Developing a Returns Competency: The Influence of Collaboration and Information Technology

Abstract

In recent years, product returns have been of increasing interest to academics and managers as firms seek to maximize profits through implementing efficient supply chain management practices. Approximately 8.8 % of all retail products are returned, costing US firms billions of dollars per year. In response to the significant impact returns can have on the bottom line, firms have begun to leverage their supply chain relationships to facilitate improved management of returns and obtain an advantage over competitors. Developing a competency in product returns can be an important part of a firm’s supply chain strategy and transform returns in to a profit center by extending the productivity of materials, resources and labor. Firms like Xerox, Canon, Estée Lauder, Caterpillar, Nike, and others have all found ways to utilize returns to positively impact performance.

The research undertaken here investigates constructs that continue to deserve attention as they are central to the supply chain management discipline. Through collaboration firms can improve their ability to handle returns, but our research introduces information technology as providing a moderating influence over the impact of collaboration in the advancement of a returns competency. One way firms maximize the advantages they receive from collaboration is through enhanced information sharing via the use of information technology. Specifically, we posit that information technology enhances the impact of collaboration through the information sharing that takes place between firms as they develop a competency in information technology operations. Our work develops a theoretical framework and three research hypotheses. An empirical study involving 267 firms is discussed where the hypotheses are tested. Results indicate support for the positive implications of a returns competency on the logistics performance of the firm.