An analytical framework

The research model is developed from theory on distribution systems in general. Inthis section we adapt the model to the reverse setting. We concretize the research model into an analytical framework that serves to guide further analysis.

Reverse distribution systems are organized to take back products at end-of-life for recovery and waste management. 'Reverse' is used in order to differentiate the system from a forward system, which brings products to the end-consumer. However, a reverse distribution system is not the 'opposite' of a traditional forward distribution system, as it has its own distinctive features. The research on reverse distribution systems has developed an understanding of the characteristics of these systems but there is still limited knowledge of how coordination is achieved. Our thesis is that the coordination mechanisms and the effect on system performance apply to reverse distribution system in the same way as to forward distribution system. Inthe analytical framework we integrate the features of reverse distribution systems with the knowledge of coordination from forward distribution systems.

The analytical framework includes functions of the reverse distribution system and we have illustrated how the coordination mechanisms for physical flows and commercial interests influence the system. The coordination mechanisms for the physical flows seek to influence the level of integrated activities, while the coordination mechanisms for commercial interests seek to influence the degree of aligned behavior. How the coordination mechanisms are adapted to the reverse distribution system is reflected in the performance variables. The performance is represented separately for each flow. However, we expect the interaction effect of the coordination mechanism to be reflected in a system goal. The analytical framework is illustrated on the following page. We continue with the argument afterwards, explaining which dimension we use to analyze reverse distribution systems empirically.

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Framework for analysis

Coordination mechanisms for physical flows:

• Planning

• Standardization

• Mutual adjustment

Reprocessing

Levelof operations

costs and customer service

Levelof transaction

costs and transaction

value

System goal:

Collection rate

~management options:

Figure 4.2:An analytical framework for analyzing coordinated action in {reverse' distribution systems Collection

• Reuse

• Remanufacturing

• Recycling

• Disposal

Degreeof aligned behavior Coordination mechanisms for commercial interests:

• Formalization

• Centralization

• Incentives

• Norms

One feature with reverse distribution systems is that there is awaste management optionwhen returning products, which is an important starting point. Research has shown thatthisis likely to have a substantial impact on the design of the system (e.g. Thierry et al. 1995). In this respect, we expect that the waste management options influence the type of physical flows and commercial interests of the systems. This feature has been illustrated in the framework as input to the functions. It is a decision that is made up front when organizing reverse distribution systems and serves as an information input when analyzing the systems.

A second feature is that products that are taken back at end-of-life have distinct activities within the functions of collection, transfer and reprocessing. In the collection function, the products have to be collected from end-consumers and accumulated at a collection site. The activity is reversed from that of a forward distribution system where products are sold and delivered to end-consumers. The transfer level represents moving the collected products from the site of collection to the site of reprocessing. The transfer level is concretized astransport in our analytical framework and it reflects the movement of goods. In many respects, transport is the same activity (in both the forward and reverse systems) despite the direction of goods but the character of the products influences the handling operations. The products are used and not necessarily packaged in the same manner as when they are new. It is therefore necessary to adjust the transport handling operations to reverse distribution systems. The reprocessing is the opposite of what one fmds in the forward system, in that products are dismantled rather than manufactured. Our analysis includes the collection, transport and reprocessing functions. These functions represent the reverse distribution tasks of coordinating 'production' and 'consumption' in time, distance and diversity of products (Alderson 1949).

Our job is to analyze how the coordination mechanisms within these two flows contribute to integrated activities and aligned behavior in the reverse distribution system. The reverse distribution system is concretized into three functions. The performance variables reflect how well the coordination mechanisms are adapted to the system. We have illustrated that each flow has separate performance variables, as well as that overall system performance is reflected in a system goal. The system goal reflects the interaction effects between the coordination mechanisms, thereby showing how the reverse distribution system works as 'a whole'. Next we specify the empirical dimensions we use when analyzing the reverse distribution systems in our study.

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We start with the coordination of physical flow. We have identified that physical flows are coordinated either through standardization, planning or mutual adjustment (Thompson 1967), or a combination of the mechanisms (Håkansson and Persson 2004). Physical flows that are coordinated with standardization have organized the activities according to specific routines and rules. If physical flows are coordinated through planning, however, the activities are adapted to each other in a specific manner each time products are being returned. When mutual adjustments are used to coordinate the physical flow, the products being returned defme how the activities are combined. By interpreting Thompson, we analyze the coordination mechanisms by using the following empirical dimensions:

Table4.1:Empirical dimensions for coordination mechanisms for physical flows

Standardization The extent towhich collection, transport and reprocessing activities are adapted in a stable and repetitive manne!. which follow si>ecific routines or rules.

Planning The extent to which collection, transport and reprocessing activities are adapted to each other whenproducts are returned at end-of-Iife.

Mutual adjustment The extent to which collection, transport and reprocessing activities are combined specifically to each situation of returning products at end-of-life.

