The impact of integrating return components planning with purchasing decisions on purchasing performance: A contingency perspective

Abstract

Purpose

The purpose of this research is to apply a simulation experiment to investigate the impact of new components purchasing and used components recovery strategies on multiple performance measures. The research compares the effectiveness of these strategies, given different levels of uncertainty for the return flow from the contingency perspective.

Design/methodology/approach

The experimental design is implemented using an ARENA simulation model. Simulation results are used to test the proposed research model. Multivariate analysis of variance is used for data analysis.

Findings

The results demonstrate that while a proactive purchasing strategy reduces total system cost, it also negatively affects service level. While there are some general conclusions, it is equally important to make decisions under specific business contexts.

Practical implications

The primary implication is that a firm has to align its purchasing strategy and recovery strategy with its business strategy. Given the tradeoff on multiple performance dimensions, the business strategy guides the selection of the appropriate purchasing and recovery strategy.

Originality/value

This paper demonstrates that using multiple performance measures is necessary to accurately assess cost and service trade‐offs related to a proactive purchasing strategy. Considering a wide range of circumstances, this paper suggests that the contingency perspective is a valid approach for investigating closed‐loop supply chains.

Citation

Jinhui Wu, S. and Closs, D.J. (2009), "The impact of integrating return components planning with purchasing decisions on purchasing performance: A contingency perspective", The International Journal of Logistics Management, Vol. 20 No. 1, pp. 57-78. https://doi.org/10.1108/09574090910954846