Analysis of Reverse Logistics Implementation Barriers in Online Retail Industry

Transcription

1 Indian Journal of Science and Technology, Vol 9(19), DOI: /ijst/2016/v9i19/94193, May 2016 ISSN (Print) : ISSN (Online) : Analysis of Reverse Logistics Implementation Barriers in Online Retail Industry G. Thiyagarajan 1* and Saifil Ali 2 1 Sathyabama University, Rajiv Gandhi Salai, Chennai , Tamil Nadu; deanmech@selvamtech.com 2 St. Theresa International College, Thailand Abstract After e-commerce and m-commerce boom in India the customer purchasing style is changed totally. The online retailers try to make a confidence among the customers through on time delivery and replacement of damaged goods soon. Not only Forward Logistics, but also Reverse Logistics is too critical for online retailer since the products and transactions are huge. The returns will be high since the customer is purchasing products without touch and feel. To avoid land-filling and also environmental concerns forced by Governments making Reverse Logistics function critical for many organizations. But there are many barriers for online retailers to implement Reverse Logistics. The aim of the study is to identify the barriers that deter the Reverse Logistics implementation with respect to different online retail industries. Empirical evidence and statistical analysis provide insights in implementing Reverse Logistics by online retailer. In this paper, Analytical Network Process is used to identify the most affecting barriers for Reverse logistics implementation in four online retail industries. Keywords: Analytical Network Process, Electronics Industry, Forward Logistics, Reverse Logistics 1. Introduction In spite of the fact that Industry-specific barriers ruin ecological advancement, the writing sets up Organizational barriers as the essential obstruction to the selection of natural practices 1. The inner barriers incorporate the absence of duty to nature with respect to laborers and management furthermore because of absence of preparing/capabilities of HR 1. The start of new innovation or advancement in an association requires a critical change in staffing to encourage new innovation adjustment 2. What s more, top management ought to offer significance to reverse logistics exercises and additionally to different associations keeping in mind the end goal to coordinate every one of the individuals from the supply chain 2. The purchasers are having more power in supply chain because of expanded rivalry and a bigger base of suppliers. The client sentiment is more essential driver of Logistics management is the data got on the logistics administration suppliers in Singapore 3. Truth be told, products are made on client requests and prerequisites so as not to surge the channel with undesirable stock 4. Focused, promoting, monetary and natural reasons are all components that have been distinguished as applicable for the authoritative selection of reverse logistics exercises and capacities 2. Numerous associations consider the barriers stood up to when building up these practices to be more noteworthy than the points of interest that they would get as a result of their implementation 5. European Countries have stringent law and regulations so Electronics producers work proficiently for proper collection, recovery and removal/disposal of products after end-of-life 6. There is less research available on the barriers of RL adoption by Online Retailers for Indian Electronics Industry. Indian online buying is growing exponentially, especially customers are buying Electronics products more and need of Reverse Logistics is essential to avoid land fill. * Author for correspondence

2 Analysis of Reverse Logistics Implementation Barriers in Online Retail Industry 2. Review of Literature Reverse Logistics adoption is challenging in India because of the lack of communal pressure, less focus on environmental issues and price sensitive market. In India reverse management practices are often considered as cost centres and are mostly performed by unorganized sectors 7. RL implementation in developed nations had seen due to enforced law and regulation on producers to take back products to recover value or dispose them after end-of-life. However, it is in nascent stage in developing countries like India 8. Companies restrictive policies and did not want to compromise quality of product by using returned products, hinder companies to become inactive in RL practices (Subramanian et al; 2014, Jindal & Sangwan; 2011). Legal rules are one of the effective ways for implementation of RL but were not greeted by companies 9. The current Indian law on mentioning & handling e-waste is ambiguous (Dutta et al., 2006, Daniel et al., 2009). Due to lack of proper legislation e-waste illegally imported to developing nations (Dwivedy et al., Lau and Wang; 2009, Rogers et al.; 2002). Therefore, it is much needed that all RL partners to develop long term effective plan for disposition of e-waste and control informal recycling sector 8. Due to uncertainty in quality and quantity of returned product remanufacturing planning could not be done that increase the amount of inventory and affect production 10. It would be hard to market remanufactured products due to competition from new products. Apart from Marketing, pricing of those products is so challenging as price is a sensitive issue in India. Also, vendor of remanufacturing products will get lower commission as compared to new product (Jindal & Sangwan; 2011, Pokharel and Mutha; 2009, Daniel et al; 2009). One of the major problems to practice RL is less supportive partners in Supply Chain. So there would be need to redesign forward Supply Chain into closedloop Supply chain or separate reverse Supply chain 11. Presley et al. 12 suggested that huge amount of capital and finance would require implementing RL practices. Lau and Wang 11 analyzed developing nations were not able to achieve ample amount of asset recovery rate due to less return volume. Ravi and Shankar 2 observed that less use of technology to monitor return and coordination and collaboration with 3PL providers were barriers to adopt RL practices. This inspired me to deal with the Barriers of Reverse Logistics implementation by online Retailers. The goal of this study is to identify the barriers of Reverse Logistics inside the Organization of online Retailers in different Industries like Electronics, Footwear, Home & Kitchen and Textile and to rank them using Analytical Network Process. Lastly the results of the empirical analysis using different barriers and different industries will be illustrated with conclusion. 3. Problem Definition This paper presents an empirical study of the barriers that hinder the implementation of Reverse Logistics by Online Retailers in different Industries. i.e., which of these barriers constitutes the greatest obstacle, which is most influential in different Industries how the barriers behave and so on. There are number of barriers for RL implementation. The twelve important barriers for implementing the Reverse Logistics by Online retailer are listed in Table below. S.no. Barriers 1 Concerned more about Forward Logistics 2 Online Retailers thinking to sell returns in secondary market and not optimizing it. 3 Not investing in Technology for Reverse Logistics 4 Lack of information in Technological systems 5 Lack of commitment from Top and Middle Management 6 In order to implement Reverse Logistics, huge cost will incur in Finance, Technology and Human resource departments. 7 Online Retailers are not interested in Reverse Logistics since they are just middleman. 8 There is a notion that returns are waste. 9 Reverse Logistics flows through multiple departments, Channels and multiple Organization. 10 Needs technology to have high user experience which reflect in touch and feel of products, reduce returns by the customer. 11 No stern measure from government to prevent land-filling. 12 No Optimization for reaching returned products to OEM and Suppliers. 4. Research Methodology The study was conducted among the online Retailers who are dealing with Electronics products, Footwear, 2 Vol 9 (19) May Indian Journal of Science and Technology

