Forecasting product returns and reverse logistics performance: structural equation modelling

Abstract

Purpose Forecasting product returns plays an important role in the operations of reverse logistics (RL). However, their contribution to sustainability performance is yet to be explored. The purpose of this paper is to explore the product returns in Indian electronics industry and examine the relationship of forecasting product returns with triple bottom line performance of RL. Design/methodology/approach In this study, based on past literature review, four hypotheses, relating to forecasting of product returns and its association with performance, were developed. A questionnaire was sent to 700 respondents from the Indian electronics industry. Overall, 208 received responses were found suitable for the research. The necessary statistical analysis was carried out to ensure the reliability and validity of the questionnaire. In order to test different hypotheses, partial least square path modelling (PLSPM) technique of structural equation modeling was utilized. Findings Measurement model had shown sufficient data fit for the modeling. PLSPM results reveal that the accuracy in forecasting product returns is positively associated with operational performance of RL. It also plays an important role in the sustainability efforts of an organization. Research limitations/implications Managers can utilize results of study for exploring and emphasizing issues of product returns for improving RL performance. One of the limitations is that data are collected only from Indian electronics industry. Another limitation is that only product returns are considered for the operational and TBL performance of RL. In future, study may be carried out considering different factors in other sectors and countries. Originality/value The intent of forecasting product returns is considered to be operational efficiency. It can make significant contributions to the sustainability efforts of an organization. Review of the past literature indicates that research in the field of RL is in developing stage, and issues related to forecasting product returns are under-represented. The paper adds value to the few available articles on product returns.