunities in such context. However, this is critical in many retailer-driven consumer goods industries, e.g. fashion, where sustainability and resources constraint are rising concerns. In this context, the purpose of this paper is to investigate value creation phenomenon in a multi-echelon retail reverse value chain (RRVC), and its underlying mechanisms. Design/methodology/approach: A case study approach is adopted in fashion retail context to investigate the take-back scheme for used clothes. Data is collected through semi-structured interviews, observation and documented reports, along a multi-echelon chain commonly existing in such take-back schemes, involving collectors (clothing retailers), global sorters and downstream processors (in low-cost bases, here in India). Deductive framework serves as the basis for constructing the interview questions for exploring the value creation aspect. Findings: Differentiated values are created and captured by the actors involved with multi-echelon take-back network. The collecting and sorting companies regard building corporate image and gathering information as the key values gained through involvement. The processing firms, on the other hand, are predominantly interested in generating economic benefits only. Vis-à-vis the motivation and challenges are also different for the actors. Environmental factors, e.g. distinct legislative policies, serve as an entry barrier for all actors, but at the same time is a strategic resource for the processing firms. Insights on antagonistic attitudes of the government and media towards engagement with such activities are obtained, in the Indian context. Further value creation at the retailers is underpinned by strategic customer relationships and information management, while the processing firms achieve cost-efficiency through process know-how and skilled labour. Value: The paper investigates value creation in a multi-echelon take-back network, in RRVC context, epitomising an emergent and dominant post-retail phenomenon driving towards circular economy. From a resource-based perspective, the findings illustrate differentiated value priorities and strategic resource commitment by the actors along the network, as highlighted by Jayaraman and Luo (2007) to be essential for developing distinct rent-earning competence. Research limitations/implications: Further research needs to be conducted to investigate how the actors appropriate value and what capabilities are required to facilitate it, in such multi-echelon take-back arrangement. The present research could also be extended by developing quantitative models of diverse value creation. Practical implications: The paper sheds light to sustainability managers in fashion retailers lacking an overall transparent view of the multi-echelon structure of the arrangement. Further, the key design attributes are identified.
    Original languageEnglish
    Title of host publicationThe Proceedings of 21st International Symposium on Logistics (ISL 2016)
    Subtitle of host publicationSustainable Transport and Supply Chain Innovation
    Pages419-429
    Publication statusPublished - 2016
    MoE publication typeB3 Non-refereed article in conference proceedings
    Event21st International Symposium on Logistics, ISL 2016: Sustainable Transport and Supply Chain Innovation - Kaohsiung, Taiwan, Province of China
    Duration: 3 Jul 20166 Jul 2016
    http://www.isl21.org/wp-content/uploads/2016/06/ISL-Proceedings-2016.pdf (Full proceedings)

    Conference

    Conference21st International Symposium on Logistics, ISL 2016
    Abbreviated title ISL 2016
    CountryTaiwan, Province of China
    CityKaohsiung
    Period3/07/166/07/16
    Internet address

    Fingerprint

    Multi-echelon
    Reverse logistics
    Value creation
    Retail
    Retailers
    Value chain
    Strategic resources
    Sustainability
    Customer relationship management
    Quantitative model
    Economic benefits
    Resource-based perspective
    Skilled labor
    Structured interview
    Information gathering
    Entry barriers
    Design methodology
    Resource constraints
    India
    Managers

