The sustainability implications of "product take-back clause" insupplier/retailer interface : case study: Swedish bread industry

Abstract: Food waste consumes resources, has a negative effect on the environment and leads to monetary losses for the supply chain participants. One of the ways to address food waste is to reconsider the supply chain´s linear process and implement the reverse supply chain. Many researchers consider reverse supply chain to be sustainable and value adding. Yet some studies mention that in supplier-retailer interface in the context of food industries, reverse supply chains with take-back clause might be exposed to retailers’ market power abuse and cause overproduction and waste. This study used the qualitative approach to explore implications of power relations in retailer-supplier interface on take-back practice by looking at the case of Swedish bread suppliers. All major bread suppliers that have take-back agreement along with retailer chains, representing all retailer corporate ownership groups in Sweden have been interviewed. Using the theory of market power and reverse supply chain sustainability, the study analyzed the implications of power-relations on the take-back practice and explored sustainability concerns and/or fixtures it poses for the supply chain. The study findings do not fully confirm with conclusions of previous research arguing that reverse supply logistics systems serve as additional incentive for powerful retailers to over-order or lead to higher waste due to inability of suppliers to properly dispose of waste. Yet other instances of retailer’s market power that have not been touched upon in previous research were found within studied take-back agreement. The specific terms of agreement resulting from power asymmetries were found to still cause over-ordering and other negative effects on the overall sustainability of bread supply chains. The sustainability breaches identified in the study are mainly connected with lack of retailer’s economic incentive to reduce the amount of unsold bread, which becomes the source of overproduction, and leads to economic, environmental and social costs.