The profitability drivers in packaging materials reuse for manufacturers in business to business environments

Purpose –The purpose of this paper is to explore the profitability drivers for a firm’s operation of a reverse supply chain (RSC) that takes back and reuses packaging materials. Results apply specifically to original equipment manufacturers (OEMs) in business to business environments.
Design/Methodology/Approach – Using in-depth data from the Danish manufacturer of measurement instruments, Radiometer Medical, the paper first identifies the total set of factors that directly influence the profitability of reusing packaging materials, and second assesses the relative impact among the identified factors. The paper’s theoretical basis is the RSC literature’s business perspective formulated by Guide and Van Wassenhove.
Findings – The drivers of profitability in packaging materials reuse are 1) the amount of avoided costs of purchasing new packaging materials, 2) the firm’s ability to reduce costs of reverse logistics.
Research limitations/implications – The study’s data is limited to one firm’s operation in one country, which limits the generalizability of the paper’s findings. However, the paper provides the basis for examining the bilateral relationships between the identified drivers and reuse profitability as well as between the drivers and their sub-level antecedents.
Originality/value – The study provides exploratory insights into the economics of reusing packaging materials and identifies the drivers that are decisive for a firm’s ability to reuse packaging materials profitably.