REVERSE LOGISTICS

of defective products
in management
of manufacturing enterprises
Monograph

Marta Starostka-Patyk
Reverse logistics of defective products
in management of manufacturing
enterprises

Marta Starostka-Patyk

Monograph
2nd edition, changed, corrected and supplemented

Katowice, 2017
 Reviewed by:
Prof. Mourad Abed, University of Valenciennes, France
Prof. Juan Moreno Gutierrez, University of Cadiz, Spain
Prof. Virgil Popa, University of Targoviste, Romania

Scientifically edited by:

Prof. Jerzy Szkutnik, Czestochowa University of Technology, Poland
Assoc. Prof. Joanna Nowakowska-Grunt, Czestochowa University
of Technology, Poland

Translated by:
Bartłomiej Stanirowski

Cover design:
Jakub Kokoszczyk

© Copyright by Marta Starostka-Patyk

Katowice 2017

The monograph is based on the research results of the project financed by National
Science Centre in Poland according to the decision no. DEC-2012/07/D/HS4/02071.

The first edition of this book was published in 2016 in Polish language under the title:
Logistyka zwrotna produktów niepełnowartościowych w zarządzaniu przedsiębiorstwami
produkcyjnymi by Polskie Wydawnictwo Ekonomiczne (PWE) with ISBN 978-83-208-2275-5.
The book was reviewed by Prof. dr hab. Ewa Bojar, Prof. dr hab. Czesław Skowronek
and Prof. dr hab. Jarosław Witkowski.

Number of publication’s sheets – 10.793

ISBN (print): 978-83-65929-00-6

ISBN (e-Book): 978-83-6529-01-3

WYDAWNICTWO NAUKOWE SOPHIA

ul. Mickiewicza 29
40-085 Katowice
2
TABLE OF CONTENTS:
Introduction 5
THEORETICAL PART – IN TERMS OF MANAGEMENT
9
OF MANUFACTURING ENTERPRISES
1. Logistics aspects in contemporary management 9
1.1. Sustainable development in the concept of management 9
1.2. Logistics management 16
1.3. Reverse logistics 26
2. Reverse logistics of defective products 38
2.1. Reverse flows 38
2.2. Specificity of the defective products’ flows 45
2.3. Reverse logistics processes in the defective products’ flows
53
management
EMPIRICAL PART – IN THE LIGHT OF RESEARCH PRACTICE OF
63
MANUFACTURING ENTERPRISES
3. Reverse logistics practice of defective products 65
3.1. Research objectives and sampling criteria 65
3.2. Interpretation of the survey questionnaire results 70
3.2.1. Characteristics of the defective products’ flows 70
3.2.2. Parameters of actions related to management of defective
76
products’ flows
3.2.3. Objectives and motives of the policy of defective products
80
returns
3.2.4. Barriers of effective management of defective products’ flows
83
and ways of overcoming them
3.2.5. Effects of defective products’ flows management 87
3.3. Identification of key premises for introduction and implementation
88
of reverse logistics
4. Organization and functioning of reverse logistics 91
4.1 Decisions in reverse logistics management processes 91
4.2. Model of reverse logistics of defective products 95

3
 4.3. Verification of procedures in reverse logistics of defective products 104
5. Interdependence of determinants in reverse logistics management
118
of defective products
6. Relationships of reverse logistics processes and differences in their
139
management
Conclusion 166
Literature 169
Tables 191
Figures 193
Attachment 1. Survey questionnaire 195

4
Introduction
The concept of logistics management has been functioning in literature of the
subject and economic practice for numerous years, and it has developed research
methods related to other disciplines of knowledge. The realities of current global
economy force the enterprises to consider the sustainable development concept as
well. This concept, by assuming sustainability in implementation of economic, social
and environmental objectives, exerts impact on the management strategy
of contemporary enterprises. This also results from the advancing globalization and
the increasing scale of production along with negative phenomena that emerge in the
environment and economy, i.e. environmental degradation and depletion of resources.
Hence, the sustainable development concept may be sought first of all in strategies
adopted by manufacturing enterprises, the operations of which are based on
technological processes, distribution and sales, as well as post-sale services and the
possibility to manage the final products or reuse of the materials.
The strategies for sustainable development of manufacturing enterprises imply
the strive for improvement in operations and acquisition of additional economic and
ecological benefits. It is also significant within the strategic operations carried out by
the enterprises to develop and maintain the competitive advantage, and to limit the
adverse environmental impact exerted by the products and services, reduce the
consumption of materials and energy and decrease the amount of waste and emissions.
Therefore, the reverse logistics is embedded into the concept of sustainable
development of enterprises.
The analysis of the literature of the subject, both international and Polish,
identified a certain mismatch in the approach to the subject of the reverse logistics.
In the international literature, the subject of reverse logistics is posed by waste and
defective products, while the Polish literature mentions the reverse logistics concept
first of all in terms of the waste. The Polish approach results from the fact that the
reverse logistics is an environmentally-oriented logistics concept. Thus, its basic
objective is to shape the flows of different materials and products in a direction
opposite to forward flows, the strive for reduction of the amount of generated waste,
to minimization of the adverse impact exerted by the waste on the natural
environment and effective use of the waste that are recyclable through management1.
However, it should be noticed that both the international literature and
economic practice have recently pointed to a clear growth in interest with another
dimension of the reverse logistics concept, which is related to the defective products’
flows emerging in a form of returns. However, the returns may be also related to the
products of full value. Then, they are grasped in forward flows, so they do not
constitute a subject of reverse logistics. In turn, the returns of defective products,
which are often characterized with an advance stage of life or its end, supply the
reverse flows. The purpose of this is to use their value or manage them in another

1 The problems of reverse logistics related to waste were raised in the publication drawn up among other
by J. Szołtysek [2009], J. Szołtysek and S. Twaróg [2017], A. Sadowski [2010] and A. Mesjasz-Lech [2012].

5
form. The value recovery from defective products is an objective for implementation
of the reverse logistics processes in manufacturing enterprises. This dimension of the
reverse logistics concept is raised in a minor scope in Polish publications 2 as well as in
works by authors from the neighboring countries 3.
The strive for ordering the terminology, specifying the essence and determining
the practical application of the reverse logistics process related to the defective
products in management of manufacturing enterprises have become a premise to raise
the topic of this work.
Regarding the scope and terminological complexity level of the themes
in question, the following was assumed for the need of drawing up the work:
a) A defective product is each product that is not waste, which however does
not meet the quality and/or functional requirements against which it was
manufactured, on various stages of its life.
b) The reverse logistics of defective products in management of manufacturing
enterprises is brought down in the theoretical part to defective products’
flows management in those enterprises4. As the defective products’ flows
management is identified with logistics management, narrowed down in
this context to implementation of reverse logistics.
c) In the empirical chapters (3-6) the defective products’ flows management
is called the reverse logistics of defective products3.
d) Within the scope of reverse flows of defective products within
manufacturing enterprises, these products are subjected to the reverse
logistics processes, i.e. gatekeeping, collecting and gathering, controlling
and sorting as well as final disposal.
e) Reverse flows of defective products are called the defective products’ flows
interchangeably with the term of reverse flows4.
This monograph is of an epistemological and empirical character. Its originality
and innovative character are mainly related to the subject of the studies, i.e. the
defective products, of the selected research background, i.e. the manufacturing
enterprises, and the combination of the reverse logistics concepts with the defective
products’ flows management.
The main purpose of the monograph is to carry out an analysis and evaluation
of the reverse logistics processes in the scope of the defective products’ flows
management in the Polish manufacturing enterprises.
The performed empirical studies are highly significant, and while supported by the
mentioned theory they allowed reaching the main goal, detailed with particular
objectives:

2 The only previous integral academic work raising the issues of reverse logistics of products is related to the
clothing industry and empirical studies performed in this scope in the Polish commercial enterprises [Jeszka 2014].
3 The situation is similar in the Czech Republic, where there are not many authors who undertake these issues,

and the research in reverse logistics is carried out by among others R. Skapa [2012], and they refer mainly to the
results that the enterprises can obtain by employing those processes.
4 These terms are identical in the context of this monograph.

6
 1) Determination of new areas of reverse logistics in the manufacturing
enterprises;
2) Conceptualization of notions and determination of the scope and specificity
of the defective products’ flows in the manufacturing enterprises, with
specification of the reverse logistics processes as the basis for implementation;
3) Development of a descriptive model of reverse logistics of defective products,
and its verification in the researched manufacturing enterprises;
4) Determination and evaluation of interdependencies between description of the
defective products’ flows in the manufacturing enterprises and results of the
reverse logistics;
5) Find out whether the differences in evaluation of the main returns categories
and actions of the reverse logistics related to the defective products’ flows
management are statistically significant in the groups of manufacturing
enterprises selected according to the number of their employees.
The monograph employs the research methods that correspond to three field:
theoretical, model and empirical. When it comes to the theoretical field, the analysis
and synthesis methods for the literature of the topic, based on books and scientific
articles in Polish and English. The literature studies allowed systematization
of knowledge in the scope of issues discussed in the work. The techniques of literature
studies, creative thinking and direct interview were employed in the model field what
allowed developing an original descriptive model for the reverse logistics processes
related to defective products in manufacturing enterprises. In turn, the empirical field,
bearing in mind the need to diagnose the researched sphere in the conditions of the
manufacturing sector, the primary data from the survey studies were employed, along
with the statistical methods for their development.
The monograph is composed of the introduction, six chapters and a conclusion5.
The introduction includes a justification for the motives of raising such a topic of the
work, along with presentation of its objectives and structure. In the main part of the
work, two first chapters include theoretical deliberations, while the remaining
chapters cover the performed empirical studies (the fourth chapter additionally refers
to the model approach).
The issues from the first two chapters were presented within the theory
for manufacturing enterprises management. The first chapter describes the sustainable
development concept and its impact on management of contemporary enterprises,
especially those manufacturing ones. What is more, the notions of logistics
management were discussed, and the reverse logistics concept along with the
possibilities of its application in management of enterprises that strive for
implementation of the sustainable development priorities were described. In turn, the
second chapter is devoted to identification of the reverse logistics, its implementation
in enterprises, and its processes in relation to the defective products’ flows
management. This is where the basis for the theory of forward and reverse flows are

5 There are also the subject lists and the survey questionnaire included.

7
presented in the circumstances of the logistics of enterprises. Afterwards, there was
the specificity of reverse flows of defective products discussed, and further the reverse
logistics was identified in the processual dimensions, supporting the defective
products’ flows management in enterprises.
The subsequent four chapters pose the research part, based on practices
undertaken by the manufacturing enterprises.
The third chapter presents the methodological assumptions and organization
of the research process, employed in the empirical studies. The goal of the studies and
criteria for the research sample selection in the Polish manufacturing enterprises are
demonstrated here. There is also a general discussion of the reverse logistics in the
defective products’ flows management in the Polish manufacturing enterprises, based
on the analysis and interpretation of primary data. The data was acquired as a result
of the survey studies performed on a representative sample of the Polish
manufacturing enterprises. There were also certain premises for introduction and
implementation of the reverse logistics in those enterprises identified.
The fourth chapter covers the issues of reverse logistics of the defective
products in a model manner. It presents the organization and operation of reverse
logistics in manufacturing enterprises, based on the decisions in the scope of managing
its processes. This is where an original descriptive model for the reverse logistics
processes was developed in the field of the defective products’ flows, which was
afterwards verified based on research carried out in a form of a direct interview, in five
selected manufacturing enterprises.
The last two chapters present the statistic estimations in the analyzed sphere.
The fifth chapter covers the significance of relationships and reverse logistics
processes in management of defective products’ flows in Polish manufacturing
enterprises.
The x 2 measurements and the  - Yule’s coefficient were adopted for that
purpose, evaluating particular interdependencies between the factors that determine
this management. In turn, the sixth chapter presents the simulations of relationships
between the reverse logistics processes in the defective products’ flows management,
employing the distance weighted least squares smoothing method. By employing the
Mann-Whitney U test there were also certain differences between the returns
categories and actions in the scope of the defective products’ reverse flows
management pointed out among groups of the Polish manufacturing enterprises.
The conclusion describes the conclusions drawn from the performed studies.
The emphasis was put on the significance of achieved results for the practice
of enterprises, especially in the field of formulating recommendations for the
managerial staff.
The content of this publication poses one of the main results of the project
entitled “Logistics management of defective products in Polish manufacturing
enterprises” financed by National Science Centre with the decision no. DEC-
2012/07/D/HS4/02071, under implementation between 2013 and 2017, a manager
of which was the author of this monograph.