    Keywords

    • reverse value chain
    • value creation
    • retail
    • clothing

    Cite this

    Pal, R., Hemilä, J., Paras, M. K., & Sandberg, E. (2016). Creating value through reverse logistics in a multi-echelon used clothing chain. In The Proceedings of 21st International Symposium on Logistics (ISL 2016): Sustainable Transport and Supply Chain Innovation (pp. 419-429)
    Pal, Rudrajeet ; Hemilä, Jukka ; Paras, Manoj K. ; Sandberg, Erik. / Creating value through reverse logistics in a multi-echelon used clothing chain. The Proceedings of 21st International Symposium on Logistics (ISL 2016): Sustainable Transport and Supply Chain Innovation. 2016. pp. 419-429
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    title = "Creating value through reverse logistics in a multi-echelon used clothing chain",
    abstract = "Purpose of this paper: Reverse logistics in retail value chains is an increasingly emerging phenomenon yet under-explored in research. The literature becomes shallower while discussing value creation opportunities in such context. However, this is critical in many retailer-driven consumer goods industries, e.g. fashion, where sustainability and resources constraint are rising concerns. In this context, the purpose of this paper is to investigate value creation phenomenon in a multi-echelon retail reverse value chain (RRVC), and its underlying mechanisms. Design/methodology/approach: A case study approach is adopted in fashion retail context to investigate the take-back scheme for used clothes. Data is collected through semi-structured interviews, observation and documented reports, along a multi-echelon chain commonly existing in such take-back schemes, involving collectors (clothing retailers), global sorters and downstream processors (in low-cost bases, here in India). Deductive framework serves as the basis for constructing the interview questions for exploring the value creation aspect. Findings: Differentiated values are created and captured by the actors involved with multi-echelon take-back network. The collecting and sorting companies regard building corporate image and gathering information as the key values gained through involvement. The processing firms, on the other hand, are predominantly interested in generating economic benefits only. Vis-{\`a}-vis the motivation and challenges are also different for the actors. Environmental factors, e.g. distinct legislative policies, serve as an entry barrier for all actors, but at the same time is a strategic resource for the processing firms. Insights on antagonistic attitudes of the government and media towards engagement with such activities are obtained, in the Indian context. Further value creation at the retailers is underpinned by strategic customer relationships and information management, while the processing firms achieve cost-efficiency through process know-how and skilled labour. Value: The paper investigates value creation in a multi-echelon take-back network, in RRVC context, epitomising an emergent and dominant post-retail phenomenon driving towards circular economy. From a resource-based perspective, the findings illustrate differentiated value priorities and strategic resource commitment by the actors along the network, as highlighted by Jayaraman and Luo (2007) to be essential for developing distinct rent-earning competence. Research limitations/implications: Further research needs to be conducted to investigate how the actors appropriate value and what capabilities are required to facilitate it, in such multi-echelon take-back arrangement. The present research could also be extended by developing quantitative models of diverse value creation. Practical implications: The paper sheds light to sustainability managers in fashion retailers lacking an overall transparent view of the multi-echelon structure of the arrangement. Further, the key design attributes are identified.",
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    year = "2016",
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    Pal, R, Hemilä, J, Paras, MK & Sandberg, E 2016, Creating value through reverse logistics in a multi-echelon used clothing chain. in The Proceedings of 21st International Symposium on Logistics (ISL 2016): Sustainable Transport and Supply Chain Innovation. pp. 419-429, 21st International Symposium on Logistics, ISL 2016, Kaohsiung, Taiwan, Province of China, 3/07/16.

    Creating value through reverse logistics in a multi-echelon used clothing chain. / Pal, Rudrajeet; Hemilä, Jukka; Paras, Manoj K.; Sandberg, Erik.

    The Proceedings of 21st International Symposium on Logistics (ISL 2016): Sustainable Transport and Supply Chain Innovation. 2016. p. 419-429.

    Research output: Chapter in Book/Report/Conference proceedingConference article in proceedingsScientific

    TY - GEN

    T1 - Creating value through reverse logistics in a multi-echelon used clothing chain

    AU - Pal, Rudrajeet

    AU - Hemilä, Jukka

    AU - Paras, Manoj K.