3 G. Thiyagarajan and Saifil Ali Textile and Home & Kitchen industries. A structured self administrated questionnaire was designed and got online response. Snowball sampling method was adopted to obtain the responses of the online retailers. The Analytic Network Process (ANP) is an organized system for sorting out and examining complex choices. ANP was created by Thomas L. Saaty in the 1996 and has been broadly examined and refined from that point forward. ANP is utilized as a part of this paper to rank the reverse logistics barriers as for various commercial enterprises. Points of interest of utilizing ANP are: ANP will be valuable to dissect complex choice issues ANP is a basic leadership technique and speculation of AHP. ANP Overview: In ANP Standards, Sub-Criteria as well as Replacements are considered as hubs in a network. Each of these hubs may be contrasted with whatever other hub, the length of there is a connection between them. Ranking of choices may rely on upon the weightage of criteria as well as choices given will impact the positioning of the criteria. In ANP the hubs may be gathered into groups. The network of ANP is spoken to in Matrix The grid is gathered by posting of all hubs on a level plane and vertically and called as Super-Matrix. Perception of Barriers for implementing Reverse Logistics. Table 1. Barrier perceptions Criteria Criteria Cluster Alternatives Code PB Policy Barrier PB1 Concerned more about Forward Logistics SB TB EB Strategic Barrier Technological Barrier External Barrier PB2 PB3 PB4 SB1 SB2 SB3 SB4 TB1 TB2 EB1 EB2 Online Retailers are not interested in Reverse Logistics since they are just middleman. There is a notion that returns are waste. No Optimization for reaching returned products to OEM and Suppliers. Reverse Logistics flows through multiple departments, Channels and multiple Organizations. Lack of commitment from Top and Middle Management In order to implement Reverse Logistics, huge cost will incur in Finance, Technology and Human resource departments. Online Retailers have the mindset to sell returns in Secondary market. Online Retailers not interested in Technology investment for Reverse Logistics Lack of information in Technological systems Customers expect high user experience which reflect in touch and feel of products, will in turn reduce returns by the customer. No stern measure from government to prevent land-filling. Vol 9 (19) May Indian Journal of Science and Technology 3