8
 THEORETICAL PART – IN TERMS OF MANAGEMENT
OF MANUFACTURING ENTERPRISES

1. Logistics aspects in contemporary management

1.1. Sustainable development in the concept of management

Economic conditions and reality that contemporary enterprises are forced

to operate in are changing in a highly dynamic manner and are dramatically different
from those that dominated a dozen of years or several decades ago. Therefore,
the enterprises must be capable of adjusting to the changes that take place, as this
adaptation attribute guarantees not only their development but also existence
[Lichtarski 2011; Jagoda, Lichtarski 2010]. Thus, the current approach to the matter
of enterprises management, which apart of being based on the traditional forward
theory, which it derives knowledge and inspiration from, must be complemented and
extended on ongoing basis so the enterprises can adjust to the contemporary economy
[Nogalski 2007].
Currently, one of the most important challenges that must be faced by the
enterprises and various economies is to implement a sustainable development concept.
It strives for an integrated economic, social, environmental, spatial as well
as institutional and political order [Strezov, Evans, Evans 2017]. This order determines
and creates reality by formulating conditions and objectives for all actions in the
economic, social and environmental scope [Skowrońska 2009]. Hence, it seems
justifiable to refer to the definition of sustainable development.
In its basic, statutory definition, it is found out that the sustainable development
is such socio-economic development which integrates political, economic and social
actions, with preserverance of natural balance and stability of basic natural processes,
in order to provide for a possibility to fulfill basic needs of particular communities
or citizens, of both the contemporary and future generations [the Act: Environmental
Protection Law 2001].
Other definitions can be encountered in the Polish and foreign literature apart
that one, as numerous authors provide their own sustainable development definitions
[Brand 2015]. Regarding their abundance, it is impossible to cite all of them, and what
is more, despite the fact that the definitions differ, the concept stays the same.
It is worth mentioning the definition according to which the sustainable development
is the strive for maximum benefits from economic growth, at the same time
guaranteeing the ability to recreate usefulness and quality of natural resources, while
the economic growth means here not only the increase of profits per capita but also
improvement of other elements of social well-being along with structural changes both
in the economy and in the society [Pearce, Turner 1990]. It also must be emphasized
that the essence of sustainable and permanent development is provision of lasting life
improvement in contemporary and future generations, by shaping adequate

9
proportions between three kinds of capital economic, human and natural [Pionek
2003].
The sustainable development concept is to develop some correlations between
social, economic and ecological needs along with their development (Fig. 1.1).
Figure 1.1. Social, economic and ecological needs in the sustainable development concept

Social needs
 Equality
 Co-deciding
 Mobility
 Preservation of
cultural heritage

Economic needs
 Services
Environmental needs
 Households needs
 Biodiversity
 Industrial
 Natural resources
development
 Maintenance
 Agricultural
of proportions
development
 Ecosystem integrity
 Mobility
 Clean air and water
 Effectiveness
of work

Source: Own work based on [Nitkiewicz 2004].

The sustainable development concept, implemented in the enterprises’

operations, is of special significance for their management (Fig. 1.2). The enterprises
undertake implementation of the sustainable development concept being aware that
they exert intensive influence on the environment by utilizing natural resources,
emitting pollution or generating waste, and the expectations towards their operations
are focused on the trends towards limitation of use of materials and resources and
improvement of contribution to the social life [Clark et al. 2016]. Furthermore, the still
increasing social awareness regarding the natural environment protection is reflected
in greater expectations and requirements of customers towards the enterprises.
At the same time, the enterprises themselves seek manner to develop and strengthen
their competitive advantage, looking for solutions in implementation of eco-minded
activities that consist in among other reduction in materials and energy consumption,
creation of new sales markets and utilization of their management possibilities,

10
expansion of the products’ and services’ life cycle and broadening of their scope
or co-creation of the social well-being [Nitkiewicz 2013].
Figure 1.2. Relationships of an enterprise with sustainable development

Economic
development
Social development
SUSTAINABLE
DEVELOPMENT
Environmental
protection

Entrepreneurship
Innovation
ENTERPRISE
Access to the
market

Source: Own work based on [Bajdor 2012b].

However, to place the sustainable development concept in management

of contemporary enterprises, it is necessary to analyze the contemporary concept
of enterprises management along with determinants that shape it [Szkutnik 2010].
To a high degree, management in contemporary enterprises depends on their
proneness and adaptive skills regarding the transformations in civilization, cultural,
social and economic areas, which influence all aspects of their operations and are
characterized with novelties, high pace, intensity and complexity, and thus are difficult
or unpredictable [Buckingham, Kina 2015]. Premises that refer to sustainable
development and decide directly on change of assumptions in the enterprises
management are related to [Osbert-Pociecha 2011]: development of new
organizational forms, dynamic development of new technologies, escalation
of competition, intensification of the globalization processes, increase in actions
on international markets, concentration on customers’ requirements and needs,
emergence of new markets and disappearance of the existing ones.
While undertaking the relationship context of the presented assumptions,
it is necessary to state that the basis of sustainable development is development of new
organizational forms, e.g. networks, which by formulating the cooperation objective
strive for implementation of sustainable development of networks. Similar
interdependencies also exist in relation to new technologies and competitiveness
or other assumptions [Holden, Linnerud, Banister 2017].

11
 Analyzes related to the evolution of globalization processes remain in the direct
context, continuously leading to uniformity of markets and creating global competition
and the need for enterprises to adjust to the international environment’s conditions
[Firlej, Bargieł 2014; Malara 2009]. Globalization 6 caused the need to introduce
changes in the organizational management [Urbanowska-Sojkin 2011], and the process
of that changes takes place on several plains [Adamczyk 2009; Gierszewska,
Wawrzyniak 2001]:
 structural - visualization,
 work systems - flexible systems,
 competence - creation of new knowledge,
 technology and organizational procedures - e-business,
 values - corporate social responsibility, CSR.
The sustainable development may be directly positioned in the corporate social
responsibility [Kolk 2016]. This means that globalization changed the manner and
models for organizational operation dramatically, and caused that numerous standards
and rules that were in force previously in the field of management have changed
to a considerable degree [Sudoł 2012; Stabryła 2011]. The standards and rules that
were modified are especially related to sustainable development.
The turbulent character of economic changes causes significant economic
transformations, and as it is impossible to impose any boundaries in the economy,
these changes - emerging with unpredictable intensity - penetrate various elements
of its theory what is reflected in the new, currently appearing concepts, one of which
may be the sustainable development [Hák, Janoušková, Moldan 2016].
These concepts integrate with management processes because of the common
objective determined within the sustainable development concept. Objectives
and benefits that arise from implementation of the sustainable development concept
in enterprises are presented in Table 1.1.
The transformation process of the traditional approach to management takes
place slowly [Borowiecki, Kiełtyka 2011]. However, it should be observed that
generation of new theories does not correspond to their immediate practical
application - there is a need for a certain implementation delay, which is inevitableas
the management sciences are of an application nature that is the main priority for their
development [Lichtarski 2011]. The sustainable development is a typical example
of the need to develop a concept because of dynamics of economic development along
with negative results of those operations [Chang et al. 2017].

6 Currently, apart of the term “globalization”, the following terminology is encountered: global information society,
global state, global economy, global finances, global product, global bank, global economy or global strategy
[Bojar 2007].

12
Table 1.1. Basic objectives and benefits that are characteristic for each dimensions
of the sustainable development concept implemented in enterprises

Dimension of sustainable Basic objectives of enterprises Benefits for enterprises

development

Economic - increase in efficiency, - balance in the surroundings,

- greater security of business, - good reputation
- safety of recipients, of the enterprise,
- higher level of well-being of the
closest social surroundings

Social - greater satisfaction of the - greater demand for products,

recipients, - certainty of deliveries of the
- competitiveness in relation to final product
the remaining energy carriers,
- strengthening of the brands’
position

Ecological - reduction in the pollution - smaller or not environmental

emission level, penalties,
- not exceeding the granted - greater level of achieved
limits, profits,
- adopting the production - increase in the company’s
technology that is friendly to the value,
environment and resident, - good reputation of the
enterprise

Source: Own work based on [Bajdor 2017].

The review of literature of the subject suggests that both the practitioners
and theoreticians that deliberate the management theory, while being aware of the
consequences of emerging changes, seek new managements concepts in an active and
intensive manner [Cairns, Martinet 2014]. Numerous scientific papers in that field
emphasize that the management sciences use the knowledge on the principles
of enterprises’ operations and development along with the management rules 7.
Based on that, the development of theory and practice on the management sciences
contributes to changes of a differentiated character.
The contemporary management concepts allowed undertaking the attempt
to specify their four main components, which while influencing one another create
a model of a perfect enterprise (sustainable enterprises). These components that are
responsible for the permanent success of the enterprises are: trust, knowledge,

7 The literature undertakes certain topics regarding the concepts of management sciences, and the authors
of the most popular works in this field are: W. Chan Kim, C. Christenses, J. Collins, R. D`Aveni, G. Hamel, D. Jamali,
R. Mauborgne, H. Mitzberg, T. Peters, M. Porter or C. Zook. They stress the significance of changes for development
of new concepts in management along with the fact that those changes are of a deep and complex natures, causing
certain difficulties in management, and this in turn is reflected in complexity and multidimensionality
of the management concept.

