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https://www.emerald.com/insight/0957-4093.htm
IJLM
32,3 Leveraging big data analytics
capabilities in making reverse
logistics decisions and improving
742 remanufacturing performance
Received 9 June 2020 Surajit Bag
Revised 8 September 2020
24 January 2021 Department of Transport and Supply Chain Management,
16 March 2021 School of Management, College of Business and Economics,
Accepted 6 April 2021
University of Johannesburg, Johannesburg, South Africa and
Department of Marketing and International Business,
School of Business and Economics, North South University, Dhaka, Bangladesh
Sunil Luthra
Department of Mechanical Engineering,
Ch Ranbir Singh State Institute of Engineering and Technology, Jhajjar, India
Sachin Kumar Mangla
Jindal Global Business School, O.P. Jindal Global University, Haryana, India and
Plymouth Business School, University of Plymouth, Plymouth, United Kingdom, and
Yigit Kazancoglu
Department of International Logistics Management, Yasar University, Izmir, Turkey
Abstract
Purpose – The study investigated the effect of big data analytics capabilities (BDACs) on reverse logistics
(strategic and tactical) decisions and finally on remanufacturing performance.
Design/methodology/approach – The primary data were collected using a structured questionnaire and an
online survey sent to South African manufacturing companies. The data were analysed using partial least
squares based structural equation modelling (PLS–SEM) based WarpPLS 6.0 software.
Findings – The results indicate that data generation capabilities (DGCs) have a strong association with
strategic reverse logistics decisions (SRLDs). Data integration and management capabilities (DIMCs) show a
positive relationship with tactical reverse logistics decisions (TRLDs). Advanced analytics capabilities (AACs),
data visualisation capabilities (DVCs) and data-driven culture (DDC) show a positive association with both
SRLDs and TRLDs. SRLDs and TRLDs were found to have a positive link with remanufacturing performance.
Practical implications – The theoretical guided results can help managers to understand the value of big
data analytics (BDA) in making better quality judgement of reverse logistics and enhance remanufacturing
processes for achieving sustainability.
Originality/value – This research explored the relationship between BDA, reverse logistics decisions and
remanufacturing performance. The study was practice oriented, and according to the authors’ knowledge, it is
the first study to be conducted in the South African context.
Keywords Africa, Information technology, Structural equation modelling, Reverse logistics, Logistics
competences
Paper type Research paper
1. Introduction
In this era of the Fourth Industrial Revolution, big data analytics (BDA) is leveraged by
The International Journal of
Logistics Management
various firms to enhance business performance (Arunachalam et al., 2018). BDA can be a
Vol. 32 No. 3, 2021
pp. 742-765
© Emerald Publishing Limited The authors would like to thank the anonymous reviewers and the Editor for their insightful comments
0957-4093
DOI 10.1108/IJLM-06-2020-0237 and suggestions.
valuable asset for managers when making quality decisions (Schoenherr and Speier-Pero, The effect of
2015; Brinch et al., 2018). BDA benefits motivate organisations to build capabilities and BDACs on
extract value from big data. With the aid of BDA tools, both structured and unstructured data
generated in real time can be examined (Arunachalam et al., 2018). However, BDA application
reverse
has not been fully explored by past researchers and the understanding of BDA seems logistics
rather subtle (Brinch et al., 2018). Moreover, managers lack the understanding of requisite
capabilities for converting big data into important pieces of information (Arunachalam et al.,
2018). From the literature, the indication is that studies related to BDA applications on reverse 743
logistics and closed-loop chains are limited (Nguyen et al., 2018). The main reason behind the
scarcity of research in this direction is due to the difficulty in gathering data related to old/
used items that act as a barrier in applying BDA in reverse logistics (Nguyen et al., 2018).
