Critical Barriers to Implementation of Reverse Logistics in the Manufacturing Industry: A Case Study of a Developing Country

Abstract

Globalization policies are encouraging manufacturing companies to produce environment-friendly products that offer a sustainable competitive advantage. Currently, product recovery and zero-waste supply chains have caught the attention of manufacturers and professionals. Reverse logistics (RL) is considered as the most significant part of supply chain management in developed countries; unfortunately, its implementation in developing countries is in the initial stages due to certain barriers. This study aims to identify and verify the barriers to implementation of reverse logistics using a two-stage methodology: the Delphi Method and Structural Equation Modeling. A comprehensive literature review was considered to identify a primary set of barriers. Using the Delphi Method, a team of experts screened out barriers after performing three iterations. A survey-based questionnaire was then sent out to supply chain and logistics employees in the manufacturing industry and relevant government authorities. Five hundred and forty-seven useful responses were analyzed in the Statistical Package for the Social Science (SPSS) & AMOS 21 softwares using Structural Equation Modeling to verify barriers, and ranked according to their severity. The most critical barriers with respect to each category are: high cost of reverse logistics adoption (finance and economics), lack of skilled professionals (knowledge and experience), lack of government supportive policies (law and regulation), poor organizational culture (management), lack of human resources (infrastructure and technology), lack of environmental law awareness (environment), lack of community pressure (market) and company policies (reverse logistics in policy). Overall, the top five barriers found in this study include lack of initial capital, lack of skilled professional in RL, companies’ policies against RL, lack of new technologies and information systems, and lack of community pressure. Knowledge about barriers to reverse logistics allows manufacturing companies to prepare a priority list of actions for better implementation of the reverse logistics system.