13
innovation and entrepreneurship [Hejduk 2016]. Hence, the model approach
is identified with the sustainable development.
The sustainable development aspect is intended to improve effectiveness
of enterprises both in the technical and economic dimensions as well as in the social
sphere [Broman, Robèrt 2017]. This is turn brings the need to connect the “hard”
management elements such as a strategy, structure, operation systems, with the “soft”
ones, i.e. a mission, culture, leadership, people, and first of all the need to consider
the reactions from the stakeholders towards direct effects of the enterprises’
operations [Nowakowska-Grunt 2013; Bratnicki 2009].
Exposure of the sustainable development by enterprises requires consideration
of such attributes as: flexibility and the ability for innovative and quick adaptations,
innovativeness, entrepreneurship, intelligent actions, skillful knowledge management
and gathering of intellectual capital [Shepherd, Patzelt 2017]. Evolution of those
attributes shaped the contents of the new approach in the management sciences.
Therefore, apart of constant transformation taking place in the organization and its
surroundings, these are the attributes that are treated as conditioning the effective
management, allowing the achievement of assumed objectives [Romanowska 2011].
All the listed attributes of contemporary enterprises are embedded in the sustainable
development concept. The greatest impact on the final shape of the concept is exerted
by: flexibility8, innovativeness9 and entrepreneurship10.
Currently, the management is based on the organization’s ability to deal with
the constant change, organization of networks [Niemczyk, Stańczyk-Hugiet, Jasiński
2012], establishment and development of relationships with partners or concluding
alliances and creating a strong market position thanks to competitive advantage
[Grudzewski, Hejduk 2006]. Therefore, it might be assumed that the organizational
development in the 21st century will be first of all directed at increase
in entrepreneurship, innovation and competitiveness [Stańczyk-Hugiet 2011].

8 The enterprise’s flexibility is expressed with the ability to adjust to new situations and circumstances, making
quick decisions, finding, testing and implementing new ideas and solutions or the ability to introduce innovations.
It is also fast and skillful response to the constantly changing customers’ needs and expectations on given market.
When it comes to organization, flexibility means a broadly understood skill of adjustment to the changeable
conditions of the surroundings, which in today’s world are characterized with high dynamics [Stańczyk-Hugiet
2013] - the changes are rapid, unexpected and they require an immediate response.
9 The management of innovations in the organization is the same as management of other functions or processes,

and it may be treated as a collection of ordered actions: planning and making decisions, organization, leadership and
control [Nowicka-Skowron, Pachura 2009]. An enterprise that is willing to manage an innovation process should
also specify a strategy of the innovative operations [Czakon 2012], covering among other the selection of the
innovative operations’ directions, manners of data, information and knowledge acquisition [Sopińska 2012], which
are necessary for its development, use of innovations while considering the political, legal, financial, administrative,
social or environmental aspects.
10 The entrepreneurship causes emergence of new economic activities that create a specific value or influence the

emergence of new jobs [Wu 2013]. However, first of all, the entrepreneurship contributes to improvement in the
organizational competitiveness not only in its closest surroundings but also on a global scale [Wu, Huarng 2015].
Apart from the international entrepreneurship related to internationalization of enterprises there is also regional
and local entrepreneurship related to particular territories. Existence of the latter is conditioned by creation of an
entrepreneurship environment, which is often the same as the innovative surroundings [Skowron-Grabowska
2013]. The literature describing entrepreneurship also distinguishes a strategic type of entrepreneurship, the main
role of which is to use the opportunities during the strategic development of the organization [Brzozowska 2013].
In this aspect, the entrepreneurship is based on interaction of developmental opportunities, strategic factors
and organizational competences [Chodyński 2009].

14
The intellectual capital will also be of great significance [Stachowicz 2011], covering
among others the well-educated and experienced employees, who thanks to the held
skills will be capable of designing modern production and service provision systems, or
develop new management techniques that will allow to meet the customers’
expectations.
The above deliberations justify the statement that contemporary management
in based on numerous different variables, which are related to the areas connected
with economy, society and environment. Thus, the contemporary management
concepts, while implementing the actions from those three areas, at the same time
consider the priorities of the sustainable development concepts [Duran et al. 2015a].
Globalization, growth and dynamics of production, reduction in products’ life cycles,
diversification and specialization of production, technological and research
development, innovation processes, depletion of natural resources, degradation of the
environment and many other factors cause the need to plan and direct the
development [Barbier, Burgess 2015]. This is intended to prevent the regress, and it
leads to permanent use of all available capitals and resources, as well as to
consolidation of results from developmental actions [Dziadkiewicz, Całus 2011]. The
sustainable development mechanisms are necessary to maintain the results of the
developmental actions, as development essentially takes place in a non-sustainable
manner [Skowrońska 2009].
The sustainable development concept is implemented in the enterprises
in a form of a strategy, very often posing a substitute for the previous main
developmental strategy or its complementation with environmental and social issues
[Dogaru 2013]. The sustainable development strategy may pose a general strategy
of an enterprise or one of the main functional strategies. Then, there might be other
functional strategies, executing other groups of the sustainable development priorities
(e.g. social) or horizontal functions of an enterprise (e.g. sales) [Shapira, Ketchie, Nehe
2017]. However, it is always necessary to integrate it with the hierarchy of objective in
an enterprise, implemented developmental strategies and operational practices, so it is
possible to achieve the assumed effects [Gierszewska, Romanowska 2009; Lichtarski
2007; Krupski, Niemczyk, Stańczyk-Hugiet 2009; Bratnicki 2011].
The discussed sustainable development concept is currently a standard
of manufacturing and market behaviors for numerous states and economic units.
What is more, it influences the consumers’ behaviors, who, while being more aware,
impact the production of enterprises to an increasing degree [Kurniawan, Managi
2017]. This causes that boththe strategies and methods of production operations
are re-evaluated [Brzeziński 2016].
A special case in the analyzed sphere is posed by manufacturing enterprises,
which base their key operational parameters on the products, material and energetic
resources, adopting in the manufacturing process, manners of storage and distribution,
post-sales services, possibilities for final disposal of products, their re-use or recycling,
etc. [Keeys, Huemann 2017]. All of those processes can be significantly reflected in the
potential for seeking the possibilities for production dematerialization, reduction

15
of its energy consumptions, introduction of low-emission and waste-free
manufacturing system, limitation of dysfunctions of products in their life cycles,
generation of material and power feedback and their use to supply some new cycles
[Siva et al. 2016]. These actions combine economic and ecological benefits, and
indirectly also some social advantages, thus they pose a determinant for a specific
direction for the manufacturing enterprises management [Nitkiewicz 2013].
A great spectrum of notions for the sustainable development, dynamics
of the globalization processes, with simultaneous and explicit attitude of the
consumers, i.e. societies that prefer an ecological approach to manufacturing
[Szymczyk 2015] - these are the basic premises for changes in the economic theory and
practice [Caiado et al. 2017]. The new sustainable development concepts, in their
otological foundations directly refer to the problems of enterprises management, as the
economic entities are on one hand an imperative for organizational and technological
changes, and on the other a recipient of social signals that flow from the market [Duran
et al. 2015b].
The consumers’ interest in the notions of sustainable development created
a new operational sphere in the enterprises, thus determining the plain for changes
in the management processes [Dvořáková, Zborková 2014].
Hence, it may be concluded that the sustainable development concept
has become an integral and increasingly more acceptable problem in the enterprises
management [Oelze et al. 2016]. What is more, they contributed to emergence
of numerous new management concepts. Some of them are oriented on the enterprise
management process, other are focused on management of changes and some on other
organizational forms.
The group of the enterprise management concepts oriented on the management
process covers logistics management intended to rationalize the materials flows
to achieve high operational effectiveness and at the same time reduce costs.

1.2. Logistics management

The shape and increase in significance of logistics management in contemporary

enterprises have been influenced first of all by rapid and virtually continuous
transformations that take place on the markets [Voortman 2004]. The organizations
willing not only to show themselves but also develop in the current economic reality
must be characterized with a high competitive position reached among others through
implementation of varied solutions that are intended to meet the customers’
expectations and needs [Barcik, Jakubiec 2016].
Therefore, the logistics management belongs to one of the most dynamically
developing management concepts [Fernie, Sparks 2014; Pyka 2011], the purpose
of which is to maximize the value delivered to the final recipients, and at the same time
maintain the costs on the lowest level possible [Świerczek 2006].
The logistics management is also one of the components that increase the value,
both for the enterprises and their customers [Kisperska-Moroń 2006].

16
 The literature most often emphasizes the logistics management objective
that implements the 7R principle covering the following components [Michlowicz,
Smolińska, Zwolińska 2015]:
 right product,
 right customer,
 right quantity,
 right time,
 right place,
 right quality,
 right price,
This principle suggests that the goods intended for a customer should
be delivered to a right place and in right time, it cannot differ from the ordered goods,
both in terms of quantity and quality, it should be supplied to the right recipient and
handed upon a previously agreed charge has been paid [Jacobs, Chase 2013].
First of all, the logistics influences the enterprise’s areas where the resources’
flows take place (raw materials, materials, finished products), from the place of their
acquisition to the final recipient, with the accompanying information and financial
flows [Nowosielski 2008; Skowronek, Sarjusz-Wolski 2012].
In turn, the logistics management is “a decision-making process, which covers
a logical chain of actions that compose a process of creating a general concept
of logistics actions in an enterprise [Schönsleben 2016], specified in a logistics plan,
and the implementation process in a properly shaped organizational form and with
adoption of adequate control and monitoring systems” [Sołtysik 2003].
The contemporary enterprises base organization of their work on the processes,
and their management is intended to ensure greater effectiveness of actions with
consideration of the customers’ preferences and needs, along with the time and space
criterion [Zeng 2003].
Therefore, the processes in logistics management must be emphasized, among
others the flow processes what takes place in the following definition: “logistics
management covers the following components: strategy formulation, planning,
steering and controlling (carried out effectively, in a manner allowing to minimize the
global costs) the processes of the raw resources flow and storage, stocks and work-in
-progress, finished goods and adequate information - from the point of acquisition to
the point of consumption - in order to adjust to the customer’s needs to fulfill in the
best possible way” [Abt 1998].
Hence, while analyzing the processes implemented within the logistics
management, we need to stress their significant differentiation within particular
enterprises [Saenz, Koufteros 2015]. Their essence, character and scope, as well as the
purpose of this work justify mentioning of two selected classifications.
The logistics management processes can be divided into [Piennar, Vogt 2015]:
 internal processes, which comprise of: internal flows coordination processes,
supply processes, warehouse management processes in relation to materials,

17
 raw resources or semi-finished products, warehousing processes, material
management processes, communication and information processes,
 external processes that cover: reverse logistics processes, packaging
management processes, warehouse management processes in relation to
finished products, ordering processes, transport processes, customer service
processes.
Apart from the above, the logistics management also encompasses the processes that
do not belong to any of the above groups, and are related to production manufacturing
and implementation of marketing actions [Piennar, Vogt 2015].
The logistics management processes can be also divided according to the task criterion
[Miller, Vollman 1985], into:
 flow processes related to material streams, from the moment of purchasing
the raw resources/materials, until the moment of sales of finished products,
 regulatory processes, which are intended to adjust the production means
and workforce to the need for finished products,
 control processes, related to quality of finished products, realization of orders
and course of the production processes,
 information processes, which are intended to update data and information
on ongoing basis within the IT system of the enterprise [Borgi, Zoghlami,
Abed 2017].
Following the aforementioned characteristics of the logistics management
processes in an enterprise and leading themes of this monograph, it is possible
to separate those processes that are strictly connected to justification of recognition
of logistics management as an integral component of the enterprise management
through the coordination of actions in base processes in order to obtain a higher value
of results achieved by the enterprise and integrate the auxiliary processes with the
base processes to improve the value of results from base processes [Witkowski 2010].
These processes are base processes that group the actions related technologically into
the processes of results production (products) that are a market offer, supporting
processes that group actions ensuring direct service of operations included in the
scope of the market results generation process and the supporting processes for input
and output of the base processes or the internal supporting processes [Słowiński
2010].
Based on the presented classifications, it may be concluded that the logistics
management consists in planning, coordinating and controlling of the logistics
processes, i.e. such the implementation of which requires interdependence with other
processes because of the places and/or times of realization as well as principles
for generation and delivery of results [Kempny 2010].
The logistics processes pose one of the key categories of processes within
enterprises and they consist in physical shift of goods within subsequent stages of the
undertake economic activities [Sindi, Roe 2017]. These processes cover - within
an enterprise and between enterprises - the flows of raw resources, materials, semi-
finished products, finished products, goods and returns along with co-existing

