Testing the Effect of Strategies of Dealing with Returned Products on Company Performance - Literature review Example

Literature Review Name: University: Date: Testing the Effect of Strategies of Dealing with Returned Products on Company Performance – Literature Review Disposition Strategies Reverse logistics, according to Abdullah and Yaakub (2015), is the movement of materials or products taking place in the opposite direction of the supply chain with the goal of recapturing or generating value, or for appropriate disposal. Therefore, reverse logistics involves processing returned products because of seasonal inventory, damage, excess inventory, salvage recalls, restock and so forth. The process involves equipment disposition, programs for hazardous material, recycling programmes as well as asset recovery (Abdullah & Yaakub, 2015). Disposition options as observed by Skinner, Bryant, and Richey (2008) are normally product or industry-specific and rely on the product characteristics like the product shelf life, transport cost, price/value as well as the patterns of market demand. Basically, when the value of the products are adequately high and can be reproduced for re-sale, resourceful reverse logistics may double up as a profit centre. Companies like Xerox as well as Canon as cited by Skinner, Bryant, and Richey (2008) are routinely remanufacturing products. This is also notable in the automobile parts, where products are recovered for remanufacturing through disposition strategies. In Skinner, Bryant, and Richey (2008) study, they observed that the most applied disposition strategies include: recycling, destroying, refurbishing, repackaging of returned products as well as remanufacturing. According to Attia (2015), handling returned products is an activity associated with reverse logistics and that all every disposition strategy has an effect on the company performance as well as environment. For that reason, all disposition strategies can be utilised as tools for achieving sustainability and attaining competitive advantage. Product disposition as mentioned by Khor and Udin (2012) results in profit maximisation and enables the firm to become environmentally responsible through effective waste management practises. Still, the type of disposition strategy to use relies on a number of key decisions like value and cost of recovery, the products’ market value as well as product sophistication level (Khor & Udin, 2012) Organizational Performance Organizational performance as described by Kheyrabadi and Horri (2015) is organisation’s external efficacy measures in three main areas: financial performance; sale and market performance; and equity return. As mentioned by Attia (2015), utilising repair and disposal strategies can result in the improvement of organizational performance and suitable resource allocation can moderate the relation between organisational performance as well as disposition strategies. One of the crucial decisions that is associated with the company’s competitive strategy is the disposition strategy selected for returned product. The selected strategy has an effect on the organizational effectiveness and performance. Disposition strategies for the returned products in depend on a number of dimensions, but Attia (2015) maintains that environmental dimension must be considered as a one of performance measurement standard due to its environmental effect. According to Ramírez and Morales (2014), activities related to reverse logistic are enormously crucial for controlling return costs as well as increasing organisational performance. For this reason, companies have to measure their logistics performance in order to enhance their revenue growth, cut the cost of operation, and improve the shareholder. Ramírez and Morales (2014) further mentioned that companies that consider reverse logistics save costs and get benefits that normally lead to improved organisational performance. In their study, Ramírez and Morales (2011) observed that information distribution flexibility and reverse logistics resulted in improved organizational performance. Organisational reverse logistics activities’ proactive nature enables the organization to attain superior value; therefore; it is important for the firm to focus on reverse logistics systems that bring about flexibility. Organisational competitiveness is limited by such systems, and the firm is able to support different delivery requirements; thus, resulting in reduced uncertainty. Essentially, reverse logistics is not anymore used just for reducing costs only, but also improving organisational performance. Implementing the return process effectively enables the firm just to manage the flow of the reverse product efficiently, but also to recognise the opportunities for reducing undesirable returns as well as to control recyclable assets like the containers. Allocating Resources Company resources according to Attia (2015) include knowledge, organizational process, capabilities, assets, information, organizational characteristics, and so forth. These resources should be effectively controlled by the organisation since they facilitate the formulation and execution of a strategy in a manner that boosts the company’s effectiveness and efficiency. Basically, the logistics function’ performance levels varies according to the resources allocation, and allocation of resources directly impact the reverse logistics capability so as to attain its targets. Richey et al. (2005) opine that resources associated with labour are very important; therefore, enough employees should be allocated to reverse logistics programs. Richey et al. (2005) further argue that resources may be utilised to develop innovative capabilities that can be used to improve performance as well as achieve competitive differentiation. Imperatively, allocation of resource to reverse logistics must be considered a priority due to the potential for improving organisational performance and for the reason that reverse logistics development provides a strategic means of developing long-lasting relationships with customers. Allocating sufficient personnel and financial resources according to Richey et al. (2005) is amongst the barriers for developing an effective reverse logistics program. Therefore, allocating adequate resources is important for the success of the firm. According to Badenhorst and Nel (2012) the number of organisations that have succeeded in automating information systems in the process of returning products is very few, and the allocated resources in such systems are stressed to the limit and are inaccessible for utilisation of reverse logistics. Firm competencies’ Resource-Based View (RBV) according to Genchev et al. (2010) points out that dedicated resource commitments are related to effective performance outcomes in the organisation. Simultaneously, lack of sufficient resource commitment to the reverse logistics is amongst the main problem in the development of effective returns programs. Genchev et al. (2010) further argues that firms must understand how capabilities of reverse logistics can materialise. In view of this, dedicated resources lead to maximisation of reverse logistics performance, and processes may be utilised to create a reverse logistics competency which improves the contribution of the resources to the generation of reverse logistics capabilities (Genchev et al., 2010). References Abdullah, N. A., & Yaakub, S. (2015). The Pressure for Reverse Logistics Adoption among Manufacturers in Malaysia. Asian Journal of Business and Accounting, 8(1), 151- 177. Attia, A. (2015). The Impact of Returned Product Disposition Strategies on Organizational Performance Applied to the Egyptian Household Appliance Industry. International Journal of Business and Management, 10(9), 143-155. Badenhorst, A., & Nel, J. D. (2012). Identifying potential solutions for specific reverse logistics problems. Journal of Transport and Supply Chain Management, 6(1), 73-90. Genchev, S. E., Landry, T. D., Daugherty, P. J., & Roath, A. S. (2010). Developing reverse logistics programs: a resource based view. Journal of Transportation Management, 21(1), 7-26. Kheyrabadi, K., & Horri, M. S. (2015). The impact of logistics performance on organizational performance in a supply chain context. Columban Journal of Life Sciences, 17(1), 108-117. Khor, K. S., & Udin, Z. M. (2012). Impact of Reverse Logistics Product Disposition towards Business Performance in Malaysian E&E Companies. Journal of Supply Chain and Customer Relationship Management, 1, 1-19. Ramírez, A. M., & Morales, V. J. (2011). Effect Of Reverse Logistics And Flexibility On Organizational Performance. Economics and Management, 16, 873-881. Ramírez, A. M., & Morales, V. J. (2014). Improving organisational performance through reverse logistics. Journal of the Operational Research Society, 65, 954–962. Richey, R. G., Genchev, S. E., & Daugherty, P. J. (2005). The role of resource commitment and innovation in reverse logistics performance. International Journal of Physical Distribution & Logistics Management, 35(4), 233-257. Skinner, L. R., Bryant, P. T., & Richey, R. G. (2008). Examining the impact of reverse logistics disposition strategies. International Journal of Physical Distribution & Logistics Management, 38(7), 518-539. Read More