End-of-life returns of long-lived products from end customer—insights from an ideally set up closed-loop supply chain

Abstract

For successful operation of closed-loop supply chains, product acquisition from customers plays a key role. Most cases presented in the literature so far have looked at products that still have a considerable marginal value of time or short life cycles. In such cases, it seems more likely that customers would return products at the end of their life cycle. But for a wide range of products such as apparel, the opposite is the case. This paper presents a classification of products for end-of-life acquisition based on the marginal value of time and the product lifetime. In a second stage, transaction cost economics are discussed to evaluate the behaviour of end-customers regarding end-of-life returns. A modified version of the transaction cost analysis is taken up, which allows an assessment of the transaction costs incurred by customers for end-of-life returns. This will show that low transaction costs are vital for acquiring products at the end of their life. The case of ECOLOG is used to explore related issues and discuss the importance of including the final customer in planning such product return channels.

Keywords:

• Closed-loop supply chain management
• Transaction costs
• End-of-life returns
• Apparel industry
• Case study