18
information [Rushton, Courcher, Baker 2010]. The basic logistics processes are:
transport, warehousing, handling and packing, which while creating a coherent
composition, consisting in numerous interconnected elements, establish a physical
flows process [Grant 2012].
The logistics processes also have significant influence on creation of the
enterprise’s value, e.g. through adequate warehouse management [Harrison, Hoek,
Skipworth 2014]. Furthermore, bearing it in mind that the logistics processes play
a significant role in shaping of the costs in the enterprise, it might be assumed that any
modifications influencing their more effective implementation, have measurable
impact on the financial results of the whole enterprise [Ganapathi, Nandi 2015].
In contemporary enterprises, the logistics processes are considered
as integrated material flows (substantive, physical) and information flows
[Nowakowska-Grunt, Nowakowska 2012; Skowronek 2010], related
to implementation of such actions as transport, manipulation, warehousing, packing,
servicing, etc. [Selviaridis, Norrman 2015].
The logistics processes combine all those actions undertaken by the enterprises
and are intended to improve the exchangeable and utility value of the products in the
spatial and time context [Hart, Taraba, Tomastik 2014; Pfohl 1998]. Improvement in
the value of products in the spatial aspects is related to efficient delivery of the product
to its destination, while in the time aspect it is related to consideration of an adequate
delivery moment, which results from the direct demand [Ballou 1987].
What is more, the logistics processes also play an ordering role, i.e. they
determine the change of quantity and grade of goods by the processes mainly in goods
flows (transport, warehousing and handling) along with auxiliary processes in the
goods flows (packing and marking) [Pfohl 1998].
Considering the proper functioning of contemporary enterprises, the logistics
processes that take place within them must be managed skillfully, having knowledge
about them, as because of that it is possible to monitor, control them, and integrate
them with other processes, coordinate their flows, inspect effectiveness and costs
or combine with information flows [Ciesielski, Długosz 2010]. The essence of logistics
processes is to find the best solution regarding production and distribution of goods,
while considering their use by the markets and recipients [Bass 2015].
In turn, the essence of logistics management in contemporary enterprises
is an ordered and cohesive concept of adopting the management functions and
instruments in the area of logistics processes related to materials flows and the
accompanying flows of information [Farahani, Rezapur, Kardar 2011].
The increase in significance of logistics management has been influenced first
of all by rapid and virtually continuous transformations that take place on the
contemporary markets [Bloemhof-Ruwaard 2015]. The organizations willing not only
to show themselves but also develop on the market must be characterized with a high
competitive position reached among others through implementation of varied
solutions that are intended to meet the customers’ expectations and needs, by making
their offer to stand out from the others. This causes that currently the logistics

19
management belongs to one of the most dynamically developing management
concepts, the purpose of which is to maximize the value delivered to the final
recipients, and, at the same time, maintain the costs on the lowest level possible
[Świerczek 2006].
The logistics management theory brings a lot of definitions, out of which a group
of those oriented on the materials and finished products flows can be separated, along
with adequate information, at the same time suggesting the these are the material
flows, as logistics processes, are the element that combines various approaches to this
notion into a single whole [Kersten, Blecker, Herstatt 2007].
The logistics management can be defined in the scope of processual
management: “examination of materials and information flows in the cross-section
of various functions and specialties, description of its course and each time a given
operation has been implemented, the analysis of input, performed transformations and
utilized resources, and output or obtained products” [Brilman 2002].
In turn, from the perspective of the systemic approach to management,
the logistics management is based on a holistic and integrated approach to planning,
organizing and controlling of material flows and the interconnected information
[Tyagi, Agarwal 2014], thanks to which both the enterprises and their customers
obtain measurable advantages in a form of a shorter delivery time, transparent
cooperation in business surroundings, better service, reduced probability of damaging
or destructing the product, better adjustment of the products to the customers’
requirements and introduction of the just-in-time principle [Ailawadi, Singh 2012].
Hence, the logistics management allows efficient and effective overcoming
of time and spatial limitations during the products transport, and it consists in physical
shifting of materials (resources, products), while striving for implementation of the
enterprise’s objective and contributing to economization of this process [Kisperska-
-Moroń 2006].
What is more, the logistics management may be treated as compilation
of the management and logistics functions, based on the fact that logistics management
consists in undertaking of actions that cover planning, organizing, controlling
and monitoring of the logistics processes in such a manner so the enterprise’s
objectives can be achieved [Sobotka 2005].
The presented definition also suggests the character of logistics management
(Fig. 1.3), first of all covering the improvement of the supply, warehousing,
transporting and distributing processes with consideration of improvement in contacts
with the external recipients and the customer service quality within enterprises
[Szkutnik 2005; Chaberek 2000].

20
Figure 1.3. Logistics management diagram

LOGISTICS MANAGEMENT

Planning Controlling Monitoring

Flow and warehousing processes

Raw resources Finished

Stocks
and materials products

Financial
Information
resources

Source: own work based on [Abt 1998].

The result of studies on application of various management functions, i.e.

planning, organizing and controlling, in logistics operations of enterprises there was
the development of tasks that the logistics management needs to face [Wu et al. 2013].
These are as follows [Kisperska-Moroń 1999]:
 detailed exploration of various logistics processes in the economy, their
correlations and relationships of the logistics processes with other fields
of management,
 seeking and verifying the increasingly more effective examination tools for
logistics processes,
 development and verification of the methods for effective implementation
of the logistics processes in the economy,
 promoting effective management patterns for logistics processes in the
economic practice.
The logistics management takes place along with processes related to
distribution, stocks and flows of different elements, while there is a need to coordinate
and integrate them with other processes that take part within the whole enterprise
[Mesjasz-Lech 2012].

21
 The purpose of coordination is to ensure that the logistics processes and other
related procedure are adjusted to each other, and not only within a single organization
but also in case of cooperating enterprise [Fugate, Sahin, Mentzer 2005].
This coordination consists in cooperation and penetration of particular elements
of logistics within the management and operational structure in the enterprise
[Brekalo, Albers 2016]. The significance of coordination was stressed in the definition
stating that the main task of the logistics management is planning and coordinating the
logistics processes with other procedures, considering own and partners’ goals
[Harrison, Hoek, Skipworth 2014].
In turn, integration leads to consolidation of organizational functions and units,
which carry out the logistics tasks that they have been entrusted with - what
is presented in Fig. 1.4 [Sołtysik 2003].

Figure 1.4. Integration of logistics processes with an enterprise

Integration levels
for logistics
SUPPLY PRODUCTION DISTRIBUTION
processes

Control
0 S Purchasing
of materials
Production Sales Shipping
U C
P U
P Production S
1 Supply management
management
Distribution management
T
L
O
I
M
E E
R Distribution
2 Materials management R
management
S S

3 Internal logistics management

4
External logistics management

Source: own work based on [Baran et al. 2008].

While deliberating the logistics processes integration within an enterprise,

there are five levels that can be distinguished [Kot, Starostka-Patyk, Krzywda 2009]:
 a zero level is specified as functional isolation, emerging with independence
of particular departments of the enterprise, which are focused on
implementation of their own tasks and goals; this isolation is also characterized
with each department having its own separate database, which poses the basis
for the employed IT system (each department has its own IT system);

22
  the first level is determined as intra-functional integration, displayed with
internal integration of logistics processes: supply, production or distribution:
each distinguished phase of the material flow has its own IT service;
 the second level is specified as intra-functional integration 1: here the logistics
processes of supply and production are integrated with IT service of each
distinguished phase of the material flow;
 the third level is determined as intra-functional integration 2, where the
material management and distribution are integrated with all external phases of
the material flow; this is the level where complex IT services occur [Kiełtyka
2011];
 the fourth level is determined as external integration, where the logistics
processes of the enterprise are integrated with the closer logistics surroundings,
so-called integration of the internal material flow with suppliers and recipients
of the 1st tier, along with complex IT services.
Based on those deliberations, certain tasks and function of logistics management can
be presented according to operational spheres of the enterprise (Table 1.2).
Regarding variety of undertaken actions that are embedded into the sphere
of logistics management in an enterprise, there are several orientation types
distinguished [Wincewicz-Bosy 2013].
 The partner orientation to a customer, which is based on the common planning
of the time, spatial and technological orientation with the enterprise’s partners
[Rokita 2005]. What is important here is the exchange of information, as well as
the development of common supervision, monitoring and control systems
arising from the partnership [Jeżak 2013]. This orientation covers the employed
motivational systems as the attitude of the employees to the whole process
plays an important role.
 The orientation on flows, where a basic assumption is the decisive role of the
flows in the competitive fight. They should be planned and implemented
adequately. This orientation forces strict cooperation of all departments of the
enterprise, from the moment of planning until the final stage.
 Orientation on planning, the main assumption of which is development
of an adequate plan that would cover all processes. This plan should be
controlled and corrected if there is such a need. It should cover with its scope
the whole logistics of the enterprise.
 The orientation on costs, the main purpose of which is to strive for reduction
of costs for such a level that would ensure competitive advantage and
sustainable functioning of the company [Barcik, Bilovodska 2015].
 Orientation on effectiveness assumes accurate planning of the whole logistics
of the organization. There is also an analysis carried out here allowing here
solving problems and eliminate any disturbances that emerge already on the
level of planning.

23
Table 1.2. Tasks and functions of logistics management according to operational spheres
of the enterprise

Type and Basic tasks and functions of logistics management in the field of:
character of
advantages distribution production supply

Planning of Planning of the Planning of the

warehousing and warehousing and warehousing and transport
transport processes transport processes processes
Planning of the Planning of the Planning of the
warehouses location warehousing and warehousing spots
Long term

transport means
Planning of the Planning of the supply
distribution structure Planning of the structure
manufacturing systems
Planning of the finished structure Planning of the materials
products stocks and raw resources flows
Logistics tasks and processes

Planning of the
Planning of the external manufacturing potential Planning of the external
logistics scope protection logistics scope

Planning of the means Planning of the means of Planning of the means of

of transport application transport application transport application
Medium- and short-term

Controlling and Planning and controlling Planning and controlling

executing orders the production the material flows
Planning the dates for Controlling the materials Planning the delivery
goods deliveries and semi-finished dates, types of packagings
products flows
Controlling the finished Controlling and monitoring
products stocks Controlling the use of of the materials acceptance
personnel and technical and storage
Commissioning and devices
packaging of goods Exchange of information
Exchange of information
Exchange of
information
Coordination tasks for

Planning and Planning and Planning and determining

action processes and

determining the determining the the supply programs

distribution programs manufacturing programs
Long term
spheres

Planning of the supply

Planning of the Planning of the strategy
distribution strategy manufacturing strategy
Evaluation and selection of
Selection of commercial Planning of the suppliers
enterprises and production location
customers

24
 Medium- and short-term
Determination Determination Determination of the needs
of the needs regarding of the needs regarding regarding supply
distribution manufacturing
Determination
Determination Determination of purchasing, transport
of sales, transport of the load to machinery and warehousing
and warehousing programs
programs Planning of the
production batches Determination of the size
Determination of the of deliveries
delivery service levels
Source: [Blaik 2010].