However, this can be overcome in this Industry 4.0 era through the application of the Internet
of things (IoTs), sensors and wireless technologies for collecting data (Telukdarie et al., 2018;
Bag et al., 2020). Supply chain managers face various challenges in managing reverse
logistics and remanufacturing practices due to uncertainties in product returns and the
presence of contradictory organisational targets. In this context, BDA can prove useful in
capturing the perceptions of supply chain partners, developing proper goals, scrutinising the
supply chain process and taking corresponding strategic actions (Nguyen et al., 2018). IoT in
the remanufacturing processes can identify the flaws within no time. IoT also helps in real-
time production scheduling for the remanufacturing of automobile engines by the Internet of
manufacturing things process (Zhang et al., 2018). IoT and BDA have a significant role
related to the issues concerning safety and the operations environment (Hopkins and
Hawking, 2018). The application of real time technology to assess the diverse data sets has
facilitated many opportunities that further resulted in a profit for a company. Reverse
logistics is a critical need in our society to encourage the recycling of old products (Kumar and
Putnam, 2008). However, using advanced technologies, the challenges related to coordination
and communication need to be eliminated (Govindan and Soleimani, 2017). BDA has been
found to enhance the ecological quality (Song et al., 2012, 2018; Chuai and Feng, 2019; Rumson
and Hallett, 2019). BDA used in making management decisions can impact an organisation’s
power relative to its customers and suppliers (Waller and Fawcett, 2013).
From the literature, the indication is that big data has gained importance to create superior
business value relative to an information and communication technology point of view
(Raguseo et al., 2020). Although studies are available that have investigated the effect of BDA
capabilities, both on an organisation’s performance (Akter et al., 2016) and supply chain
agility (Dubey et al., 2019b) but the effect of BDA on reverse logistics decision-making is
under researched. Therefore, we aim to answer the question below:
RQ1. What is the impact of BDA capabilities on reverse logistics decisions?
The world is moving towards a stage where there will be no more landfills for disposing of
waste material generated from industry sources. Plastics waste, rubber waste, end-of-life
electronic parts and end-of-life vehicles result in the quick degradation of the environment
(Mohajerani et al., 2020; Ullah and Sarkar, 2020; Saidani et al., 2020). Various researchers have
proposed frameworks for the environmental management of end-of-life items (Rizzi et al.,
2013; Saidani et al., 2020). Of all the available options, remanufacturing has emerged as the
most popular option (Kumar et al., 2017), due to its ability to increase the life of resources by
restoring its properties for the resale of the same item to the market (Abbey et al., 2015). Ferrer
and Swaminathan (2006) argued that remanufacturing is very profitable as organisations can
improve savings and lower production costs. However, various reverse logistics challenges
are associated with remanufacturing, which minimises its original appeal (Sundin and
Dunb€ack, 2013). The process involved in the acquisition of core is a challenge for the
automotive sector. Additionally, information that is available for reverse engineering is a big
IJLM challenge for small and medium organisations. Handling, shipping and the storage of
32,3 returned products are other major concerns for remanufacturing organisations (Sundin and
Dunb€ack, 2013). The changes in the demand-pattern of consumers have significantly
impacted the life cycle of products. Furthermore, the technological changes are making
items obsolete at a quicker pace; while the disposal of end-of-life products are not organised
leading to a stochastic return pattern (Seitz and Peattie, 2004; Zhou and Disney, 2006;
Sundin and Dunb€ack, 2013). The quantity, quality and timing of returned products depend
744 on the reverse logistics network. Every decision associated with these steps can decide the
profit or loss of the remanufacturing business and therefore, the importance of reverse
logistics in the context of the circular economy is increasing (Zhou et al., 2017; Julianelli
et al., 2020). Reverse logistics is evolving at a fast pace due to the emergence of advanced
Industry 4.0 technologies (Witkowski, 2017); and therefore, worth investigation in the
context of the present situation. Therefore, we aim to answer the second research question
as below:
RQ2. What is the effect of reverse logistics decisions on remanufacturing performance?
The theoretical model explains the proposed relationships by drawing on the dynamic
capability view (DCV) theory. DCV is an extension of the resource-based view (RBV) theory.
Barney and Arikan (2001) explained why some firms constantly outperform others using the
popular RBV theory. DCV explains how a firm develops the ability to integrate, build and
reconfigure internal and external competencies to cope in dynamic business situations (Teece
et al., 1997).