    AU - Sandberg, Erik

    N1 - LIS: Peer-reviewed abstract Project code: 100920

    PY - 2016

    Y1 - 2016

    N2 - Purpose of this paper: Reverse logistics in retail value chains is an increasingly emerging phenomenon yet under-explored in research. The literature becomes shallower while discussing value creation opportunities in such context. However, this is critical in many retailer-driven consumer goods industries, e.g. fashion, where sustainability and resources constraint are rising concerns. In this context, the purpose of this paper is to investigate value creation phenomenon in a multi-echelon retail reverse value chain (RRVC), and its underlying mechanisms. Design/methodology/approach: A case study approach is adopted in fashion retail context to investigate the take-back scheme for used clothes. Data is collected through semi-structured interviews, observation and documented reports, along a multi-echelon chain commonly existing in such take-back schemes, involving collectors (clothing retailers), global sorters and downstream processors (in low-cost bases, here in India). Deductive framework serves as the basis for constructing the interview questions for exploring the value creation aspect. Findings: Differentiated values are created and captured by the actors involved with multi-echelon take-back network. The collecting and sorting companies regard building corporate image and gathering information as the key values gained through involvement. The processing firms, on the other hand, are predominantly interested in generating economic benefits only. Vis-à-vis the motivation and challenges are also different for the actors. Environmental factors, e.g. distinct legislative policies, serve as an entry barrier for all actors, but at the same time is a strategic resource for the processing firms. Insights on antagonistic attitudes of the government and media towards engagement with such activities are obtained, in the Indian context. Further value creation at the retailers is underpinned by strategic customer relationships and information management, while the processing firms achieve cost-efficiency through process know-how and skilled labour. Value: The paper investigates value creation in a multi-echelon take-back network, in RRVC context, epitomising an emergent and dominant post-retail phenomenon driving towards circular economy. From a resource-based perspective, the findings illustrate differentiated value priorities and strategic resource commitment by the actors along the network, as highlighted by Jayaraman and Luo (2007) to be essential for developing distinct rent-earning competence. Research limitations/implications: Further research needs to be conducted to investigate how the actors appropriate value and what capabilities are required to facilitate it, in such multi-echelon take-back arrangement. The present research could also be extended by developing quantitative models of diverse value creation. Practical implications: The paper sheds light to sustainability managers in fashion retailers lacking an overall transparent view of the multi-echelon structure of the arrangement. Further, the key design attributes are identified.

    AB - Purpose of this paper: Reverse logistics in retail value chains is an increasingly emerging phenomenon yet under-explored in research. The literature becomes shallower while discussing value creation opportunities in such context. However, this is critical in many retailer-driven consumer goods industries, e.g. fashion, where sustainability and resources constraint are rising concerns. In this context, the purpose of this paper is to investigate value creation phenomenon in a multi-echelon retail reverse value chain (RRVC), and its underlying mechanisms. Design/methodology/approach: A case study approach is adopted in fashion retail context to investigate the take-back scheme for used clothes. Data is collected through semi-structured interviews, observation and documented reports, along a multi-echelon chain commonly existing in such take-back schemes, involving collectors (clothing retailers), global sorters and downstream processors (in low-cost bases, here in India). Deductive framework serves as the basis for constructing the interview questions for exploring the value creation aspect. Findings: Differentiated values are created and captured by the actors involved with multi-echelon take-back network. The collecting and sorting companies regard building corporate image and gathering information as the key values gained through involvement. The processing firms, on the other hand, are predominantly interested in generating economic benefits only. Vis-à-vis the motivation and challenges are also different for the actors. Environmental factors, e.g. distinct legislative policies, serve as an entry barrier for all actors, but at the same time is a strategic resource for the processing firms. Insights on antagonistic attitudes of the government and media towards engagement with such activities are obtained, in the Indian context. Further value creation at the retailers is underpinned by strategic customer relationships and information management, while the processing firms achieve cost-efficiency through process know-how and skilled labour. Value: The paper investigates value creation in a multi-echelon take-back network, in RRVC context, epitomising an emergent and dominant post-retail phenomenon driving towards circular economy. From a resource-based perspective, the findings illustrate differentiated value priorities and strategic resource commitment by the actors along the network, as highlighted by Jayaraman and Luo (2007) to be essential for developing distinct rent-earning competence. Research limitations/implications: Further research needs to be conducted to investigate how the actors appropriate value and what capabilities are required to facilitate it, in such multi-echelon take-back arrangement. The present research could also be extended by developing quantitative models of diverse value creation. Practical implications: The paper sheds light to sustainability managers in fashion retailers lacking an overall transparent view of the multi-echelon structure of the arrangement. Further, the key design attributes are identified.

    KW - reverse value chain

    KW - value creation

    KW - retail

    KW - clothing

    M3 - Conference article in proceedings

    SN - 978-0-8535-8317-2

    SP - 419

    EP - 429

    BT - The Proceedings of 21st International Symposium on Logistics (ISL 2016)

    ER -

    Pal R, Hemilä J, Paras MK, Sandberg E. Creating value through reverse logistics in a multi-echelon used clothing chain. In The Proceedings of 21st International Symposium on Logistics (ISL 2016): Sustainable Transport and Supply Chain Innovation. 2016. p. 419-429