The main advantages for the enterprise, resulting from efficient operation
of logistics management are among others: significant reduction of costs in purchase
of materials and sales costs, shortening and simplifying the transport processes
(both external and internal), minimization of the raw resources’ stock, materials
and finished products, unification of packaging and storage systems as well as the
systems responsible for information flows [Ailawadi, Singh 2012]. The logistics
management effectiveness depends to a great extent on the knowledge level
of numerous various economic notions, but also on the ability of analytical and abstract
thinking [Gołembska 2006].
The social goal in the logistics management deserves to be stressed. The social
priority in logistics management in enterprises is inseparably related to the corporate
social responsibility concept (CSR) [Barcik, Jakubiec 2014], which states that the
enterprises direct their actions not only on deriving their own benefits, but also on the
benefits that will be brought to the society thanks to their operations [Chandra, Ghosh,
Srivastava 2016]. This among others refers to relationships between enterprises
and customers, employees, local community, etc. [Bachorski-Rudnicki, Kroik 2012].
When it comes to logistics management in the enterprise, this concept is presented
mainly in the enterprises’ strive for products and services quality, effective customer
service, partner relationships with the business surroundings enterprises, continuity
of research and development works, innovativeness, seeking and implementing new
technologies, etc., what serves the society among other through customers’ satisfaction
with the commercial and service offer, development of long-standing partner
relationships, creation of new jobs, etc. [Witkowski, Baraniecka 2011].
In turn, the ecologic priority, related to environmental protection, is related first
of all in logistics management in enterprises with the scale, which the raw resources
and the energy are employed along with emissions. Operations within the logistics
management in enterprises should head towards improvement or at least to non-
hindering the natural environment condition [Bajdor 2012a]. It is possible as thanks to
employment of modern technologies and methods for effective management
of resources and remains, the negative environmental impact is minimized [Bing et al.
2016; Burchard-Dziubińska, Rzeńca, Drzazga 2014].

25
 The priorities of sustainable development in the logistics management
are carried out among others through introduction of the reverse logistics concept
in the operation of enterprises, as in the era of globalization and dynamically
developing markets the enterprises seek new and more effective possibilities related
to management of their operations. An additional stimulus is the increasingly stricter
legal acts, intended to take care of and protect the natural environment, in the scope
of economic activities, especially those related to manufacturing. The enterprises,
by accepting those changes, have developed a new concept in the scope of reverse
logistics in the recent years.

1.3. Reverse logistics

Nowadays, the reverse logistics concept has gained recognition and become
a significant sphere in the enterprises management. Direct influence on the increase
in significance of this concept in organization was exerted by greater importance of the
environmental protection and sustainable development aspects [Lewandowski 2000],
legal conditions, shaping of the socially responsible policy and increase in competition
on the domestics, international and global markets [Witkowski 2015]. This concept,
introduced into the manufacturing enterprises, allows competitive advantage
to be acquired, recognition in the customers’ eyes, and adjustment of the
manufacturing operations to the current legal, environmental, social and economic
requirements [Blaik et al. 2013].
The main premises of the reverse logistics concept development in the
enterprises may be looked for within the contemporary conditions, where these units
operate [Huscroft et al. 2013]. One of the determinants here will be the sustainable
development and involvement of the enterprises in implementation of its three main
priorities: economic, social and ecological aspects. The economic aspect of the
sustainable development in the reverse logistics concept is justified with the possibility
to derive profits from its implementation. The social aspect is related to the response
to the growing requirements from the purchasers and the growing awareness in the
scope of the corporate social responsibility for the operated business [Muniz Jr et al.
2017]. In turn, the ecological aspect is related to the enterprises’ undertaking actions
related to the natural environment protection.
Therefore, the reverse logistics is a part of the sustainable development concept,
and implementation of its processes is directed at implementation of the sustainable
development principles on the level of an enterprise [Jiang, Feng, Ouyang 2017].
It should also be emphasized that the reverse logistics carried out in the scope of the
enterprise is based on objects separated from its structure. It implements the logistics
processes of this enterprise, and in order to ensure own effectiveness, efficiency
and efficacy it adopts the functions, methods and instruments for management of those
processes.
The main idea, around which the reverse logistics concept oscillates is the strive
for solving environmental and economic issues [Skowronek 2010], related to shorter

26
life cycles of the products, through extending them by reverse flows, as only such
an approach allows to re-use the value included in the returned products/materials
[Sajjanit, Rompho 2017]. At the same time, this approach avoiding the loss of value
as a result of non-acceptance of the returns, the consequence of which is an increase
in the quantity of waste that is harmful for the environment, quantity of natural
resources employed in production and outlays for these materials, as well as reduction
in financial advantages from the re-use of products, components or raw materials
[Mondragon, Lalwani, Mondragon 2011].
While characterizing the reverse logistics, it may be concluded that it is related
to the sequence of actions related to taking-over of the returns of products from the
customers/ participants of the business surroundings in order to acquire any value
from them, which then can be re-introduced to forward or reverse flows in a secondary
form [Mesjasz-Lech 2011]. Hence, thanks to the reverse logistics processes,
the returned products, i.e. the returns, are brought back to the conditions that they
can be re-used [Dhakal, Smith, Newbery 2016].
Till half of the last century, the returns in logistics flows were not recorded
in studies or literature. Not until the beginning of 1970s did the first premises appear
regarding the products returned to reverse flows [Pokharel, Mutha 2009; Mutha,
Pokharel 2009]11. They evolved later into the reverse logistics concept [Rubio,
Chamorro, Miranda 2008], and eventually the concept was expanded with
a gatekeeping process and a procedure for preventing the returns in the study from
2001 [Croxton et al. 2001]12.
The first attempts to define the reverse logistics in the environmental aspect
were undertaken at the end of 1990s. [Carter, Ellram 1998] what eventually resulted in
emergence of the first definition that was generally accepted within the scientific
environment, stressing the purpose of the concept. According to the definition,
the reverse logistics is the process of planning implementing and controlling the cost
effectiveness, flows of raw materials, manufacturing materials, final goods and the
interconnected information from the consumption spot to the starting point in order to
regain the value or manage properly [Rogers, Tibben-Lembke 1999]. In the same time,
there were several other authors who defined the reverse logistics, taking into account
its various perspectives [Stock 1998; Dowlatshahi 2000; Srivastava 2008].

11 The first mentions about the reverse logistics appeared in the literature along with emergence of the reverse
goods flow notion [Guiltinan, Nwokoye 1975; Murphy, Poist 1989] and reverse channels [Ginter, Starling 1978].
Afterwards, in 1980s, there were first definitions of the reverse logistics mentioned, focusing on the flows directed
reversely than in the forward logistics, and these flows were called” going the wrong way” [Murphy, Poist 1989],
treating them as a side effect of operation of the enterprise, which however was not perceived negatively; it only
proved that they existed.
12 In Poland, the reverse logistics emerged in the literature studies at the end of 1990s, and following its occurrence

in 1999 in the American, generally-available, first coherent literature position analyzing this concept in detail,
drawn up by D. Rogers and R. Tibben-Lembke [Rogers, Tibben-Lembke 1999]. This book has become the basis for
further development of science in this scope, and the foundation for subsequently emerging research trends. At the
beginning, the were not many scientific articles in the Polish literature regarding reverse logistics, gradually
developing the concept within the Polish economic conditions. Several years later, there were several monographs
published, devoted to the reverse logistics and its processes, presented in various perspectives, the authors of which
hardened this concept in Poland [Szołtysek 2009; Szołtysek, Twaróg 2017; Sadowski 2010; Mesjasz-Lech 2012;
Jeszka 2014].

27
 The reverse logistics was presented from the perspective of distribution
planning, stock management and planning of production by M. Fleischmann
[Fleischmann et al. 1997], as a field of science focused on the environmental aspects
of transport by C. Carter and L. Ellram [Carter, Ellram 1998], in combination with the
developmental theory for successful implementation of the reverse logistics processes,
with consideration of various strategic and operational factors by S. Dowlatashi
[Dowlatashi 2000] or consideration of the proposals made by C. Prahinski
and C. Kocabasoglu [Prahinski, Kocabasoglu 2006], analyzing the existing practices in
this scope, the critical notions and management techniques before the reverse logistics
is implemented. There are also numerous papers that present the literature review in
the scope of creating of flows in reverse logistics [Fleischmann et al. 2000; Akcali,
Cetinkaya, Üster 2009; Chanintrakul et al. 2009; Sheriff, Gunasekaran, Nachiappan
2012].
The definition of reverse logistics intensively evolved since the beginning of the
21st century, extending its scope and adjusting to the cognitive process of its
operations. At the beginning, both the scientists and practitioners ignored the presence
of the reverse logistics processes and emergence of reverse flows, often not realizing
that they existed [Bernon, Cullen 2007]. However, the economic growth caused that the
enterprises need to notice the transformations that were taking place, and expand the
management and logistics with the reverse flows of products, directed from the point
of consumption of the goods to the source spot [Rogers, Tibben-Lembke 2001].
While deliberating the reverse logistics definition, and considering the literature
works in this scope, it is necessary to pay attention to the fact that the literature of the
subject often adopts names that are similar or identical to reverse logistics, along with
similar concept notions. Therefore, it becomes necessary to explain and justify
the emergence of those similarities as well as to explain the differences between them.
The English literature regarding the reverse logistics presents the concept
of industrial ecosystems, product life-cycle stages management, reverse supply chains,
closed-loop supply chains integrated supply chain management, green/sustainable
supply chains [Seuring 2004] 13.
The Polish literature of the subject brings functioning of the reverse logistics
concept down to implementation of processes related to the communal, industrial and
hazardous waste management [Szołtysek 2009; Sadowski 2010; Mesjasz-Lech 2012;
Szołtysek, Twaróg 2017]. A small number of papers is related to the reverse logistics
implemented in the area other than waste. A. Jeszka, in her monograph entitled
“Reverse logistics”, undertook an analysis of the reverse logistics processes in the
clothing industry, stressing the role of the reverse logistics actions in the scope of the
reverse flows management, which includes the products and re-usable materials in the
clothing sector [Jeszka 2014].

13 The reverse logistics also functions in the Polish literature under varied names: reversed logistics, waste logistics,
eco-logistics, recovery logistics, disposal logistics, repeated management logistics, waste management logistics, etc.
The reverse logistics term, which constitutes an usus, has been most strongly embedded in the Polish literature
tradition in the scope of the logistics terminology [Krzemińska-Krzywda 2008].