The research team argued that firms possessing BDA capabilities can efficiently build reverse
logistics strategies for developing competence in remanufacturing operations. BDA comprises
many resources, such as the capabilities of data creation, data integration and management,
advanced analytics, data visualisation and a data-driven culture (DDC) (Arunachalam et al., 2018).
The literature has shown the lack of research focus on BDA managed returns (Barbosa et al.,
2018). Thus, it would be interesting to examine the role of big data analytics capabilities (BDACs)
in the improvement of reverse logistics decisions. BDACs are a source of competitive edge in this
cut-throat competition (Wang et al., 2016; Gupta et al., 2020).
This study extends the knowledge base of the application of BDA in the logistics
management area. Since big data management causes fear among logistics and supply chain
management (LSCM) practitioners, mainly due to both the lack of awareness and of updated
skills, this study intended to connect the big data capabilities with reverse logistics decisions
and remanufacturing operations to shed light on this important area, which will help LSCM
practitioners to gain rich insights.
The next section deals with the review of BDA applications in the field of LSCM; section
three outlines the research hypotheses; section four consists of the methodology; section five
presents the findings of the data analysis and the final section present the conclusions drawn
from the study.
2. Literature review
This section reviews key literature on the application of BDA on LSCM.
Data driven
culture H10
Figure 1.
Theoretical framework
Source(s): Author own compilation
3. Hypothesis development
The research hypotheses of this study are as follows:
4. Research design
This section provides details of the research design, including the questionnaire design and
survey.
Using a five-point Likert scale, the primary data was gathered during the survey. “Sample
characteristics” (four survey questions) were to identify the demographic and environmental
characteristics of the company, such as sector, years of activity and size.
Respondents Respondents
Particulars Respondents (in number) (in percentage)
6. Discussion of findings
The study intended to address two gaps in the literature. Firstly, to establish that BDACs can
aid in strategic and tactical reverse logistics decision-making. Secondly, to establish that
strategic and tactical reverse logistics decision-making can improve the remanufacturing
performance.
To address the first research gap, the research team examined H1, H2, H3, H4, H5, H6, H7,
H8, H9 and H10. The outcome of the examination of the hypotheses indicates that two
hypotheses (H2 and H6) are not supported. DGCs show a strong link with SRLDs and
supports H1; whereas it does not show any positive link with TRLDs (H2). The underlying
reason for DGCs not supporting the TRLDs could be due to unique BDA capability
requirement such as DGCs in SRLDs compared to TRLDs.
DIMCs do not show any link with SRLDs (does not support H2); whereas it shows a
positive link with TRLDs (supported H7). The underlying reason could be due to unique BDA
capability requirement such as DIMCs in TRLDs in an emerging economy like South Africa.
Data
generation
capabilities
β = 0.29*
β = 0.72*
Tactical β = 0.23*
Data
β = 0.53* Reverse
visualization
Logistics
capabilities
β = 0.93* Decisions
β = 0.86*
Data driven R2 = 0.56
culture
7. Conclusion
Big data is gaining recognition among supply chain practitioners. However, the quick
evolution of big data technologies has not provided companies with enough time to make the
necessary preparation. Big data is generated from various sources and can be in the form of
structured, semi-structured and unstructured data, which are available in different forms
such as audio, images, video and text. Big data cannot create any value in a vacuum unless
the value of big data is unlocked to allow for management to make decisions. Big data
management involves a complex process such as the acquisition, recording, extracting,
cleaning, automation, integration, aggregation, representation, BDA-based modelling,
analysis and interpretation in the final stage. The application of big data in the domain of
operations management is gaining popularity after both the research community and
operations managers realised the massive benefits of BDA. BDA capabilities can be
categorised as DGC, DIMCs, AACs, DVCs and DDC. BDA capabilities in logistics
management are a relatively new research area, with a lack of studies on the application
of BDACs on reverse logistics management. Reverse logistics decisions are complex in nature
and are a critical function of remanufacturing operations. The study explored a unique area in
the domain of operations management, i.e. the effect of BDACs on the reverse logistics
decisions and remanufacturing performance. In that process we have addressed the call of
previous researchers. It is very important for firms to focus on resources and capabilities in
this dynamic environment for timely reconfiguration of resources and to remain sustainable.
