Research paper

Exploring reverse supply chain management practices in Turkey

Ismail Erol and Meltem Nurtanis Velioglu
Department of Business Administration, Faculty of Economical and Managerial Sciences, Abant Izzet Baysal University, Bolu, Turkey

Funda Sivrikaya Serifoglu

Duzce University, Duzce, Turkey

lc ko Gu in Buyu zkan
Galatasaray University, Industrial Engineering Department, Faculty of Engineering and Technology, Ortakoy, Istanbul, Turkey

Necati Aras
i Bogazic University, Industrial Engineering Department, Faculty of Engineering, Bebek, Istanbul, Turkey

Nigar Demircan Cakar

Duzce University, Faculty of Forestry, Duzce, Turkey, and

Aybek Korugan
i Bogazic University, Industrial Engineering Department, Faculty of Engineering, Bebek, Istanbul, Turkey
Abstract Purpose This paper aims to examine the current state of reverse supply chain management (RSCM) initiatives in several Turkish industries. Design/methodology/approach This study is based on an exploratory research regarding RSCM activities of Turkish automotive, white goods, electric/electronics, and furniture industries. The sample consists of all the companies included in the Top-500 Industrial Enterprises List of The Assembly of the Istanbul Chamber of Industry (ISO). Findings The research ndings show that the RSCM initiatives in the considered industries are still in a very early stage. Companies involvement in product returns is mostly due to the legislative liabilities, and system inadequacies are emphasized as the most important reason for not being able to implement an efcient RSCM. Research implications/limitations This paper investigates the reverse supply chain practices of selected industries in Turkey and aims to enable researchers to use this study as a building block in understanding these practices and related problems. The limitation of this study is to solely include the medium and large-sized companies in the industries. Practical implications Reverse supply chain operations contribute to the economic sustainability by reducing waste and saving energy and material. In this research, an empirical study in the electronics, white goods, automotive and furniture industries is conducted, and potential research opportunities are discussed to streamline reverse supply chain activities in the industries. Hence, this study can be viewed as an attempt to increase the level of awareness on reverse supply chain issues. Originality/value No eld study has been conducted to analyze reverse supply chain activities of the industries in Turkey. This research is a pioneering study and will provide a benchmark for the various research activities on related topics. Keywords Supply chain management, Economic sustainability, Turkey Paper type Research paper

1. Introduction
RSCM is dened as the effective and efcient management of the series of activities required to retrieve a product from a customer in order to either dispose of it or recover value
The current issue and full text archive of this journal is available at www.emeraldinsight.com/1359-8546.htm

(Prahinski and Kocabasoglu, 2006; Defee et al., 2009). Fleischmann et al. (2000) base the growing importance of RSCM basically on agreements for excess products and extended producer responsibilities. As agreements for excess products are associated with product returns, which can be very high in some industries experiencing returns at over 50 percent of sales, extended producer responsibilities deal with requiring businesses to effectively manage the entire life of the
This research was fully supported by the Scientic and Technological Research Council of Turkey (Project No: 105K154). An early version of this paper was presented in International Logistics and Supply Chain Congress on November 8-9, 2007, Istanbul, Turkey.

Supply Chain Management: An International Journal 15/1 (2010) 43 54 q Emerald Group Publishing Limited [ISSN 1359-8546] [DOI 10.1108/13598541011018111]

43

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

product. In this respect, end-of-life take-back laws have been enacted over the past decade both in the European Union (EU) and the United States (Prahinski and Kocabasoglu, 2006). Directives on Waste Electrical and Electronic Equipment (WEEE) and on End-of-Life Vehicles (ELV) are two well-known examples (European Commission, 2004). Due to the particular difculties related to its application, the RSCM approach complicates traditional supply chain network design, product design, production planning and scheduling and inventory management problems (Li and Olorunniwo, 2008). Though these types of problems have been extensively studied especially by European researchers, and sophisticated models and strategies have been developed (Van Hoek, 1999; Guide and Van Wassenhove, 2003; Fleischmann, 2001; Dekker et al., 2003, Srivastava, 2007), the same issues are not considered in a detailed fashion in developing countries such as Turkey. Therefore, RSCM initiatives are either not well-known or not investigated in relevant industries. There exist a number of studies that examine RSCM in Turkey from a conceptual viewpoint (Sever and Buyukozkan, 2003; Sahin and Baki, 2004). However, there is still a lack of empirical research focusing on RCSM practices in various sectors. Considering legal obligations arising with the candidacy of Turkey to EU and the potentials involved in the forms of the aspects of sustainability (Svensson, 2007; Keating et al., 2008; Defee et al., 2009), it can be argued that distributors, manufacturers and third party service providers should be actively involved in RSCM operations and successful implementations. Since there is no study that systematically reports the practices of Turkish enterprises on RSCM, the goal of this research is to conduct a eld study to identify the current state of the infrastructure regarding the RSCM operations in the prominent Turkish industries, which are the automotive, electric/electronics, white goods and furniture industries. There are several research questions addressed in this paper. The rst research question is derived from the fact that the researchers in the eld of RSCM are interested in understanding the motivation of the companies in different countries that have implemented specic strategies regarding RSCM operations (Murphy and Poist, 2003; Sahay et al., 2006; Lee, 2008; Zhu et al., 2007; Zhu and Sarkis, 2006). Besides, owing to the factors such as the rapid globalization of business and the economic emergence of developing countries, there has been an increasing emphasis in recent years on the study of logistics and supply chain in different nations (Murphy and Poist, 2003). Therefore, in this research, we study the main incentives of the companies in Turkey to embrace product return strategies and compare these incentives. Exploring the difculties related to implementing supply chain management strategies has also attracted several researchers (Rogers and Tibben-Lembke, 2001; Fawcett et al., 2008; Wycherley, 1999). They argue that for strategic supply chains to be successful, managers and scholars must not focus on one particular inhibitor or facilitator, but rather consider the barriers holistically. Therefore, the obstacles for not having a successful RSCM system in a holistic manner is studied as the second research question in this article. Another important research subject is to nd out the level of rms awareness on the legislation regarding a specic area. The researchers have considered the current level of awareness among decision makers towards policies, 44