28
 Meanwhile, the reverse logistics should be considered in a broader context,
where its processes are related to the reverse flows management supplied not only
with waste but also products and other materials that do not constitute waste as
understood in their definitions.
The definition developed in the logistics terms dictionary by the Council
of Supply Chain Management Professionals determines the reverse logistics
as a specialised segment of logistics focused on flows and management of products and
resources after they are sold and delivered to the final recipient [Council...].
In turn, according to the definition developed by the Council of Logistics
Management, in its general meaning, the reverse logistics is related to the logistics
management of skills and actions involved in the management, organization
and disposal of the reverse flows contents in the business surroundings of the
enterprise. In a more specific scope, the reverse logistics is a process of planning,
introducing and controlling the efficiency, cost effectiveness of the raw materials flows,
stock, final products and the interconnected information from the consumption point
to the starting point, in order to recover some value or carry out the final disposal
correctly [Reuse... 1993].
Therefore, the reverse logistics processes are related to the physical, reverse
product flows, from their standard destination to the starting point in the enterprise,
assuming the recovery of value or a different kind of correct final disposal. Emerge of
the reverse logistics processes upon an accomplished fact, i.e. when the reverse flows
are supplied, is highly significant in reverse logistics [Batarfi, Jaber, Aljazzar 2017].
Then, all of its operations are related to management of those flows and the
interconnected information. In turn, the reverse logistics processes are not applicable,
when the reverse flows have not products or materials, meaning when the products
and materials are already in their final destination, having finished the circulation in
the forward logistics flows, and have not yet been qualified to the reverse flows, so
they remain outside the circulation of the logistics flows [Herbert-Hansen et al. 2017].
The literature thematically related to the reverse logistics stresses that is brings
measurable advantages to the organizations differentiated in term of profiles and
industries, as well as the whole sector and branches of the economy 14. Regarding the
increasing significance of the reverse logistics processes, numerous manufacturing
enterprises started to assume it as a tool strategic for acquisition of economic
advantages and improvement of the social image of the company [Kannan et al. 2012].

14 Examples of the reverse logistics operation in particular enterprises and branches (sectors) are presented in the
following works: Kodak and recovery of structural elements of final products from the market [Jayaraman, Luo
2007]; Dell and reverse logistics processes on a computer production line [Kumar, Craig 2007]; editorial sector and
possible, potential advantages after implementation of reverse logistics [Wu, Cheng 2006]; electronic industry in
China and problems related to introduction of the reverse logistics processes [Lau, Wang 2009]; manufacturing
industry in China and problems related to management of products that came to an end of life in the reverse
logistics flows [Subramanian et al. 2014]; food containers and reverse logistics in their recycling and re-use
[Jayaraman, Patterson, Rolland 2003]. Implementation of the reverse logistics processes in various sectors is
presented in the following works: production of carpets [Biehl, Prater, Realff 2007]; retail [Bernon, Rossi, Cullen
2011]; bottling industry [González-Torre, Adenso-Diaz, Artiba 2004]; production of paper [Ravi, Shankar 2006];
goods-packaging enterprises [González-Torre, Adenso-Diaz 2006]; production of cell phones [Rathore, Kota,
Chakrabarti 2011]; pharmaceutical industry [Narayana, Elias, Pati 2014]; recycling of batteries [Wang et al. 2014].

29
What is more, the enterprise also noticed that better understanding and use of the
reverse flows, as well as effective implementation of the reverse logistics processes
allow getting the competitive advantage [Stock, Mulki 2009]. Despite the fact that
numerous industrial branches adopt the reverse logistics processes in their operations
[Kot, Grabara 2009], seeing them in the categories of sustainable competition and
acquisition of market advantage, there are still certain discrepancies and deficiencies
in information about adaptation and implementation of the reverse logistics processes
[Richey et al. 2004].
The enterprises, by running certain economic activities, transform the products.
This transformation consists in qualitative change of products during the
manufacturing or consumption processes, as well as in time and space changes, where
the manufacturing processes is combined with consumption in the distribution
procedure, related to shifting and warehousing of products. The time and space
transformation
of goods in the enterprise’s logistics is based on management and implementation
of the emerging logistics processes [Guo et al. 2017].
In the enterprises, the activities of which are based on manufacturing
of products, and the products supply the physical flows, the logistics processes
management is a highly significant sphere that covers seven key area [Brzeziński,
Brzozowska, Korombel 2014], the last out of which is the reverse logistics (Table 1.3).
Table 1.3. Logistics management areas in contemporary enterprises

Logistics management area Characteristics

Management of customer relationships determines the developmental structure and

maintenance of relationships with customers,
along with product development

Management of customer service allows direct contact and provides direct

information on requirements of particular
customers

Management of demand creates a balanced structure between the

customers’ requirements and the manufacturing
capabilities of a given enterprise

Implementation of orders is related to all actions necessary for definition of

the customers’ requirements, designing of a
logistics network and implementation of orders
placed by customers

30
Manufacturing flows management is related to all actions necessary to shift products
between the production units and to acquire the
implementation and manufacturing flexibility
management in the enterprise

Management of relations with suppliers creates a structure for development and

maintenance of relationships with suppliers

Reverse logistics is related to all actions related to the reverse flows

management emerging in the enterprise
Source: Own work based on: [Croxton et al. 2001; Lambert, Cooper, Pagh 1998].

All of the areas listed in the above table are interdependent and they often
condition adequate functioning of other areas with their regularity. Despite the fact
that all of the aforementioned areas of logistics management in the enterprise evolve
in certain time framework, adjusting to the continuously changing economic, political
and social realities, the most significant area when it comes to the sustainable
development concept, which currently is broadly promoted in management,
is the reverse logistics indeed.
It should be noticed that the enterprises never function independently,
but rather in cooperation with the business surroundings, where they remain.
Therefore, the reverse flows cover not only the structure of a given enterprise, but also
involve other participants of its surroundings [Morgan, Richey Jr, Autry 2016].
The groups of entities that participate in the reverse flow management, undergoing
the reverse logistics processes, the following can be listed [Jeszka 2014]: base entities
(manufacturer, agent, retailer), specialized intermediaries (recycling points, recovery
organizations, etc.), public-private and charity organizations. These entities, by taking
part in the reverse flows management, deal with numerous types of supplies for those
flows, towards which the reverse logistics processes are implemented (Fig. 1.5).

31
Figure 1.5. Reverse and forwards logistics in an enterprise and its surroundings

Lower-quality
F products R
O Products with short E
validity period
R MANUFACTURER
SECONDARY V
W MARKET E
Surpluses of stock
A Repaired products R
R Returns S
Products with short
D E
PRODUCTS

RETURNS

validity period
Damaged products
L Surpluses of stock L
Repaired products
O O
G Recycling of raw G
I DISTRIBUTION
resources I
Manufacturing devices
S UNITS
and equipment
S
T Waste from the T
Returns
I Damaged products
manufacturing process I
PRODUCTS

RETURNS

Faulty products
C Surpluses of stock C
S Repaired products S
Products donated
to charity

RECYCLING
CUSTOMER AND DISPOSAL
Post-consumer returns ORGANIZATIONS
Products recycling
Products donated
to charity

FORWARD FLOWS REVERSE FLOWS

Source: Own work based on: [Monahan 2004].

When flows in reverse logistics are analyzed, it can be seen that the returns emerge
on each stage. For example, the reverse flows from the manufacturer or distribution
units to secondary markets include: lower-quality products, products with short
validity period, surpluses in stocks or repaired products, etc. The reverse flows from
the manufacturer or distribution units to the recovery and disposal organizations
cover the damaged products, surpluses of supplies, repaired products, goods intended
for recycling and products donated to charity, faulty products, manufacturing devices
and equipment as well as waste from the manufacturing process. In turn, the reverse
flows from the customer are related to the post-consumer returns, products intended
for recycling and charity donation [Kumar et al. 2017].
While deliberating various organizational aspects of reverse logistics in the
enterprises, there must be certain differences pointed out between the reverse
and forward logistics (Table 1.4).

32
Table 1.4. Differences between the forward and reverse logistics

FORWARD LOGISTICS REVERSE LOGISTICS

Based on profits and costs optimization Based on legal and environmental regulations,
but also on profits and costs optimization

Relatively easier and direct forecasting of the Much harder forecasting of the products returns
demand for products

Smaller diversity in the products quality Highly differentiated quality of products

Traditional marketing techniques can be There are factors that make the marketing more
employed complicated

The processing time and phases are well-defined The processing time and phases depend on the
condition of returned products

The goods are transported from one location to The returned products are collected from various
numerous destinations location and sent to a single processing destination

Speed is a competitive advantage Speed is not a crucial factor

Standardization of the product packagings Highly-differentiated packaging or no packagings

Standardization of the products structure Modified products structure

Cost estimation is easier thanks to accounting Determination and visualization of costs

systems is complicated

Alternatives for products disposal are clear The options for final disposal of the returned
products depend on their condition

Consequent stocks management Inconsequent stocks management

Financial implications are clear Financial implications are not clear

High transparency of processes during product Low transparency of processes because of no

monitoring in real time information about the monitoring possibilities

Relatively easier management of changes in the Adjustment to changes in the products life-cycle
products life-cycle is harder

The manufacturers are most important The processing units are most important
Source: Own work based on: [Gupta 2013].

33
The analysis of differences between the forward and reverse logistics presented
in Table 1.4 suggests that they differ significantly what is a result of, first, the direction
of logistics flows (forward or reverse), and second, the contents of those flows
(products and product returns).
Despite the fact that currently the enterprises are somewhat forced
to undertake actions related to implementation of the reverse logistics processes in the
reverse flows management, implementation of such solutions poses a great challenge
and numerous problems to overcome. Nevertheless, it also brings numerous
advantages [Alshamsi, Diabat 2017]. The acceptance of reverse flows itself is less
problematic in numerous enterprises, especially the larger ones, while implementation
of the reverse logistics processes and the general implementation of this concept is
often impossible as it encounters the external resistance - from the partner
enterprises, and the internal one - from departments and employees of the company.
Meanwhile, the advantages brought by adequately implemented and prepared reverse
logistics processes are often reflected in measurable improvement in value of the
whole enterprises, and acquisition of a positive result on the side of advantages
is possible (Table 1.5).
Table 1.5. Determinants and barriers for implementation of reverse logistics in enterprises

DETERMINANTS BARRIERS

Reduction in manufacturing costs High costs and lack of support from

the economic policy

Improvement of customer service Lack of knowledge and awareness

in the scope of the reverse logistics processes

Company’s image promotion

The need to create adequate technologies

Support from policy and law No supporting policies or laws

Fulfillment of environmental obligations Unpredictability and differentiation

of demand and supply

Involvement of the managing staff Inadequate distribution of sources

Focus on the reverse logistics processes Concerns against changes

Source: Own work based on: [Gupta 2013].

During the analysis of the determinants for implementation of reverse logistics

in the enterprises, the foreground is the manufacturing costs reduction, which
is possible through employment of returns as a source of spare parts, components
and recycled materials. At the same time, the actions related to acceptance of the

34
returns allow the enterprise to improve the customer service department,
and as a consequence improves the company’s image. This image is also influenced
by pro-environmental action, which is a consequence of implementation of the process
of reverse flows management. An additional external incentive is constituted by legal
regulations and policies that promote activity in the scope of adequate organization
of the reverse flows management [Fancello et al. 2017]. Involvement of the managerial
staff in preparation and introduction of changes is equally important, as it is directly
reflected in the degree of the employees’ involvement in new solutions.
This involvement causes that the whole enterprise focuses its efforts both
on manufacturing and on the reverse flows management, thus it is possible to reach
certain balance between the forward and reverse flows, and this in turn is reflected in
achievement of advantages, especially those of economic and environmental character
[Bojar, Żelazna-Blichtarz 2008].
While analyzing the barriers for implementation of the reverse logistics in the
enterprises, the Table 1.5 presents them in a general form, and for their better
demonstration Table 1.6 lists the most frequent barriers encountered by the
enterprises during implementation of the reverse logistics into the practice, describing
them in detail. They were divided into barriers emerging in the business surroundings
of the enterprises and barriers emerging in the enterprises themselves.
Table 1.6. Barriers for implementation of the reverse logistics in the business surroundings
and in the enterprises

BUSINESS SURROUNDINGS LEVEL

Barriers Characteristics

No involvement Existing solutions in the partner enterprises adopted in the common business
of the managerial environment can be modified with implementations only in cooperation,
staff and with support from the managerial staff. It should not exert any negative
influence on the modified system.

