Strategy for the Reverse Supply Chain : Applicability of the Lean and the Agile Concepts

University essay from Högskolan i Jönköping/IHH, Centre of Logistics and Supply Chain Management; Högskolan i Jönköping/IHH, Centre of Logistics and Supply Chain Management

Abstract:

The reverse part of the supply chain becomes more and more important due to the legislation, environmental concerns, higher volumes of returns, etc. As a result, companies cannot see the reverse supply chain as the additional costs only and have to think strategically. The right strategy for the reverse supply chain can help to achieve the competitive advantage. However, there are not so many researches made about strategies for the reverse supply chain yet, contrarily to the forward supply chain. Therefore, the need to adopt strategies for the reverse supply chain appears.

The purpose of this thesis is to analyze the applicability of the Lean and the Agile concepts in the Reverse Supply Chain strategy, and to investigate the driving forces and challenges for the implementation of the strategy in the Reverse Supply Chain.

The inductive research approach was applied in this thesis. The qualitative study was the most suitable for the better understanding of the point of view, the attitudes, the perceptions of the interviewed participants regarding a wide range of issues related to the choice, and the implementation of the strategy for the reverse supply chain. Multiple case studies as the research strategy was chosen, thus data was collected from 13 interviews conducted at four companies: Fläkt Woods, Systemair, Swegon and Rettig ICC.

The main conclusions from the analysis of the applicability of the lean and the agile concepts in the reverse supply chain are that the design of the reverse supply chain depends on the characteristics of the returns: the size, the volume, the life cycle, the B2B or the B2C returns; as well the reasons for the returns: the guarantee service/ after warranty service. When weighting the results about the lean and the agile concepts implementation in the reverse supply chain, it appears relatively more likely that none of the companies implement either only the lean or only the agile approach. Due to various reasons, there are different material flows and they require different strategic approaches. The agility is implemented close to the customer in order to ensure speed and high responsiveness. Lean flows are implemented from the manufacturer to the supplier or the third party (recycler, etc.). Even more, the companies seek to find the optimal combination of both strategies, or as it called – leagile. Two different approaches for leagile concept’s implementation are used: preponement and de-coupling point. Driving forces for the strategy implementation are green forces, increasing the demand for improving customer service level, cost reduction, and the new retail marketing strategies. Main challenges for the strategy implementation are the lack of formal operating procedures, the lack of information sharing with the suppliers, ‘false alarm’ returns, the lack of local competence, and the lack of forecasting possibilities.

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