legislation and measures of miscellaneous subjects since this type of study may provide the associated benets, barriers and incentives to implementing strategies with respect to legislation (Adeyeye et al., 2007, Prahinski and Kocabasoglu, 2006; Blumberg, 1999). Therefore, the fourth research question aims at measuring the level of awareness of companies on RSCM-related legislation in Turkey. Due to the different motives, enforcements, practices and skills, different industries may have varying levels of initiatives in RSCM and environmental practices (Connelly and Limpaphayom, 2004; Zhu et al., 2007). In their study, Zhu and Sarkis (2006) investigate whether the Chinese companies in different industries have differing motives and practices as to the green supply chain management. Finally, there is also a substantial change in logistics practices between supply chain partners as they struggle to establish efcient, effective and relevant product or service solutions for end customers and emphasize the vertical to virtual integration. Since the problems with the vertical integration are that it requires signicant capital investment and complex organizational structure, outsourcing supply chain operations to third party service providers has been a source of competitive advantage for most companies. In outsourcing process, it is argued that determining the factors and the criteria used in selecting third party providers is vital (Gol and Catay, 2007; McIvor, 2000). Therefore, the factors for outsourcing the reverse supply chain operations and the criteria used in selecting third party service providers for RSCM activities are also analyzed in this research. The remainder of this paper is organized as follows: a literature review on RSCM is presented rst, which is followed by the description of the methodology used. Then, the methodology is summarized. Finally, the data analysis is demonstrated, and some concluding remarks are given in the last section.

2. Literature review
Although there is no other similar eld study conducted in Turkey, there are several research studies performed in EU member countries and North America. Moreover, the recent membership of Peoples Republic of China (PRC) to the World Trade Organization has resulted in an increase in the number of studies concerning green supply chain management related to PRCs industries. A closer look at the eld studies conducted on RSCM shows that they are mostly based on mailed surveys with return rates below 30 percent, and even this statistic implies that there is much to do in the near future. A few important studies are discussed in this section. Murphy and Poist (2000) answer two questions in their eld study: What are the popular strategies used to solve environmentally related problems in logistics? Are there any relations between rm characteristics and used strategies? A questionnaire was prepared and sent to randomly chosen Logistics Management Council members. Among them, 450 members from USA, 130 from Canada and 101 from EU countries received the questionnaire and 133, 31 and 24 members from those regions respectively returned it. The results showed that materials recycle, materials reuse consumption cut and environmental audits are the most important strategies. The least signicant strategy was the

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

intensication of governmental regulations on the environment. After exposing the value adding process to products, related complicating factors and solution alternatives, Guide and Jayaraman (2000) stressed the importance of collection activities of used products. To better understand the difculties arising in remanufacturing processes and product collection, the authors prepared a 75 questions survey, and sent it to 320 remanufacturing rms which are members of American Production and Inventory Control Society Education and Research Foundation (APICS E&R). The return rate was 15 percent. Face-to-face interviews were also carried out with managers to obtain more detailed information. Conclusions were drawn from industrial practices on demand forecasting, balancing of product returns with demand, resources planning and reducing uncertainties in returns. Rogers and Tibben-Lembke (2001) interviewed more than 150 logistics managers and analyzed logistics processes in those visits. Before these interviews, a questionnaire was sent to the managers to expose the questions they would face. The survey was sent to 1,200 managers that were member of Logistics Management Council and with a 29.53 percent return rate, only 311 of them were found acceptable. The contributing US rms were manufacturers, wholesalers, retailers and from service industries. The results of this study are summarized as follows: . rms are not against product returns from customers that do not give their motive; . product returns have some strategic roles such as competitive advantages, the need to develop a clear channel system, elimination of the products according to regulations; . widely performed reverse logistics activities are reselling, remanufacturing, recycling, elimination, and repackaging; . 70 percent of the contributing rms use central return depots (facilities) for inspection and classication; and . factors affecting the performance of reverse logistics activities are the belief that reverse logistics activities are less important compared to other rm activities, rm policies, system inefciencies, top management lack of commitment, incompetence of the employees, nancial inabilities and legal regulations. Murphy and Poist (2003) compare US and non-US rms with respect to select propositions regarding environmental issues, practices and strategies. Accordingly, a survey was sent to 450 randomly selected Council of Logistics members. A total of 133 usable surveys were received from the USA; 31 usable surveys came from Canada; 24 usable responses from European companies. The study results indicate that US and non-US rms tend to share similar perspectives and practices regarding the management of environmental logistics. In another study, Tibben-Lembke (2004) focused on secondary markets for recycled products. The following titles were discussed in that study: characteristics of the products sold in secondary markets, brokers working in those markets, ways to recover returned products and how to choose the best alternative, importance of central facilities and factors to be considered in the selection of secondary market channels. Lastly, the author stressed the need for further data collection and detailed analysis on Internet auctions in order to 45