No coherence The solution under implementation should be clearly formulated on each

between the management level, and expressly communicated to all employees it concerns.
management levels

Impossibility Lack of communication constitutes a serious problem. Information flows

or reluctance are distorted because of lack of attention or reluctance what leads to serious
towards problems in the flows processes and to impossibility to introduce new solutions
information Therefore, it is necessary to eliminate such adverse events.
sharing

No trust between Lack of trust is a psychological barrier. In case of introduction of new solutions,
the business it is highly harmful and it hinders the progress. Unfortunately, regarding
surroundings its character, it is hard to eliminate.
participants

35
Reluctance towards Both the risk and success related to the implemented solution should be divided
sharing the risk among the business surroundings participants. The risk should be taken with full
and success awareness and included in the strategy on each level of management. Success
motivates the employees, and lack of success becomes a demotivating factor.

No organizational The organizational structure of each business environment participant should

and process be designed in such a manner that it is possible to quickly and effectively match
flexibility it to sudden and unexpected changes that results from the introduced solution.

Conflict and Each participant of the business surroundings should openly share their
protectionism knowledge in the scope of the solution under implementation. It is undesired
to keep the information as this may lead to a conflict and as a result
no cooperation over the implementation among the participants.

Inadequacy and The effectiveness measures pose an important evaluation criterion for
contradiction of assessment of efficiency. Incorrectness of tools and methods is reflected in
effectiveness incompliance and incompleteness of evaluation of the introduced solutions.
measures It is necessary to unify and develop those measurements in detail so it is possible
to measure the expected results during the evaluation.

Reluctance and Changes are an inevitable element of progress. The resistance towards them
resistance against is negative and adverse, but almost always present within teams of employees.
changes Overcoming of this phenomenon facilitates the enterprise’s potential in the scope
of introduction of innovative solutions.

Lack of trainings Continuous improvements are necessary and they might be achieved through
that would execution of applicable trainings. Acquisition of new skills and change of thinking
introduce new pose the key success factors while introducing the changes. Lack of them results
skills and ways in negligence of the opportunity to improve the implemented solutions.
of thinking

ENTERPRISES LEVEL

Company’s policy The enterprise’s policy as regards the general dimension of its operations must
be adjusted to the returns management processes. The policy transformation
is a long-standing and complicated process, but lack of such changes can lead
to a failure in reverse flows management.

Financial resources A financial barrier usually constitutes a big problem. Investments in new
processes in the scope of reverse flows management are often very expensive.
If there are no resources, the new implementations should not be resigned from,
but rather divided into stages.

Non-significance The enterprises’ employees may often see the problems related to reverse flows
as not very significant. There is a need to change such an attitude,
as no involvement of the employees in new implementations may cause
that undertaking to fail.

36
Lack of adequate Implementation of the reverse flows management requires re-organization
organizational of work in numerous departments of the enterprise. This is a time-consuming
solutions and strenuous process, but necessary for improvement of implementation
of new solutions.

Legal The applicable law often constitutes a barrier that cannot be overcome
circumstances by enterprises that implement the reverse flows management. In this case
it is necessary to seek other options for solving the problems with returns.

No attention from The managerial staff must show involvement in the executed implementation
the managerial No attention from that employees is reflected in loss of motivation
staff of all workers, and it will not allow to become successful.

Incompetent All employees in the enterprise should be adequately and thoroughly trained
personnel in the scope of implemented solutions. Only such a behavior will allow maximum
reduction of errors in the reverse flows management, caused by the human
factor.
Source: Own work based on: [Gupta 2013].

While deliberating the significance of logistics management in enterprises,

it needs to be stressed stress that the use of the reverse logistics processes for
operation of the reverse flows absolutely facilitates its organization and exerts positive
influence on creation of the added value, coming from repeated use of the product
returns.
The presented deliberations allowed describing the logistics management
characteristics, embedded in implementation of the sustainable development concept.
They also allowed to determine the reverse logistics concept, where the processes
implemented for the reverse flow management in the enterprises, allow realization
of the sustainable development priorities. The presented theoretical approach forms
a context and conceptual background for further deliberations carried out in this
monograph, related to implementation of the reverse logistics processes in the field
of defective products’ flows in the manufacturing enterprises.

37
2. Reverse logistics of defective products
2.1. Reverse flows
In enterprises logistics, the management is related to the logistics processes
[Sołtysik 2003] that are employed in case of various resources, especially materials
and information [Blanchard 2007]. Generally, logistics of a given enterprise is based
on correct operation of those flows, thus it is necessary to provide their efficiency
and continuity via supervisions resulting from the logistics management function
[Nowicka-Skowron 2009].
Logistics flows in an enterprise are presented in Fig. 2.1, where they
are separated from the logistics of an economic entity, i.e. a manufacturing enterprise.

Figure 2.1. Flows of products and materials in a manufacturing enterprise

Flows of raw
Flows of raw resources auxiliary
resources auxiliary materials, parts from Flows of finished
materials, parts from purchase, products, commercial
purchase, semifinished products, spare parts
commercial products products and (semi-finished
and finished finished products, products)
products, spare parts spare parts

Production
process
Supply Dispatching Shipping
Supply market Sales market
warehouse warehouse warehouse
Intermediate
warehouse

Secondary
market

Defective products
(returns) flows,
waste flows

Source: Own work based on [Pfohl 1998].

When it comes to a manufacturing enterprise, logistics flows emerge in relation

to supply with raw resources, auxiliary materials, etc., production, where the flows
include finished or semi-finished products, and distribution, where the flows regard
the commercial products and spare parts. There are also flows supplied with defective
products and waste in the manufacturing enterprises [Pfohl 1998].

38
 However, attention must be drawn to the fact that the flows are divided
according to their direction (Fig. 2.2), into forward and reverse [Kisperska-Moroń,
Sołtysik 1996].

Figure 2.2. Forward and reverse flows in an enterprise and its business surroundings

Distributor Customers
Supplier Manufacturer - distribution
- production
- assembly
- disassembly
- remanufacture
Supplier Customers
Collection spots
- collection and
gathering
- inspecting
Supplier - sorting
Recovery spots Customers
- recycling

Forward flows

Reverse flows

Source: Own work based on [Lee, Chan 2009].

Forwards flows of materials are directed from the manufacturing spot

to delivery to the final customer, along with the accompanying flows of information
and finances [Ciesielski, Długosz 2010]. In turn, the reverse flows of materials take
place in the opposite direction, i.e. from the final customer to the manufacturing spot
or point of obtaining the raw materials for production, also with the accompanying
flows of information [Lu, Bostel 2007] what is presented in Fig. 2.3.

Figure 2.3. Directions for forward and reverse flows in logistics

New resorces
and materials
Forward flows

products sales
Producer Seller Customer

Secondary
Reverse flows
materials

Source: own work based on [Silva et al. 2013].

39
 Flows of materials from the operational perspective of any enterprise are the
most important flows, as they ensure fluency of the course of the processes in all fields
of operation of this enterprise and its business surroundings. Forward flows
of materials include raw resources, semi-finished products, final products, while the
reverse flows are supplied with product returns [Skowronek 2005]. These flows have
a form of physical flows and they are carried out by adopting appropriate elements
of the logistics structure. The material flows are stipulated as a general collection
of actions related to physical shifting of products: from the places of their production,
to spots where they are received by the final customers (forward flows); from places
when they came to an end of life or end of use [Campos et al. 2017], to the spots where
it is possible to recover value from them (reverse flows) [Kärkkäinen 2003].
The actions related to the flows of materials that support them are the transport
and warehousing processes [Heragu 2008; Sule 2009; Tompkins 2003].
Physical flows of materials in enterprises are strictly related to the information
flows that connect that enterprise with all participants of its business surroundings
[Bukowski, Feliks 2015]. These flows are usually bi-directional what is intended
to ensure continuity of information exchange, and hence effectiveness and efficacy
of the performed actions [Jelonek 2010]. Information may be transferred in a form
of physical flows of documentation of electronic flows of data and data carriers
(both basic computer application and advanced information and IT technologies
are employed for this) [Toyasaki, Wakolbinger, Kettinger 2013; Ketzenberg 2009;
de Brito, van der Laan 2009].
For the flows of materials, forward or reverse, to function properly, they must
be coordinated by logistics management with flows of information [Sawik et al. 2009].
Regarding the complexity level of an enterprise, the reverse and forward flows can be
characterized with a smaller or greater level of difficulty in the scope of coordination
and matching of particular elements [Barcik, Kubański 2011]. Additionally, when the
direction of flows is varied, the predictability and possibilities to control the flows with
logistics management are much more complicated (Fig. 2.4).
Figure 2.4 presents the complexity degree of the reverse flows along with basic
actions from the scope of reverse logistics as regards their management. Hence, while
analyzing the forward and reverse flows in the enterprises, it is possible to point
to certain differences between them, which are presented in a table form (Table 2.1).
The aforementioned characteristics of differences between the forward
and reverse flows poses the review material and presents the analyzed problem
in a simplified manner. A detailed characteristics of the flows is an individual issue
in each enterprises, and in numerous cases the forward flows may be more complex
than the reverse flows, meaning it would be opposite to what is suggested by the
analysis of the features from the table. It also needs to be mentioned here that the
reverse flows usually emerge in the enterprises with less intensity than forward flows.

40
Figure 2.4. The flows of materials in an enterprise and its business surroundings along with basic
operations of reverse logistics

Supply in materials Distribution of

Production Customer
and raw resources finished products

Reduction Reduction
of waste of waste
Repair

Returns from
Service
the customer

Refurbishment

Returns of EoL
Remanufacture
products

Recycling

Reuse

Final disposal
Flows of materials in forward logistics

Cooperation between members of business surrounding

Flows of materials in reverse logistics

Actions / processes of reverse logistics

Source: own work based on [Srivastava 2008].

When the reverse flows are identified in the enterprise’s logistics, it is possible
to separate two characteristic structures, an open and a closed loop, which result from
the course of actions in the sphere of implementation of the reverse logistics concept.

41
Table 2.1. Differentiating features for the forward and reverse flows in an enterprise

Differentiating features Forward flows Reverse flows

Prediction of structure, content and routes low complexity complex

of the flows

Distribution of flows from one to many spots from many spots

to a single spot

Quality of products, packagings, information uniformed highly-differentiated

in the flows

Routes and intended use of the flows determined non-determined

Decisions regarding organization of flows clearly-stated unclear, made

spontaneously
and under pressure

is significant is not significant

Speed of flows

stable not stable

Stability of flows

clear unclear
Clarity of the processes related to the flows

Controlling the life cycle of a product by possible impossible

implementation of the flows

Negotiations with participants of the business easier harder

surrounding as regards implementation
of the flows

Marketing methods that the flows are marketing that

well-known
subjected to is complex in multiple
dimensions
Source: Own work based on [Tibben-Lembke, Rogers 2002].

