A two-phase approach to efficiently support product recovery systems in a circular economy context

Abstract

PurposeThe execution of product recovery strategies and the definition of an adequate system to manage its performance are crucial to move toward the employment of a successful circular economy (CE) concept. Defining strategies for the efficient management of product recovery requires product data that is difficult to obtain, making it harder to handle. However, efficient product recovery management can play a key role in shifting companies from a linear economy model to a more sustainable CE model, providing economic benefits and increasing customer satisfaction by recovering and adding value to the discarded product. Therefore, this study aims to provide better models to support decision-making and to evaluate product recovery performance.Design/methodology/approachThe present study highlights a comprehensive two-stage decision approach to identify and examine the relevant key performance indicators (KPIs) for performance improvement of an information facilitated product recovery system (IFPRS) in a CE context. In the first phase, a structural equation modeling (SEM) methodology is adopted to categorize the KPIs by employing exploratory factor analysis and measurement of the model fit is obtained using the confirmatory factor analysis. Further, in the second phase, the KPIs are ranked and prioritized on the basis of expert’s recommendations adopting fuzzy-technique for order of preference by similarity to ideal solution (FTOPSIS).FindingsEmpirical investigation is conducted by compiling data from an association of six decision-makers (DMs) and two DMs from a respective prospect. The results highlight that “Technology Capacity” is ranked as the highest and is the most prominent KPI for successful employment of IFPRS practices. The results of the study would benefit policy makers and company directors in the selection of KPIs based on their importance in a context of high competition and greater pressure to adopt sustainable practices in the management of their companies.Originality/valueAs far as the authors know, no study has been performed till date to identify and construct a structural KPIs model for IFPRS performance improvement in the context of CE. The paper, therefore, proposes a two-phase SEM-TOPSIS technique to measure the impact of KPIs which is a new integration in the existing literature. The results of the study would benefit policy makers and company directors in the selection of KPIs based on their importance in a context of high competition and greater pressure to adopt sustainable practices in managing their organizations.