maximize the benet the rms can achieve in secondary markets. Gonzalez-Torrea et al. (2004) analyzed the differences existing in the relations between bottling/packaging rms from the food and beverage sector and their suppliers (mainly bottle/jar manufacturers) and their customers (end consumers of the packaged or bottled products) in two European countries with different characteristics: Spain and Belgium. Finally, they described some of the similarities and differences found between Spanish and Belgian bottling/packaging rms. Zhu et al.(2007) analyzed green supply chain management (GSCM) initiatives (implementation) of various manufacturing sectors in China and examined the links between GSCM initiatives and performance outcomes. They conducted a survey to collect data from four typical manufacturing industrial sectors in China, namely, power generating, chemical/petroleum, electrical/electronic and automobile, and received 171 valid organizational responses for data analysis. Chan and Chan (2008) presented the results of a pilot survey with follow-up interviews, which was conducted for investigating the practices of reverse logistics in this industry. A questionnaire survey was sent to the industrial participants, and follow-up interviews were conducted with the respondents. They conclude that even if reverse logistics systems are important to the industry the low level of importance of reverse logistics relative to the other issues is still a major barrier in realizing reverse logistics systems. By underlying that most research in RSCM has relied on case studies and optimization models, Prahinski and Kocabasoglu (2006) indicated the existing opportunities to use survey-based research methods to explain current practices, predominant and critical issues, and managerial techniques used to manage the reverse supply chain. They developed ten research propositions to be studied using empirical research methods. In summary, researchers suggest that it is critical to perform eld studies conducted in industries of miscellaneous countries to identify the differences and similarities of the practices and derive useful examples regarding RSCM. In this research, therefore, the ndings of an exploratory study on RSCM initiatives of Turkish companies are provided, and related issues are discussed.

3. Methodology
This research study is based on an exploratory data analysis regarding RSCM applications of Turkish automotive, white goods, electric/electronics, and furniture industries. These industries were selected for the analysis due to the fact that they are the leading industries in Turkey and that the products they produce are more appropriate for product recovery activities. Furthermore, the rst legislative drafts are being prepared by the authorities for the rst three sectors mentioned above. The research sample consists of all the companies in these industries included in the Top-500 Enterprises List of The Assembly of the Istanbul Chamber of Industry (ISO), which amounts to 40 companies. It is assumed that these companies would be willing to comply with legislation, that they have relatively easy access to nancial resources and that they successfully manage the human capital. It is also assumed that there is a high possibility that they store and manage the data

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

on their operations. The distribution of these 40 companies with respect to industries is as follows: automotive (41 percent), white goods (25 percent) electric/electronics (13 percent), furniture (21 percent). Table I displays information about the companies selected. In this study, exploratory research is preferred since it helps determine the best research design, data collection method and selection of subjects by using secondary research such as reviewing available literature and/or data, or qualitative approaches such as informal discussions with consumers, employees, management or competitors, and more formal approaches through in-depth interviews, focus groups etc. (Neuman, 2006). Data for the exploratory research are gathered by semistructured interviews since it is exible and allows new questions to be raised during the interviews based on the response of the interviewees. For each interview, we contacted top managers assistants for possible appointments and provided detailed information about the study and its objectives. Once receiving the assistants guidance, we got in touch with some of the top managers on the phone and asked for a convenient time for an interview. Sixteen of the managers rejected our request to provide further information stating that participating in such survey studies is against their company policy. As a result, we have a total of 24 interviews conducted with top level managers reecting a response rate of 61 percent. The instrument for the semi-structured interviews contains closed-ended, multiple choice and scale type questions as is the case in in-depth interviews to provide room for the individual train of thought of the respondent and allow them to shape their opinion. Questions in the instrument mainly cope with such issues as the main reasons for companies involvement in product returns, the obstacles for not having a successful RSCM system, the industries having certied in ISO 14001, the awareness on RSCM legislation, factors for outsourcing the reverse supply chain operations, Table I Sample companies
Automotive White goods

criteria to select third party providers for RSCM activities and sharing responsibilities for RSCM activities.

4. Data analysis
In this study, closed-ended, multiple choice and scale type questions are processed with the usual statistical quantitative analysis methods. Once the interviews have been conducted, returned surveys are coded, and data are entered into Statistical Package for Social Science (SPSS 15.0). Using SPSS, frequency and ANOVA tables are generated, and the analyses discussed in the following paragraphs are performed. First, the main reasons why the companies in each industry are involved in product returns are displayed in Figure 1. Note that companies involvement in product returns is mostly due to the legislative liabilities. Note also that, except for the furniture industry, competitive reasons based on sustainability is of big importance in terms of dealing with product returns. Furthermore, gaining cost advantages and international legislative liabilities appear to be the main reasons to get involved in product returns for white goods and electric/electronic industries, respectively. This result is as expected for these industries since the Turkish Government is preparing legislative drafts in cooperation with the sectoral associations and the main players in each sector. Hence, the companies are well aware of the liabilities they will be asked to obey in near future. Related to the previous analysis, we also examined the factors that prevent the companies from implementing successful RSCM applications. As can be observed in Figure 2, system inadequacies are emphasized as the most important barrier to executing an efcient RSCM system. Furthermore, the other important obstacle is legislative issues for the industries except for the furniture industry. While competition and nancial resources appear to be the most important barriers for white goods industry, the company policy is stressed as the most important reason for not having an efcient RSCM in electric/electronics industry. Finally, the

Electric/electronics Beko (supplier, OEM) Istanbul Prolo Telra (OEM)- Istanbul BSH Prolo (OEM)- Istanbul Bosch (supplier, OEM) Manisa Vestel (supplier, OEM) Istanbul Siemens (OEM)- Istanbul Aselsan (OEM) Ankara Datateknik (OEM, distributor) Istanbul

