Revised paper submitted to IJPE special issue 10 th July 2012 1 Critical barriers in implementing reverse logistics in the Chinese manufacturing sector Muhammad D Abdulrahman Nottingham University Business School China, The University of Nottingham Ningbo China, 199 Taikang East Road, Ningbo, 315 100. [email protected]Phone: +86 574 8818 0019 Angappa Gunasekaran Department of Decision and Information Sciences, Charlton College of Business, University of Massachusetts – Dartmouth, 285 Old Westport Road, North Dartmouth, MA 02747-2300, USA E-mail: [email protected]Nachiappan Subramanian* Nottingham University Business School China, The University of Nottingham Ningbo China, 199 Taikang East Road, Ningbo, 315 100. [email protected]Phone: +86 574 8818 0197 * Corresponding Author
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Source Type of RL study Industry Method used Broad conclusion Tong and Wang (2004)
Explored the global flows of e-waste and concentration of related recycling in coastal China
E waste Case study Recycling sector (authorized and illegal) has played a significant role in rural industrialization and local environment without considering environmental protection.
Liu (2006) Predicted the amount of electronic equipment from urban household in Beijing
E Waste Interview To understand statistics of e waste due to urbanization and how it can be handled in future
Zhou et al. (2007)
Analyzed current battery recycling system in China
Battery recycling
Soft system and Benchmarking
lack of governmental policies, technical guidance and administrative resources, but more importantly lacking aspect is cost-effective recycling technologies, funding resources and public participation
Yang et al. (2008)
Described and investigated national level WEEE flow
E Waste Case study Need to augment capacity and suitable WEEE treatment to protect environment.
Lau and Wang (2009)
Investigated whether current reverse logistics theories and models can be applied in China
Electronic industry
Case Study Major barriers to reverse logistics implementation are external and they are lack of enforceable law, regulations or directives to motivate manufacturers’, economic support and preferential tax policies, low public awareness of environmental protection and underdevelopment of recycling technologies.
Wu and Cheng (2006)
Compared the characteristics of reverse logistics in the publishing industry among China, Hong Kong and Taiwan
Publishing industry
Case study RL in publication industry is at an early stage and found RL cost as a significant factor.
Chung and Zhang (2011)
Evaluated the legislative measures on electrical and electronic waste in the people’s republic of China
electrical and electronic industry
Critical evaluation
Presence of large number of loop holes in Chinese WEEE regulations and they are poor law making skills, poor level of technical knowledge, lack of all-inclusive consideration and consultation and lack of inter-ministerial communication, coordination and support
Ying (2009)
Studied cause and effects of house hold appliances reverse logistics in China
Electrical and Electronic appliances (House hold appliances)
Theoretical and comparative
China has not yet realized the importance of house hold appliances reverse logistics, many manufacturers have not engaged in household appliances RL with no qualifications.
Fang et al. Examined the state of eco-industrial Process Case study Eco-industrial development in China is in its infancy stage and
(2007) development in China, industrial sustainability constraints in China and suggested future prospectus for sustainable development
industry (Sugar making industry and chemical industry)
future prospect lies on closed loop involving chains and industrial symbiotic web.
Ongondo et al. (2011)
Reviewed the management of electrical and electronic wastes with a detailed review on Chinese context
Electrical and electronic waste
Review Literature review provides detailed statistics of electrical and electronic waste management in China. Role of import and export of end of life waste electrical equipment, recycling procedures and regulations. Stated the difficultly in managing the waste electrical and electronic products compared to developed countries.
Veenstra et al. (2009)
Investigated through Markov chain model how far the existing recycling system matches with newly proposed circular economy promotion law of people’s republic of China
E-Waste Empirical Active involvement of dealers and retailers to fully realize the extended producer responsibility in recycling.
Wang et al (2010)
Analyzed the significant impact of WEEE legislation on manufacturing, recycling, treatment and exportation and importation
Household industry
Interview Absence of detailed regulations and technical standards hinders successful implementation of law and regulation.
Zhang et al. (2011)
Presented some problems before during and after manufacturing in automotive remanufacturing
Automotive Conceptual To understand the responsibility of government and OEM to recycle their products, establishment of standards and techniques to strengthen quality and reliability of remanufactured products, involvement of research institutes and universities.
Miao et al. (2012)
Proposed five dimensional structure of logistics social responsibility. It includes clan culture, business ethics, pressures from customers, suppliers and competitors and law and regulations
Manufacturing Empirical Identified clan culture and business ethics has a major effect on logistics social responsibility. It is also reported that pressure from suppliers, customers, competitors and law regulations have certain effects.