4 Analysis of Reverse Logistics Implementation Barriers in Online Retail Industry Table 1 shows the statistics of Barriers for implementing Reverse Logistics in Online ecommerce specific to Electronics Industry. Here, the criteria will be contrasted as with that they are so critical to the chiefs, regarding the objective. Every pair of things in the criteria will be thought about; there are sums of six sets (PB&SB, PB&TB, PB&EB, SB&EB, SB&TB and TB&EB). If one Barrier is more important than the other, then as per ANP Model the importance is expressed by entering a number. Table 2 give the intensity according to the importance of the barriers. Table 2. Intensity given for barriers Intensity The Fundamental scale for pair wise comparisons Definition 1 Equally important 2 Equally important - Slightly more important 3 Slightly more important 4 Slightly more important - Significantly more important 5 Significantly more important 6 Significantly more important - Very Significant proven importance 7 Very Significant proven importance 8 Very Significant proven importance Extreme Importance 9 Extreme Importance First, the judgments about all the comparisons of cluster is made by entering them in ANP as numbers as per the Table 3. Table 3. Cluster preferences with Intensity Criteria Preferences: A B More Important Intensity SB PB B 3 SB TB A 5 SB EB A 4 PB TB A 7 PB SB A 9 PB EB B 6 TB EB B 8 Use the scale to define the importance of cluster SB, compared with other clusters (Table 4). Table 4. Criteria preferences with Intensity with respect to SB Cluster SB: A B More Important Intensity SB1 SB2 B 7 SB1 SB2 B 5 SB1 SB3 B 8 SB1 SB4 B 3 SB1 TB1 A 5 SB1 TB2 B 2 SB2 SB3 A 4 SB2 SB4 A,B 1 SB2 TB1 A 5 SB2 TB2 B 4 SB3 SB4 B 3 SB3 TB1 A 5 SB3 TB2 A 4 SB4 TB1 A 7 SB4 TB2 A 9 Repeat the same procedure and use the scale to define the importance of alternatives by cluster PB, cluster EB and cluster TB compared with other cluster. All the clusters are compared with the alternatives and the results are displayed below: 1. Analysis of Results: Table 5. Final weight of reverse logistics barriers Criteria Electronics Footwear Home & Textile Kitchen EB EB PB PB PB PB SB SB SB SB TB TB Vol 9 (19) May Indian Journal of Science and Technology

5 G. Thiyagarajan and Saifil Ali Figure 4. Raw synthesis values. Figure 1. Weight of Reverse Logistics Barriers normalized by clusters. Figure 5. Sensitivity analysis. Figure 2. Normalized values. Figure 6. Sensitivity for RL barriers. Figure 3. Idealized values. Vol 9 (19) May Indian Journal of Science and Technology 5

6 Analysis of Reverse Logistics Implementation Barriers in Online Retail Industry 6. Acknowledgement The authors are thankful for unanimous reviewers of the paper for their constructive feedback and helpful comments which improved the quality of the paper. 7. References Figure 7. Alternatives: Final ranking of alternatives. Table 3. Final ranking of alternatives Industries Rank Electronics 4 Footwear 1 Home & Kitchen 2 Textile 3 5. Conclusions Companies are trying to adopt Reverse Logistics practices due to return from the customers, increased pollution and enforced legislations. The barriers inside the organization make it difficult in getting success. There comes a need for ranking the barriers which will help organizations to implement solution on priority. This research has 12 RL implementation barriers. ANP is applied to all 12 barriers along with alternatives which are 4 different industries. The results show the barriers are more in Footwear followed by Home & Kitchen, Textile and Electronics Industry. The notion that returns are waste is first, RL flows thru multiple channels is the second and RL implementation costs huge is the third are the three important barriers of RL adoption in Electronics Industry. Limitation of this study is mainly analyzing in Online Retailer perspective. The study can be extended by including qualitative and quantitative attributes by different approaches such as Fuzzy ANP, Fuzzy VIKOR and Fuzzy TOPSIS. 1. Hillary R. Pan European union assessment of EMAS implementation. European Environment. 2004; 8: Ravi V, Shankar R. Analysis of interactions among the barriers of reverse logistics. Technological Forecasting and Social Change. 2005; 72: Sum CC, Teo CB. Strategic posture of logistics service providers in Singapore. 1999; 29(9): Tan A. The use of information technology to enhance supply chain management. Production and Inventory Management Journal. 1999; 3(40): Rogers D, Tibben-Lembke R. An examination of reverse logistics practices. Journal of Business Logistics. 2001; 22: Lambert, Douglas M, Stock JR, Ellram LM. Fundamentals of logistics management. Boston, MA; Irwin/McGraw-Hill, Chapter 14; Jindal A, Sangwan KS. Development of an interpretive structural model of barriers to reverse logistics implementation in Indian industry. Glocalized Solutions for Sustainability in Manufacturing. 2001; Shrivastava P. The role of corporations in achieving ecological sustainability. Academy of Management Review. 2008; 20: Kadar WA, Lambert S, Riopel D. A reverse logistics decisions a conceptual framework. Journal of Computers and Industrial Engineering. 2011; 3(61): Fleischmann M. Quantitative models for reverse logistics. Reverse Distribution Channels for Recycling, California Management Review. 1978; 20(3): Lau KH, Wang Y. Reverse logistics in the electronic industry of China: a case study. Supply Chain Management: An International Journal. 2009; 6(14): Presley A, Meade L, Sarkis J. A strategic justification methodology for organizational decisions; a reverse logistics illustration. International Journal of Production Research. 2007; 18 19(45): Vol 9 (19) May Indian Journal of Science and Technology