Furniture Boytas (supplier, OEM) Kayseri Starwood (supplier) Inegol Istikbal (supplier, OEM) Kayseri Gramer (supplier) -Bursa Yatas (supplier, OEM) Kayseri

Ford (supplier, OEM, distributor) Istanbul Arcelik (OEM) Istanbul Toyota (OEM) Adapazar Vestel (OEM) Manisa Renault (OEM, Distributor) Bursa Prolo (OEM) Istanbul Tofas (OEM) Bursa Bosch (OEM, supplier)-Bursa MercedesBenz (Distributor) Istanbul Turk Demir Dokum (supplier, OEM) Bozuyuk Hyundai (OEM) Kocaeli Arcelik-Kocaeli BMC (supplier, OEM, distributor) Izmir Indesit (OEM) Istanbul Turk Traktor ve Ziraat (OEM) Ankara Alarko Carrier (supplier, OEM, distributor) Istanbul Uzel (OEM) Istanbul Klimasan (Supplier) Izmir MAN (OEM) Ankara Kumtel (supplier, OEM) Kayseri Temsa (OEM) Adana Karsan (OEM) Bursa Honda (OEM, distributor) Kocaeli Isuzu (supplier, OEM) Kocaeli Otokar Ariye Otoyol (OEM, distributor Ariye Askam Istanbul

46

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

Figure 1 The main reasons for companies involvement in product returns (the numbers denote cumulative percentages)

Figure 2 The obstacles for not having a successful RSCM system

lack of interest among top management is stated as the main obstacle together with system inadequacies in the furniture industry. Another important research issue is the awareness of the industries about the RSCM related to legislation. As given in Figure 3, 18 percent of the companies in the automotive industry state that they do not know the legislation. However, 28 percent of the companies in the automotive industry express that they know it and are in the phase of implementing it. As to the white goods, electric/electronics and furniture industries, all of the companies point out that they know the legislation, and 36 percent, 33 percent, and 33 percent of the companies in these industries, respectively, report that they know it and are in the phase of planning the implementation. Moreover, 25 percent of the furniture companies state that they are currently implementing the legislation. It is somewhat surprising that the furniture companies, although there is no legislative pressure, are ahead of the companies in the other industries. Once formulating a clear strategy on their involvements in reverse supply chain operations, the companies should make their decisions regarding whether they outsource these activities to third party companies. Many factors affect outsourcing decisions. In our survey, several possible factors are provided from which the respondents are asked to choose. The respondents are also provided the option of an openended answer where they can list other factors they may 47

consider. In Figure 4, the proportion of the companies in the industries that consider these factors as positive or negative incentives are demonstrated. Given the ndings in Figure 4, the following conclusions can be reached: . The automotive industry is mainly motivated by the factors such as tendency to focus on core competencies, the cost of RSCM, variety of products, returns volume, and collaboration between the companies on reverse supply chains. . The white goods industry employs the criteria, such as, tendency to focus on core competencies, the cost of RSCM, strategy to have a closed-loop chain, collaboration between the companies on reverse supply chains, variety of products and characteristics of the product. . characteristics of the product, returns volume, strategy to have a closed-loop supply chain, tendency to focus on core competencies, the need for sophisticated information system infrastructure to manage product returns mainly give an incentive for the electric/electronics industry. . The furniture industry considers tendency to focus on core competencies and returns timing as sole factors when outsourcing their RSCM operations to the third parties.

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

Figure 3 The industrial awareness on RSCM legislation

Figure 4 Factors for outsourcing the reverse supply chain operations

From Figure 4, it can also be argued that tendency to focus on core competencies is considered as one common important factor by 83.3, 100, 100 and 100 percent of the companies in the automotive, white goods, electric/electronics and furniture industries, respectively. Once the decision with respect to outsourcing has been made, the proper third party providers need to be selected. The rst step for any industry in this selection process should be to identify selection criteria to make a choice. In this research study, the companies are asked for the criteria they employ to select a third party provider for their RSCM 48

activities. In Figure 5, a possible list of selection criteria and the percentage of the companies that consider them as important are displayed. It is observed in Figure 5 that while level of expertise and service cost are the prevalent selection criteria by all the industries, service capacity is stressed as one of the main criteria for three industries except for the companies in electric/electronics industry. The other higher frequency criteria are listed in Figure 5. Companies in different industries may also differ in their assumed and outsourced responsibilities of reverse supply

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

Figure 5 Criteria for selecting third party providers

chain activities. As displayed in Figure 6, activities such as collection/sorting/testing, warehousing, repair and spare parts management are currently performed by 41.7 percent, 50 percent, 58.3 percent, and 50 percent of the companies, respectively. On the other hand, recycling, disposal, distribution and transportation are outsourced to the third parties by 50 percent, 45.8 percent, and 41.7 percent of the companies, respectively. Even though companies in different industries are observed to have similar preferences or choices on some of the issues investigated, there are several issues where the companies differ from each other and where the differences are statistically signicant. In the following analysis, differences among the industries in terms of RSCM are emphasized as demonstrated in Table II. The items listed in Table II are measured with 5-point Likert-type scale being 1 Strongly disagree, 2 Disagree, Figure 6 Responsibility for RSCM activities

3 Neutral, 4 Agree, 5 Completely agree. The mean values are compared using one-way analysis of variance (ANOVA). The analysis yields the following results as to the statistically signicant differences among industries: Customers wish to change the product they used is of insignicant importance in automotive industry with respect to the reason for the companies to have interest in product returns compared to white goods and furniture industries. Company policy is of more signicant importance in electric/ electronics industry compared to white goods and automotive industries in terms of the obstacles preventing the companies from implementing an efcient RSCM. In addition, lack of interest seems to be a more important reason in the furniture industry compared to the other industries in terms of the same factor. Concerning the awareness of the legislation on RSCM, the percentage of the companies in automotive industry stating that they know it, but they have not implemented yet