Our study shows that BDA can enhance strategic and tactical reverse logistics decision-
making and further improve remanufacturing performance in the manufacturing firm.
Therefore, it can be concluded that firms possessing BDA capabilities would enable them to
effectively create strategic and tactical reverse logistics strategies for supporting
remanufacturing planning and operations, and this BDA resource difference will last for a
long time. Nonetheless, focus is required on developing and deploying the right set of BDA
capabilities while making strategic/ TRLDs.
This research work suffered from a few limitations and we caution readers to interpret the
results of this study accordingly. Firstly, the study was conducted in the emerging economy of
South Africa, where the resources and capabilities requirement are different than in any other
country due to different rules and regulations. Secondly, the sample size was small and thirdly,
the study was based on cross-sectional data. Lastly, we did not study the impact of BDA on
operational reverse logistics decisions. We suggest future researchers to design the study in The effect of
such a way that these limitations can be eliminated. Future studies can also consider the BDACs on
mediating effects of process oriented dynamic capabilities on the relationship between BDA
capabilities and remanufacturing performance. Remanufacturing can be developed through
reverse
the higher levels of top management commitment as indicated in previous studies. The beliefs logistics
of top management and their participation play a big role in the adoption of remanufacturing
projects. Also, organisation culture plays an instrumental role in the success of
remanufacturing operations (Dubey et al., 2017). Future studies can analyse the role of 759
these two moderating variables (top management commitment and organisation culture) on
the relationship between BDA and remanufacturing performance. Future research can also
examine the dark side of BDA and its implications on remanufacturing performance.
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Corresponding author
Sunil Luthra can be contacted at: sunilluthra1977@gmail.com
Appendix The effect of
BDACs on
Construct Items Loadings AVE CR CA
reverse
logistics
Data generation capabilities (DGCs) (Adapted from DGC1 0.743 0.669 0.909 0.874
Arunachalam et al., 2018) DGC2 0.912
DGC3 0.878 765
DGC4 0.71
DGC5 0.828
Data integration and management capabilities (DIMC) DIMC1 0.589 0.535 0.888 0.852
(Adapted from Arunachalam et al., 2018) DIMC2 0.754
DIMC3 0.854
DIMC4 0.823
DIMC5 0.69
DIMC6 0.735
DIMC7 0.64
Advanced analytics capabilities (AACs) (Adapted from AAC1 0.82 0.413 0.872 0.835
Arunachalam et al., 2018) AAC2 0.663
AAC3 0.816
AAC4 0.624
AAC5 0.62
AAC6 0.613
AAC7 0.35
AAC8 0.592
AAC9 0.62
AAC10 0.592
Data visualisation capabilities (DVCs) (Adapted from DVC1 0.061 0.72 0.889 0.793
Arunachalam et al., 2018) DVC2 0.976
DVC3 0.982
DVC4 0.978
Data-driven culture (DDC) (Adapted from Arunachalam DDC1 0.706 0.584 0.893 0.857
et al., 2018) DDC2 0.719
DDC3 0.813
DDC4 0.804
DDC5 0.776
DDC6 0.76
Strategic reverse logistics decisions (SRLDs) (Adapted from SRLD1 0.722 0.662 0.907 0.87
Lambert et al., 2011) SRLD2 0.745
SRLD3 0.825
SRLD4 0.862
SRLD5 0.901
Tactical reverse logistics decisions (TRLDs) (Adapted from TRLD1 0.772 0.618 0.907 0.876
Lambert et al., 2011) TRLD2 0.791
TRLD3 0.784
TRLD4 0.773
TRLD5 0.785
TRLD6 0.811
Remanufacturing performance (REMP) (Adapted from REMP1 0.992 0.953 0.995 0.994
Graham et al., 2015; Low and Ng, 2018; Jiang et al., 2019; Wen REMP2 0.985
et al., 2019) REMP3 0.985
REMP4 0.983
REMP5 0.988
REMP6 0.926
REMP7 0.989
REMP8 0.975 Table A1.
REMP9 0.966 Loadings, AVE, CR
REMP10 0.972 and CA