Coordinating physical flows is expected to contribute to coordinated action.Inphysical flows this is a combination of integrated activities and performance variables. Inthe literature on coordination of physical flows, it is assumed that the more that activities are integrated the better (Lambert et. al. 1998). In our study, we evaluate the degree to which collection, transport and reprocessing activities are integrated. Therefore, we evaluate the integration of activities in a relative manner from high to low, that is, the level of integrated activities. It constitutes an evaluation ofhow well activities are adapted to each other. For example, when products are collected in cages, how well is this activity adapted to the transport activity in terms of size and capacity? If activities are highly integrated, they are closely adapted to each other. If activities are characterized by a low level of integration, then the collection and transport activities can be described as limitedly adapted to each other. The performance variables in physical flows are identified as operations costs and customer service level. These factors are difficult to evaluate specifically, as physical flows are to some extent unique in their configuration. However, it is possible to evaluate the costs and customer service level in a relative sense as high or low. Thus, we measure the variables that reflect the concept of coordinated action from the physical flows in the following manner:

Framework/or alUl/ysis Table4.2:Empirical dimensions for coordinated action in physical flows

The level of inte tedactivities The level of operations costs The level of customer service

Turning to the commercial interests, transacting products at end-of-life has also been shown to have specific characteristics. Itis not straightforward how the end-consumers can be stimulated to return products at end-of-life because end-consumers largely lack the incentive to initiate the transaction (Barnes 1982). Therefore, the reverse distribution system has to compensate for this lack of incentive. The coordination mechanisms need to ensure the initiation and fulfillment of the commercial interests throughout the system. Coordination is achieved through the utilization of contracts, together with a combination of the hierarchical mechanisms (Klein 1989, John 1984), incentives (Gilliland 2004, Dahlstrøm and Nygaard 1999) and norms (John and Heide 1992, Noordewier, John and Nevin 1990). We utilize the formalization and centralization dimensions to represent the hierarchical mechanisms. The empirical dimensions used in the analysis are as follows:

Table4.3:Empirical dimensions for coordination mechanisms for commercial interests

Formalization The extent to which transactions in the reverse distribution system are governed by a contract with fixed policies rules and procedures.

Centralization The extent to which transactions in the reverse distribution system are under the decision control of one fum.

Incentives The extent to which transactions in the reverse distribution system are governed by an outcome-based contract.

Norms The extent to which transactions in the reverse distribution system are governed by relational norms such as flexibility and information exchange.

As for the physical flows, the coordination of commercial interests is expected to contribute to coordinated action. This is reflected in the aligned behavior and performance variables.

Aligned behavior reflects the extent to which governance mechanisms stimulate the actors to align self-interest behavior with the common interests of the systems. The contracts to a large degree specify the expected behavior. Therefore we empirically evaluate the degree of aligned behavior among the participating actors. The evaluation is measured against the specified contracts and agreements. For example, if the contracts specify how a certain activity is expected to be performed, and the participating actor does not comply, the degree of aligned behavior is expected to be low. Oppositely, if the participating actor does comply and is performing the activities as agreed, the degree of aligned behavior is high. The degree of aligned behavior is reflected in the performance variables of transaction costs and transaction

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value. Itis the relative size of the costs and value that is measured (Williamson 1985). Thus, when evaluating the performance of the coordination of commercial interests, we evaluate the opportunity costs (Rindfleisch and Heide 1997) and opportunities gained (Ghosh and John 1999). Therefore, the performance variables are measured relative to an expectation level. The coordinated action concept for the commercial interests part of the distribution system is measured as summarized in the table below:

Table4.4:Empirical dimensions/or coordinated action in commercial interests

We expect that the interaction between the coordination mechanisms for physical flows and commercial interests influence the overall system goal.Inthe reverse distribution system, the system goal is reflected in acollection rate - i.e. how much volume the reverse distribution system is able to 'produce', or the volume ofproducts at end-of-life that has been collected, transported and reprocessed. Inother words, the extent to which the coordination mechanisms match across the flows in reverse distribution systems, we expect the systems to be able to produce a sufficient collection rate. The empirical dimension of the system goal is therefore the percentage of collected products:

Table4.5:Empirical dimension/or coordinated action on a system level

4.3 Summary

Inthis chapter, we have presented a theoretical argument and a research model, which is concretized to an analytical framework. The analytical framework is adapted to our research context on reverse distribution systems. It also illustrates that we work with systems, as several functions are part of the framework. Inthe following chapter, we argue in greater detail for our methodological choices, before we continue the case descriptions and analysis, which are structured in accordance with the analytical framework.

Methodology

5. METHODOLOGY

Inthis chapter we present the research strategy and design of our study. We have chosen the case study as a research strategy. The choice of strategy is based on the argument that the collection systems for EE-products at end-of-life are contemporary phenomena, which are difficult to separate from their real life contexts. The research design is a single embedded case study, where three cases have been studied longitudinally over a five-year period. Our unit of analysis is system, which means that our data is taken from multiple sources, based both on primary and secondary sources. The primary data include interviews and site visits with different types of actors, and the secondary data are written documents ranging from regulations, contracts and presentations, to brochures. We evaluate the overall research quality to be good but also realize that there are some challenges with this research, which we will discuss later in this chapter. The study has been very interesting both in content and form.

Inparticular, it has been exciting to work with the system as the unit of analysis, which we believe is a specific contribution of this study.