49

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

Table II Differences among the industries using ANOVA

Automotive White goods 4.00 n5 Electric/ electronics Furniture 4.20 n5

Companies are involved in product returns due to: Customers wish to change the product they used F 5 9:460 p 5 0:004 The obstacles preventing the company from implementing successful RSCM are the following: Company policy F 5 5:068 p 5 0:044 Lack of interest among top management F 5 12:836 p 5 0:005 There are regulations on RSCM. With respect to the industry we are in, we. . . Know it, but we have not implemented it yet F 5 4:55 p 5 0:038 Factors that the companies take into consideration when they make their decision about outsourcing the RSC operations: The need for sophisticated information system infrastructure to manage product returns F 5 13:906 p 5 0:009 Criteria for selecting third party providers: Facility capacity F 5 4:209 p 5 0:028

1.25 n4

1.66 n6 1.33 n6

2.50 n2 2.00 n1

4.50 n2 1.50 n2

5.00 n1

1.42 n7

3.66 n3

5.00 n5

5.00 n1

2.40 n5 4.42 n7

2.0 n2 4.40 n5

5.00 n1 3.0 n2

4.33 n3

Note: For a level of signicance of 0.05, the differences among the industries are found to be signicant

appears to be insignicant compared to the other industries. In terms of the factors for outsourcing decisions considered by the industries, the need for sophisticated information system infrastructure to manage product returns is emphasized more strongly in electric/electronics industry than the other industries. Finally, in terms of criteria for selecting third party providers, the companies in electric/ electronics industry put little emphasis on facility capacity than automotive, white goods and furniture industries.

5. Discussion and implications

Based on the ndings in this research, it appears that the major barriers to RSCM implementation consist of internal and external factors and are somewhat common to the industries. Also, the external barriers are closely linked together and a set of comprehensive improvement measures requiring efforts from both the government and the companies would be required to remove the obstacles. Identical to the ndings based on Blumberg (1999), the lack of legislations and economic incentives causes hesitation and reluctance on the side of manufacturers to implement RSCM in Turkey. This in turn reduces their initiatives to invest in RSCM infrastructure and technology and limits the scope for collaboration among supply chain partners and competitors to attain greater efciency through economies of scale. In addition to the lack of legislation and economic incentives, based on Figure 2, company policy is stressed as the most important reason for not having an efcient RSCM in electric/electronics industry. In this respect, company managers stressed that they are not interested in RSCM due 50

to the possibility of harming the company image, should they recycle/recover products/materials and use them in sale and (or) manufacturing since customers impressions of product quality may be lower than that of a new product. Next, observe that one of the main barriers to executing RSCM for all the respondent companies is system inadequacy, which is in line with the ndings from Rogers and Tibben-Lembke (2001). The companies face system deciencies that are partly brought about by inadequate infrastructure such as information system and technology for developing an efcient reverse supply chain. The companies reported that the lack of information system, infrastructure and technology prevent them from obtaining economies of scale and signicantly reduce recaptured value from product recovery. Given the ndings of this study, the companies involvement in the product returns is mainly based on two motives: national legislative liabilities and competitive reasons based on sustainability. In this respect, some of the companies state that they especially deal with the environmental aspect of sustainability, and they had been reporting their environmental performances on the sustainability reports for some time. The companies major drivers for product returns are turned out to be highly consistent with Rogers and Tibben-Lembke (2001) since they state that competitive reasons and legal issues play a strategic role. Chan and Chan (2008) also identify reverse systems as strategic weapon. Accordingly, in Murphy and Poist (2003), compliance with government regulations and control environmental costs strategically are cited as the primary reasons for establishing green perspectives.

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

As stated by Prahinski and Kocabasoglu (2006), legislation has been used as an impetus for establishing reverse supply chain networks to divert the used product from the waste stream and extend its useful life. This is in line with the fact in our research ndings that most of the companies in the industries point out the national legislative liabilities as the main reason for being interested in product returns. However, none of the companies indicates that it has an effective RSCM system in place. Since most of the regulations in the legislative body are only a rough draft, it may be conjectured that the companies are most probably waiting for the nal version of the legislation. They are also expecting that the changes they are trying to impose on the legislative bodies either individually or through industrial organizations are taken into account in the nal version of the legislation. In addition, due to the fact that the economy of Turkey has rapidly grown in the last six years, the government may not be keen to impose severe environmental legislations to restrain economic growth. After all, manufacturers competing on cost will nd it difcult to maintain their competitive advantage or even survive if they are mandated to set up costly RSCM systems to handle returns. Given the current uncertainty, they are reluctant to invest in infrastructure related to RSCM which they all consider as a cost driver. For long-term sustainable development and competitiveness in the global market, however, the governmental bodies have to set up regulations as soon as possible to promote, control, and standardize RSCM practices. Despite the fact that reducing production cost is reported in the literature as one of the driving forces (Chen, 2001; Srivastava and Srivastava, 2006), none of the companies agree in the electric/electronics and furniture industries that this is the case in Turkey as shown in Figure 1. In fact, they suggest that to establish an effective product recovery system in Turkey incurs high cost, and little prot can be made from product recovery. Therefore, it can be suggested that there is still a long way to the use of RSCM system to recover assets in Turkey. It is also observed from the analysis that the sample companies in the electric/electronics industry do not have any initiative in regard to the RSCM despite the high product returns from their customers due to the promotional campaigns in which customers used product is changed with a new one. The company managers argued that the main rationale for this abnormality is the company policy. Therefore, it may be suggested that companies main motivation for collecting the used products in this industry is to increase their market share instead of using the returned products for product recovery. Some of the company managers also reported that the high percentage of the product returns may be ascribed to increased level of warranty claims and service processes. Then, it can be concluded that this type of return has nothing to do with the environmental liabilities. Furthermore, our research ndings suggest that while awareness of sustainable development is relatively high for the corporations, public awareness of environmental protection and conservation needs to be enhanced as product returns from consumers for product recovery are still relatively small. The low public awareness and the lack of environmental legislations may be positively correlated. In any case, higher public awareness and participation in product recovery should help increase the amount of product returns to the 51

