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


    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
    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 (Full proceedings)


    Conference21st International Symposium on Logistics, ISL 2016
    Abbreviated title ISL 2016
    Country/TerritoryTaiwan, Province of China
    Internet address


    • reverse value chain
    • value creation
    • retail
    • clothing


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