How the reverse supply chain impacts the financial performance of original equipment manufacturers

This thesis examines the financial impact of a firm’s reverse supply chain (RSC). Specifically, the thesis examines the two questions of how the RSC can contribute to the financial performance of the firm and which factors are decisive for the RSC’s financial contribution. The thesis focuses on original equipment manufacturers. The thesis results show that the RSC can contribute to the financial performance of the firm in more than 20 different ways, which the thesis defines as functions of the RSC. Examples of RSC-functions are 1) resale of recovered end-products to price-focused market segments in the firm’s primary markets, 2) resale to customers in new markets (in e.g. emerging economies), and 3) sale of used materials back the firm’s original material suppliers. The firm’ RSC can conduct several RSC-functions simultaneously and the financial benefits from operating these RSC-functions differ widely among functions. The factors that are decisive for the RSC’s financial contribution depend on the type of RSC-function. For a RSC-function that recovers and resells end-products examples of factors decisive the function’s financial contribution are 1) the market’s willingness to pay for recovered products, 2) the firm’s profits from servicing recovered products once sold, and 3) the added probability of selling additional products to customers of recovered products. The thesis demonstrates that manufacturers can achieve considerable financial contributions from the RSC, which contracts the traditional perception of the RSC in academic literature as well as with logistics practitioners.