manufacturers through reverse supply chain and thus achieve economies of scale to reduce operating cost (Prahinski and Kocabasoglu, 2006). In this regard, the government can improve the situation by educating citizens on the need for waste reduction and recovery and promoting the use of environment-friendly products. Based on Figure 3, observe that 33 percent of the companies in electric/electronics industry reported that they are currently planning their RSCM implementation projects. They stated that the most important step in this process is to decide if they can handle reverse activities independently by taking into account such criteria as cost, economies of scale, exibility, prot and speed. They also stated that they have been scrutinizing the possibility of performing RSCM activities under the responsibility of a consortium along with a number of leading companies in the industry since it does not seem to be cost effective to manage reverse supply chain activities alone. This nding is in line with the fact that volume inuences the degree of RSC involvement at the rm level (Prahinski and Kocabasoglu, 2006; Johnson, 1998). As indicated in Figure 3, 28 and 25 percent of the companies in automotive and furniture industries, respectively, have been implementing RSCM. However, those companies also emphasized that these implementation processes are in a very early stage and continue slowly since the directives in question have not been enacted yet. As to the assumed responsibilities, companies suggest that they wish to outsource collection/sorting/testing and warehousing to third party providers in the future. Similarly, it can be expected that transportation and distribution will also be increasingly outsourced in upcoming years (Efendigil et al., 2008; Min and Ko, 2008). Based on the ndings, municipalities currently are not involved in any RSCM related activities since they are not ready yet to handle most of the RSCM activities. However, the company managers state that the municipal organizations in Turkey have been making a great deal of progress and, most probably in a very near future, they would be able to assume some of the reverse supply chain responsibilities. It can be argued that policy makers can stimulate the municipal bodies to take part in the industries improved product return strategies by considering municipalities and their tasks in the legislation. Thus, new directives can put pressure on the municipalities to further adopt certain strategies to help the industries better implement the reverse supply chain policies. Given the results in Figure 1, the importance of product recovery in the companies business strategy based on sustainability (Svensson, 2007; Keating et al., 2008) plays a signicant role in determining and applying the RSCM system. On the other hand, since such system considerations consist of heavy investment due to the needs for special equipment and facilities, the companies show unwillingness in implementing RSCM. Outsourcing, however, may help shift the risk to the third party providers and save the company signicant equipment and infrastructure costs. Accordingly, it is suggested that the use of third party logistics for RSCM to comply with environmental laws and regulations can reduce risk (Efendigil et al., 2008; Min and Ko, 2008).

6. Conclusion
Due to the increasing environmental concerns, expanding sales opportunities in secondary markets, proliferation of take

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

back laws particularly in the European Union, and growing consumer pressure for environmentally friendly operations, supply chain management must expand from its traditional focus on the forward ow of materials, components and products to explicitly address the disposal, recycling, reprocessing and remanufacturing of used products. Therefore, the reverse supply chain management was coined to refer to the series of activities necessary to retrieve a used product from the consumer in order to either dispose of it or recover the remaining value. However, researchers suggest that investment in the RSCM should not be made in isolation, but instead must be integrated with investments selected to improve the forward supply chain (Kocabasoglu et al., 2007). Reverse supply chain management has gained increasing popularity in last two decades among researchers, and a rich literature has piled up for various aspects within this important eld. One reason of this popularity is the economic value gained back by the recovery processes. Another one is the directives passed by the EU Commission on waste reduction and product returns. As a candidate country targeting full membership of EU, Turkey is also planning to pass similar environmental directives prepared by The Ministry of Environment and Forests. Despite these developments, there are no research papers or reports on the reactions of Turkish industrial companies to the new and enhanced responsibilities. Therefore, this paper aims to ll this gap and to disseminate the information gathered from a eld study on the topic to industrial companies, academia and decision makers in general. This research also provides a benchmark for all the following studies, a reference point against which the future developments in the investigated industries can be compared to. The key ndings of this research are as follows: . Implementation of RSCM in Turkey is still in an infant stage. . The fact that legislation with respect to RSCM has not been enacted yet brings about the companies reluctance in leading industries in Turkey. Most of the companies in automotive, white goods and electric/electronics indicated that the absence of legislative issues is a barrier to executing RSCM. Therefore, it is argued that legislative regulations should be nalized and enacted in Turkey urgently if RSCM is to fully and successfully be implemented by the industries. . It seems that one of the most important reverse supply chain problems faced by the industries in Turkey is to gure out whether companies can cope with product returns independently. In this respect, a feasibility study of establishing a consortium should be screened out since the companies state that it does not seem to be cost effective to manage reverse supply chain activities alone. In addition, this study should be performed based on the interaction between forward and reverse supply chain. In other words, the notion of closed-loop supply chain should be taken into consideration in order to establish an effective network. . All of the respondents in automotive, electric/electronics and white goods industries express that sustainability plays a vital role in their existing or future reverse supply chain operation plans. . System inadequacies are emphasized as the most important barrier to executing an efcient RSCM system. In this regard, the lack of an information 52

system, infrastructure and technology prevents the companies from obtaining economies of scale and signicantly reduces the economic value from product recovery. A comprehensive plan involving collaborative efforts of the governmental bodies and the companies is needed to encourage RSCM initiatives for the industries in Turkey. The lack of publicity and knowledge of RSCM inhibits public awareness of product recovery activities and their effects on the environment.

