Sustainable Value Creation in Closed-Loop Supply Chains: A multi-case study analysis

Abstract

The Circular Economy has come into the spotlight in recent years as a tool to address waste and the depletion of resources. With companies becoming more aware of the impacts they have on the environment and society, they are looking to recover their products and improve circularity within their supply chains. Many companies are working on developing “closed-loop supply chains” to address these concerns. The current literature has determined a comprehensive list of strategies, methods, and tools (i.e., factors) that enable sustainable value creation in closed-loop supply chains, but it is not yet clear how specific companies and sectors are addressing these factors. This exploratory study investigates how companies are addressing sustainable value creation in their closed-loop supply chains. To answer the research question, a comprehensive review of the current literature was undertaken and resulted in the development of a new theoretical model. To test the model and collect necessary data, this study took the approach of carrying out multiple case studies with companies that included the completion of a semi-structured interviews and a questionnaire. The results of the study indicate that companies are eager to create sustainable value in their closed-loop supply chains and are thus addressing multiple factors that enable sustainable value creation, including those that relate to Social/Relational, Operational, Technological, and Organizational aspects. Overall, it was found that factors that related to Social/Relational aspects were seen as most important for companies, especially the company strategy and collaboration with employees. In contrast, the companies rated Technological factors as least important but nevertheless felt that these factors must be addresses in future considerations. Furthermore, specific challenges were identified that can limit the efforts of sustainable value creation in closed-loop supply chains. Specific challenges related to the following: issues with funding, high investment costs for reverse logistics systems, price volatility of raw materials, employee and customer mindset about circularity, unclear regulations for recovery systems, and overcoming technical feasibility issues. The findings in this study provide a basis for determining which factors may lead to sustainable value creation in closed-loop supply chains of companies within multiple sectors. Suggestions for further research and recommendations have been developed for companies, organizations, and the government in order to build upon the findings of this study. In particular, it will be important to explore in depth what strategies need to be addressed to increase the level of sustainable value creation in the future.