On the Attractiveness of Product Recovery: The Forces that Shape Reverse Markets

Abstract

Product recovery is a major contributor for implementing sustainable business practices. Within such operations, which are either driven by legislation or economic rationales, practitioners face strategic issues concerning reverse market entry and positioning. Although the complexity of acting on reverse markets is widely acknowledged, a comprehensive framework to facilitate decision making in this area is lacking. In an attempt to fill that gap, we develop a model that supports original equipment manufacturers' (OEMs') assessment of the attractiveness of reverse markets. We identify, from a comprehensive literature analysis, in-depth interviews, and engagement with a dozen companies from different countries, factors that influence key characteristics of reverse markets, and consolidate this lengthy list into a comprehensive model intuitively applicable to business practice. The model combines five forces that drive reverse markets: access to recoverable products; threat of independent recovery companies' (IRCs') market entry; rivalry for recoverable products; adverse effects on core business; and remarketing opportunities. We propose for each a set of attributes that influences its power and direction. To demonstrate the efficacy of the model, we apply it in two industry settings: recovery of white goods in the United Kingdom and paper recycling in Germany. The present research enables OEMs to understand the structure and forces that drive reverse markets, identify levers to influence those markets, anticipate market developments, and formulate resilient strategies for product recovery. Keywords:closed-loop supply chain management industrial ecology market analysis reverse logistics strategy development sustainability Supporting information is linked to this article on the JIE website

In Pursuit of Closed‐Loop Supply Chains for Critical Materials: An Exploratory Study in the Green Energy Sector

“…In addition, even when studies aim to provide implications for recycling, they largely ground on remanufacturing literature (e.g., Rahman and Subramanian ; Stindt et al. ). Furthermore, when considering implications for CRMs, only a few publications can be found (Buchert et al.…”

“…Lau and Wang () and Knemeyer and colleagues () combine both approaches and identify external and internal factors, where the latter are further characterized by strategic and operational considerations. Rahman and Subramanian () classify factors based on balanced score‐card dimensions, while Stindt and colleagues () adopt Porter's five forces (Porter ) for the same purpose.…”

“…), alternative recovery processes (Stindt et al. ), and shipment of wastes out of jurisdiction (Eurometaux ; Tanskanen ).…”

“…; Geyer and Jackson ; Stindt et al. ) coming from original producers, other companies in the supply chain (e.g., suppliers), or from companies in other supply chains (Thierry et al. ).…”

“…For example, investments in product design for manufacturers (Dowlatshahi ; Stindt et al. ) and costs of separation and recycling processes for recycling operators (Hagelüken ; Tanskanen ).…”