Vicious cycles that hinder value creation in closed loop supply chains: Experiences from the field

Closed loop supply chains can create value by product acquisition, recovery and reselling returned products and parts. Although advanced supply chain optimization models are available, the literature shows that value creation in closed loop supply chains is limited by too many constraints. Strategic success factors may relax these constraints. This study investigates business practices in the closed loop supply chain of four brand owners in capital goods. We find that strategic success factors may relax constraints but they themselves are also constrained, as multiple stakeholders are involved, each having different interests. In all four cases studies, the interaction between success factors and constraints leads to vicious cycles. Breaking these cycles proves to be difficult and requires integral thinking particularly among internal stakeholders of the brand-owners. Further research is needed to differentiate between different types of cycles, e.g. in a taxonomy, and different stakeholder viewpoints, both quantitative and qualitative.