Our ndings about the reluctance of rms to be engaged in RSCM activities are in parallel with the observations published in the literature. For example, it is mentioned in Hauser and Lund (2008) that among 2000 remanufacturing rms considered only 6 percent are Original Equipment Manufacturers (OEMs). The others are third-party remanufacturing rms which are mostly small or mediumsized and do not manufacture new products. Among others, the foremost reason why OEMs are not actively involved in RSCM activities is the protability issue. The level of the competition between new products and remanufactured products is also a determining factor from the perspective of the companies. For example, Hauser and Lund (2008) report that remanufactured products in the automotive parts industry face a signicant competition from other remanufactured parts, which is a motivation for an OEM in this industry to engage in product recovery. On the other hand, in ofce furniture and some electrical products such as power tools and pumps, the major competition occurs between new and remanufactured products. An OEM in these industries can therefore compete with its new products against the remanufactured products of third-party remanufacturers without being involved in product recovery operations. As a result, the existence of secondary markets of remanufactured versions of products and the cannibalization effect of the secondary market on the new products determines the bottom-line of RSCM initiatives in the different industries. Furthermore, based on the ndings of this research, it is concluded that overseas organizations considering Turkey as a base or trading partner should consider the fact that RSCM initiatives and RSCM-related legislative issues in Turkey are in infant stage. With this in mind, these organizations may add several RSCM-related items to the contracts made with Turkish suppliers and/or OEMs to reassure RSCM requirements. Strategic partnerships could also be established between organizations in order to improve Turkish suppliers and/or OEMs RSCM capabilities to satisfy RSCM needs. The results of this study can be further utilized to suggest several directions for future research. A eld study can focus on investigating what consumers demand would be for recovered products. Several respondents, especially in the white goods and electrics/electronics industry, suggested that the Turkish customers would not be willing to buy a remanufactured product. As there is no eld study on this interesting issue, it is not possible to say if this conjecture reects the truth, and to what extent or under which conditions it is true.

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

References
Adeyeye, K., Osmani, M. and Brown, C. (2007), Energy conservation and building design: the environmental legislation push and pull factors, Structural Survey, Vol. 25 No. 5, pp. 375-90. Blumberg, D.F. (1999), Strategic examination of reverse logistics and repair service requirements, need, market size, and opportunities, Journal of Business Logistics, Vol. 20, pp. 141-59. Chan, F.T.S. and Chan, S.K. (2008), A survey on reverse logistics system of mobile phone industry, Hong Kong Management Decision, Vol. 46 No. 5, pp. 702-8. Chen, K.Z. (2001), Development of integrated design for disassembly and recycling in concurrent engineering, Integrated Manufacturing Systems, Vol. 12 No. 1, pp. 67-79. Connelly, J.T. and Limpaphayom, P. (2004), Environmental reporting and rm performance: evidence from Thailand, The Journal of Corporate Citizenship, Vol. 13, pp. 137-49. Defee, C.C., Esper, T. and Mollenkopf, D. (2009), Leveraging closed-loop orientation and leadership for environmental sustainability, Supply Chain Management: An International Journal, Vol. 14 No. 2, pp. 87-98. Dekker, R., Fleischmann, M., Inderfurth, K. and Van Wassenhove, L.N. (Eds) (2003), Reverse Logistics: Quantitative Models for Closed-Loop Supply Chains, Springer Verlag, Berlin. Efendigil, T., Onut, S. and Kongar, E. (2008), A holistic approach for selecting a third-party reverselogistics provider in the presence of vagueness, Computers & Industrial Engineering, Vol. 54, pp. 269-87. European Commission (2004), Waste electrical and electronic equipment, available at: http://ec.europa.eu/ environment/waste/weee/index_en.htm, http://ec.europa.eu/ environment/waste/elv_index.htm Fawcett, S.E., Magnan, G.M. and McCarter, M.W. (2008), Benets, barriers, and bridges to effective supply chain management, Supply Chain Management: An International Journal, Vol. 13 No. 1, pp. 35-48. Fleischmann, M. (2001), Quantitative Models for Reverse Logistics, Springer Verlag, Berlin. Fleischmann, M., Krikke, H.R., Dekker, R. and Flapper, S.D.P. (2000), A characterization of logistics networks for product recovery, Omega, Vol. 28, pp. 653-66. Gonzalez-Torrea, P.L., Adenso-Diaz, B. and Artiba, H. (2004), Environmental and reverse logistics policies in European bottling and packaging rms, International Journal of Production Economics, Vol. 88, pp. 95-104. Gol, H. and Catay, B. (2007), Third-party logistics provider selection: insights from a Turkish automotive company, Supply Chain Management: An International Journal, Vol. 12 No. 6, pp. 379-84. Guide, V.D.R. Jr. and Jayaraman, V. (2000), Product acquisition management: current industry practice and a proposed framework, International Journal of Production Research, Vol. 38 No. 16, pp. 3779-800. Guide, V.D.R. Jr and Van Wassenhove, L.N. (Eds) (2003), Business Aspects of Closed-Loop Supply Chains, Carnegie Mellon University Press, Pittsburgh, PA. Hauser, W. and Lund, R. (2008), Remanufacturing: Operating Practices and Strategies, Boston University, Boston, MA. 53

