Returns Management as a Supply Chain Process: A Look at Marketing/Logistics Integration in Italian Firms

Attention to theory-based research in the returns management arena has been largely ignored in the literature (Carter and Ellram 1998; Daugherty et al. 2001), and more specifically the nature of the relationship between marketing and logistics as it relates to the returns management process remains unknown. Because marketing strategy and policy decisions can have a significant impact on the type and timing of product returns (Mollenkopf et al., 2005), there would seem to be a corresponding influence on the nature and extent of returns management logistics activities a firm will have to undertake. We investigate the phenomenon of managing returns as part of a firm’s overall supply chain processes (Rogers et al., 2002). Due to the exploratory nature of the research, we utilize the qualitative methodology of grounded theory (Ellram 1996; Strauss and Corbin 1990) to investigate the above issue in five Italian firms, at multiple organizational levels, in highly diverse industries. The participant pool consisted of three manufacturing firms and two distributors of international parent firms, representing consumer durable goods; auto parts; books; pharmaceuticals; and transmission and propulsion systems for marine applications In trying to better understand the nature of marketing and logistics involvement in returns management, we focus on three specific research questions: 1 what is the role of the returns management process in the firm’s overall supply chain strategy? 2. How are the marketing and logistics functional areas integrated into the returns management process? 3. What factors (internal or external to the firm) influence the returns management process within the firm? Three key findings emerged from the interviews: despite the fact that the role of the returns management process is a lower priority than other initiatives in firms’ overall supply chain strategy, there is strong evidence that significant strategic goals and policies are in place and being utilized; the nature and impact of cross-functional integration within the firms is broader than was expected; and external factors that influence the returns management process are better dealt with by firms that are more highly integrated internally. Based on this work, we posit a preliminary theoretical model that may guide future research on returns management. This model needs to be further developed, but we believe this to be an important goal, as theory will become increasingly important to guiding research and providing valuable insight to firms managing return flows within their supply chains.