Respondent Position First line manager 44 18.4 Middle line manager 126 52.7 Top manager 69 28.9 Ownership Local 167 69.9 Foreign 72 30.1 Years since establishment < five years 49 20.5 Five to ten years 106 44.4 Eleven years to 20 66 27.6 > 20 years 18 7.5 Annual sales (recent fiscal year) < 50 million 93 38.9 50 to 100 million 74 31.0 100 ̴ 300 million 42 17.6 > 300 million 30 12.5 Number of employees < 100 workers 59 24.7 100 ̴ 500 workers 88 36.8 501 ̴ 1000 workers 55 23.0 > 1000 workers 37 15.4 Annual sales for Locally owned
< 50 million 74 44.3 50 to 100 million 56 33.5 100 ̴ 300 million 22 13.2 > 300 million 15 9.0 Annual sales for Foreign owned < 50 million 19 26.4 50 to 100 million 18 25.0 100 ̴ 300 million 20 27.8 > 300 million 15 20.9 Industry Steel and Construction 76 31.8 Electronics and computer 59 24.7 Automotive 33 13.8 Plastics 15 6.3 Paper and paper based products 24 10.0 Textiles 32 13.4
A. Management Barrier (KMO = .861, Bartlett’s Sig = .000)
63.73%
0.857
0.613 – 0.746 A1. Lack of RL expert at mgt. level 0.805 A2. Lack of trained personnel 0.805 A3. Low commitment 0.853 A4. Lack of waste mgt. practices 0.750 A5. Lack of shared understanding of best practices 0.775 B. Financial Barrier (KMO=.816, Bartlett’s =.000)
72.98%
0.876
0.690 – 0.778 B1. Lack of initial capital 0.884 B2. Lack of funds for training 0.841 B3. Lack of funds for storage and handling 0.823 B4. Lack of funds for return monitoring systems 0.867 C. Policy Barrier (KMO = .701, Bartlett’s Sig = .000)
60.89%
0.783
0.545 – 0.673
C1. Lack of enforceable laws and directives on take-back of end-of-life
0.852
C2. Lack of govt. supportive economic policies 0.830 C3. RL not consider critical to performance 0.694 C4. Lack of public awareness on EP 0.735 D. Infrastructure Barrier(KMO=.667, Bartlett’s Sig=.000)
68.04%
0.764
0.594 - 0.668 D1. Lack of systems (hardware/software) to monitor returns 0.828 D2. Lack of in-house facilities (storage, handling equipment and vehicles)
Table 8 Factor Analysis of Reverse Logistics Barriers for Local firms
Reverse Logistics Barriers Factor loadings
Variance Explained
Cronbach’s alpha Range of item-total correlation
A. Management Barrier (KMO = .848, Bartlett’s Sig = .000)
61.46%
0.842
0.604 – 0.720 A1. Lack of RL expert at mgt. level 0.766 A2. Lack of trained personnel 0.786 A3. Low commitment 0.840 A4. Lack of waste mgt. practices 0.732 A5. Lack of shared understanding of best practices 0.791 B. Financial Barrier (KMO=.779, Bartlett’s =.000)
69.44%
0.852
0.611 – 0.745 B1. Lack of initial capital 0.871 B2. Lack of funds for training 0.846 B3. Lack of funds for storage and handling 0.769 B4. Lack of funds for return monitoring systems 0.845 C. Policy Barrier (KMO = .726, Bartlett’s Sig = .000)
63.75%
0.807
0.526 – 0.737
C1. Lack of enforceable laws and directives on take-back of end-of-life
0.883
C2. Lack of govt. supportive economic policies 0.855 C3. RL not consider critical to performance 0.730 C4. Lack of public awareness on EP 0.711 D. Infrastructure Barrier(KMO=.665, Bartlett’s Sig=.000)
67.24%
0.754
0.532 - 0.661 D1. Lack of systems (hardware/software) to monitor returns 0.807 D2. Lack of in-house facilities (storage, handling equipment and vehicles)
Table 9 Factor Analysis of Reverse Logistics Barriers for Foreign firms
Reverse Logistics Barriers Factor loadings
Variance Explained
Cronbach’s alpha
Range of item-total correlation
A. Management Barrier (KMO = .789, Bartlett’s Sig = .000)
66.10%
0.870
0.617 – 0.769 A1. Lack of RL expert at mgt. level 0.868 A2. Lack of trained personnel 0.856 A3. Low commitment 0.880 A4. Lack of waste mgt. practices 0.749 A5. Lack of shared understanding of best practices 0.696 B. Financial Barrier (KMO=.825, Bartlett’s =.000)
76.77%
0.898
0.672 – 0.818 B1. Lack of initial capital 0.903 B2. Lack of funds for training 0.803 B3. Lack of funds for storage and handling 0.905 B4. Lack of funds for return monitoring systems 0.890 C. Policy Barrier (KMO = .604, Bartlett’s Sig = .000)
78.42%
0.688
0.531 – 0.657
C1. Lack of enforceable laws and directives on take-back of end-of-life 0.885 C2. Lack of govt. supportive economic policies 0.874 C3. RL not consider critical to performance 0.916 C4. Lack of public awareness on EP 0.744 D. Infrastructure Barrier(KMO=.645, Bartlett’s Sig=.000)
67.52%
0.754
0.546 - 0.648 D1. Lack of systems (hardware/software) to monitor returns 0.869 D2. Lack of in-house facilities (storage, handling equipment and vehicles) 0.719 D3. Lack of Coordination with 3PL providers 0.868