Johnson, F. (1998), Managing value in reverse logistics systems, Transportation Research Part E (Logistics and Transportation Review), Vol. 34, pp. 217-27. Keating, B., Quazi, A., Kriz, A. and Coltman, T. (2008), In pursuit of a sustainable supply chain: insights from Westpac Banking Corporation, Supply Chain Management: An International Journal, Vol. 13 No. 3, pp. 175-9. Kocabasoglu, C., Prahinski, C. and Klassen, D.R. (2007), Linking forward and reverse supply chain investments: the role of business uncertainty, Journal of Operations Management, Vol. 25, pp. 1141-60. Lee, S. (2008), Drivers for the participation of small and medium-sized suppliers in green supply chain initiatives, Supply Chain Management: An International Journal, Vol. 13 No. 3, pp. 185-98. Li, X. and Olorunniwo, F. (2008), An exploration of reverse logistics practices in three companies, Supply Chain Management: An International Journal, Vol. 13 No. 5, pp. 381-6. McIvor, R. (2000), A practical framework for understanding the outsourcing process, Supply Chain Management: An International Journal, Vol. 5 No. 1, pp. 22-36. Min, H. and Ko, H. (2008), The dynamic design of a reverse logistics network from the perspective of third-party logistics service providers, International Journal of Production Economics, Vol. 113, pp. 176-92. Murphy, P.R. and Poist, R.F. (2000), Green logistics strategies: an analysis of usage patterns, Transportation Journal, Winter, pp. 5-16. Murphy, P.R. and Poist, R.F. (2003), Green perspectives and practices: a comparative logistics study, Supply Chain Management: An International Journal, Vol. 8 No. 2, pp. 122-31. Neuman, W.L. (2006), Social Research Methods, Pearson Education, Upper Saddle River, NJ. Prahinski, C. and Kocabasoglu, C. (2006), Empirical research opportunities in reverse supply chains, Omega, Vol. 34 No. 6, pp. 519-32. Rogers, D.S. and Tibben-Lembke, R. (2001), An examination of reverse logistics practices, Journal of Business Logistics, Vol. 22 No. 2, pp. 129-48. Sahay, B.S., Gupta, J.N.D. and Mohan, R. (2006), Managing supply chains for competitiveness: the Indian scenario, Supply Chain Management: An International Journal, Vol. 11 No. 1, pp. 15-24. Sahin, C. and Baki, B. (2004), The conceptual framework: critical factors in integrating reverse logistics systems, paper presented at International Logistics Congress, Izmir, December 2-3, Vol. 1, pp. 486-97. Sever, F. and Buyukozkan, G. (2003), A reverse logistics system proposition for recycling sector in Turkey, paper presented at International Logistics Congress, Istanbul, June 30-July 1, pp. 19-24. Srivastava, R.K. and Srivastava, S.K. (2006), Managing product returns for reverse logistics, International Journal of Physical Distribution & Logistics Management, Vol. 36 No. 7, pp. 524-46. Srivastava, S.K. (2007), Green supply-chain management: a state-of-the-art literature review, International Journal of Management Reviews, Vol. 9 No. 1, pp. 53-80. Svensson, G. (2007), Aspects of sustainable supply chain management (SSCM): conceptual framework and

Exploring reverse supply chain management practices in Turkey Ismail Erol et al.

Supply Chain Management: An International Journal Volume 15 Number 1 2010 43 54

empirical example, Supply Chain Management: An International Journal, Vol. 12 No. 4, pp. 262-6. Tibben-Lembke, R.S. (2004), Strategic use of the secondary market for retail consumer goods, California Management Review, Vol. 46 No. 2, pp. 90-104. Van Hoek, R. (1999), From reversed logistics to green supply chains, Supply Chain Management: An International Journal, Vol. 4 No. 3, pp. 129-35. Wycherley, I. (1999), Greening supply chains: the case of the Body Shop International, Business Strategy and the Environment, Vol. 8 No. 2, pp. 120-7. Zhu, Q. and Sarkis, J. (2006), An inter-sectoral comparison of green supply chain management in China: drivers and practices, Journal of Cleaner Production, Vol. 14 No. 1, pp. 472-86. Zhu, Q., Sarkis, J. and Lai, K-H. (2007), Initiatives and outcomes of green supply chain management implementation by Chinese manufacturers, Journal of Environmental Management, Vol. 85 No. 1, pp. 179-89.

Blumberg, D.F. (2005), Introduction to Management of Reverse Logistics and Closed Loop Supply Chain Process, Taylor and Francis, Boca Raton, FL. Dowlatshahi, S. (2000), Developing a theory of reverse logistics, Interfaces, Vol. 30 No. 3, pp. 143-55. Fassoula, E.D. (2005), Reverse logistics as a means of reducing the cost of quality, Total Quality Management, Vol. 16 No. 5, pp. 631-43. IGEME (2008), IGEME, available at: www.igeme.org.tr (accessed June 10, 2008). Porter, M. and Van Der Linde, C. (1995), Green and competitive, Harvard Business Review, Winter, pp. 120-34. Rogers, D.S. and Tibben-Lembke, R. (1999), Going Backwards: Reverse Logistics Trend and Practices, RLEC Press, Pittsburgh, PA.

Further reading
BEYSAD (2008), BEYSAD, available at: www.Beysad.Org. Tr/Index_Eng.Asp (accessed June 10, 2008).

Corresponding author
Ismail Erol is the corresponding author and can be contacted at: erol_i@ibu.edu.tr

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints

54