There are numerous significant publications encountered in the literature,

characterized with the closed and open loop [Khatami, Mahootchi, Farahani 2015; Das,
Posinasetti 2015; Blumberg 2005; Sarkis 2001; Bettac et al. 1999; Inderfurth, Teunter
2002; Krikke, Kokkinaki, van Nunen 2001; Minner, Kiesmüller 2002]. The loops
are related solely to the reverse flows, as the forward flows in both loops have the
same route - the raw materials supply the manufacturing process, a finished product

42
is generated which then is delivered to the final customer who makes use of it.
When returns of waste appear in an enterprise, the reverse flows are created, and their
course determines the type of the loop [Schenkel et al. 2015; Abbey et al. 2015;
Chen, Chan, Chung 2015].
An open loop is when the reverse flows are directly addressed to the units that
processes the returns and waste (e.g. recycling organizations) or to landfills (Fig. 2.5).
Figure 2.5. An open loop of reverse flows in an enterprise

Sources of raw
resources
and materials

Primary resources Primary resources Primary resources

Collecting Collecting Collecting

Pre-manufacturing
Concentration of materials Concentration of materials Concentration of materials

Processing Processing Processing

Finished materials Finished materials Finished materials

Scrap
Forming

Manufacturing
Finished components

Assembly

Finished products Spare parts

Use

Recycling Use Service

of materials
EoL products
Replaced parts
Wear

Recovery in an End of life / use

Reuse of the open loop
elements / parts

Final disposal

Source: own work based on [Gupta 2013].

In an open loop, the reverse flows in an enterprise are characterized with

a much simpler course than in the closed loop. The content of the flows is not re-used,
and it is most often deposited on landfills or delivered to specialized recycling

43
organizations for recovery of value, which however do it for their own use and this
value does not supply the same enterprise in any manner whatsoever [Płaczek 2014].
The logistics processes related to reverse flows in an open loop are related to collecting
returns and waste, their transport, warehousing and depositing on landfills.
In turn, the closed loop emerges when the reverse flows address their content
to the spots that carry out the value recovery processes, and afterwards this content
having a form of recovered materials is directed to the starting point of the enterprise,
thus supplying the forward flows with secondary raw materials. The recovered value
returns to the same enterprise in a closed loop (Fig. 2.6).
Figure 2.6. A closed loop of reverse flows in an enterprise

Sources of raw
resources
and materials

Primary resources Primary resources Primary resources

Collection Collection Collection

Pre-manufacturing
Concentration of materials Concentration of materials Concentration of materials
Recycling
of materials
Processing Processing Processing

Finished materials Finished materials Finished materials

Scrap
Forming

Manufacturing
Finished components
Reuse of elements
Assembly

Finished products Spare parts

Use

Use Service

EoL products
Recovery
Replaced parts
in a closed loop
Wear

End of life / use

Final disposal

Source: own work based on [Gupta 2013].

44
 The closed loop is characterized with recirculation of content of the reverse
flows. These flows lead to the units, where the processes reinstating the value
of products or waste are carried out, so they can supple the forward flows at the
starting point of the enterprise in whole, partially, or in a form of secondary raw
materials. The reverse flows in a closed loop are subjected to strict quality monitoring,
as based on the results of that control there are certain decision made on final disposal
and use of the flows contents [Meng et al. 2017].
From the economic and environmental perspective, the closed loops of the
reverse flows in enterprise are more advantageous, as they bring measurable financial
advantages for the enterprise and participants of their business surroundings,
in a form of added value that results from the use of secondary instead of primary raw
materials along with ecological advantages in a form of being environmentally-friendly
and limiting the emissions [Blasco et al. 2014]. At the same time, the closed loops are
certainly more difficult in implementation and more complex in management,
therefore their implementation causes plenty of problems in numerous enterprises,
and in some of them they are not implemented at all. Here, an additional difficulty is
posed by the technical and technological barrier, as often the investment in modern
possibilities of value recovery overgrows the possibilities of the enterprise [Koppius,
Özdemir, Laan 2015; Rezapour et al. 2015].
This chapter illustrates the reverse flows in the enterprise, pointing to the
significance and necessity of correct management of those flows that are impossible to
avoid in the economic practice, and which - while managed properly - may as a result
allow to acquire many various benefits.

2.2. Specificity of the defective products’ flows

The manufacturing enterprises, the main activity of which is manufacturing

of goods that are afterwards offered to the customers on the market [Skowronek,
Sariusz-Wolski 2012], have actually always needed to face the problem of return
products, both of full value and defective, which support the logistics flows in a form
of returns. The terms describing the returns, i.e. products of full value and defective
products, are assumed in such forms for the needs of this work (Fig. 2.7).

45
Figure 2.7. Contents of the reverse flows of materials

REVERSE FLOWS OF MATERIALS

PRODUCT RETURNS WASTE

PRODUCTS OF FULL VALUE DEFECTIVE PRODUCTS

Source: Own work.

In literature of the subject, when it comes to the works on reverse flows

and their contents, and in the context of definitions mentioned in this scope, the most
common term is “waste”, which actually does not completely correspond to its Polish
equivalent for waste considered in terms of municipal and industrial waste (possibly
with stress put on the hazardous waste). The term “waste” employed in English works
describing the reverse flows is of a slightly broader meaning, covering with its scope
also the returned products - “returns” or “product returns”. The emphasis on this
broader meaning is significant because along with evolution of the concepts related to
the reverse flows, these are the returned products, included in the term “waste”, have
become the main subject of interest. The cause of that is initial inclination of these
concepts towards the post-sales services covering the returns [Rogers, Tibben-Lembke
1999], and afterwards towards defective products’ flows management via the reverse
logistics processes. Nowadays, the concept of reverse logistics is considered in two
contexts: in relation to municipal and industrial waste management including
the hazardous waste, and in relation to the defective products’ flows management 15.
Furthermore, while classifying the contents of reverse flows of materials into
the product returns and waste, it is necessary to make the first ones more detailed
by further dividing them into returns of products of full value and returns of defective
products. This division is based on the concept of reverse logistics, where the product
returns, before supplying the reverse flows, are subjected to the gatekeeping process.
This is the basis for classification of the products as of full value - when the
decision on their inclusion into the reverse flows is negative, and as defective - when
the decision on their inclusion into reverse flows is positive. This division is significant

15In the monograph, the concept of reverse logistics is considered in relation to the defective products’ flows
management. However, it must be mentioned here that the waste is included in the empirical part in order to point
out their place in the reverse flows and establish a comparative background and a reference point for the defective
products.

46
from the perspective of performed deliberations regarding defective products’ flows
management, as the returned products of full value do not pose the content of the
reverse flows, so management of those flows does not refer to them. The returns
of products of full value are the first-quality products, which are returned by the
customer in an identical and original condition that they were purchased or received
in. Therefore, the only action undertaken towards those returns is their redirection
for sales in forward flows. In turn, the returns of defective products supply the reverse
flows and are therefore classified as products subjected to management of that flows
within implementation of the reverse logistics processes. This type of returns includes
all returns products and those that do not meet the criteria of products of full value,
so they are products that have come to an end of life or end of use, but they still
represent some value that can be used again [Nitkiewicz 2013].
Defective products’ flows in an enterprise are subjected to the logistics
processes management, where there are decisions made about them in the scope
of implementation of the reverse logistics concept. The defective products’ flows
management can be defined as: “management of all logistics processes and operation
related to the defective products returned by the final and original users
to the supplier or manufacturer, with an intention for the cost-effective recycling,
according to all legal standards” [Shulman, Coughlan, Savaskan 2011]. This means that
the defective products’ flows management covers a whole scope of activities related
to implementation of the reverse logistics flows, beginning with the entrance into
its processes through gatekeeping, and ending at leaving the procedures, where after
the final disposal process, the value recovered from the defective products supplies
the same or different flows of the enterprise or its business surroundings.
Hence, correct implementation of the defective products’ flows management
in enterprise poses some significant support for not only positive results from
the reverse flows management, supplied with the returned defective products what
is within the scope of competence of the reverse logistics, but it also improves
the decision-making process in the area of possibilities for reduction of reverse flows
and control over the value of those flows - the possibility for recovery and reuse.
The reverse flows management is usually related to the ecological activities
of enterprises, forced by legislative and market influence. This is the basis, on which
the manufacturing enterprises undertake actions for voluntary acceptance of the
returns [Arora, Cason 1995; Khanna, Damon 1999]. Therefore, they ensure compliance
with applicable law and at the same time the long-term presence on the market
[Suchman 1995]. Of course, apart from ecological premises, the increase in global
competition on the markets [Popa 2012] and shortening life cycles of products along
with returns policy that is customer-friendly, contribute to the increase in the quantity
of returned products what mobilizes the enterprises to introduce solutions in this
scope, i.e. to introduce the reverse logistics concept [Guide, Harrison, Van Wassenhove
2003].
However, apart from the internal pressures exerted on the enterprises
in the scope of introduction of solutions from the reverse flows management,

47
they themselves noticed the possibilities brought by effective management of the
reverse logistic processes in a form of, among others, improvement in customer
service, more effective supplies management or disposal of products [Norek 2002;
Stock, Speh, Shear 2006; Mollenkopf, Russo, Frankel 2007; Mollenkopf et al. 2007;
Mollenkopf 2010; Frankel, Mollenkopf, Russo 2010].
The topic of returns of the defective products has been especially applicable
within recent a dozen or so year because of liberalization of the markets,
their globalization [Czakon 2010] and liberal policy of the offering parties towards
the customers, as well as because of emergence of modern techniques and technologies
that cause the products to have shorter life cycles [Chatfield, Pritchard 2013].
Therefore, the notion of product return is faced by all manufacturers, and these are
their decisions that influence the manner, which the enterprise will deal with this
problem in.
The returned defective products and adequately organized handling should
pose a significant point considered by the manufacturing enterprises while agreeing
on the management strategy. The current market conditions distribute the problem
of returns among all participants of the business surroundings, but the manufacturers
are those entities that are especially required (Fig. 2.8) to organize the defective
products’ flows management [Srivastava 2007; Toffel 2004].

Figure 2.8. The returns that depend on the product’s life cycle in the business surroundings
of enterprises

Consumer use
Manufacturer Distributor Seller
Guarantee period Post-guarantee period

Source: Own work based on [Ait-Kadi et al. 2012].

Unfortunately, there are still some cases - although less frequent - that some
manufacturing enterprises fail to see the benefits [Fleischmann, Kuik 2003], among
others in a form of positive impact on the market share and increase in the competitive
positions [Stankiewicz 2005], resulting from implementation of the reverse logistics
processes in defective products’ flows management [Jaayaraman, Luo 2007].
There are numerous types of returned defective products in the practice
of manufacturing enterprises, which move within the reverse flows and must
be correctly disposed based on adequate decisions in terms of the reverse logistics
processes.

48
 The literature of the subject presents a lot of divisions classifying the returns
according to the differentiated features and sources of origin [Andel 1997].
According to the most common classical division executed in a general grasp, the
returns that supply the defective products’ flows are divide according to the place in
the business surrounding of the enterprise where they emerged what at the same time
is reflected in three phases occurring in the product life cycle (Fig. 2.9), into
manufacturing returns, distribution returns and consumer (marketing) returns
[de Brito, Dekker 2004].
Figure 2.9. Basic classification of returns of defective products

Manufacturing
returns

Internal source for

the reverse flows
supply

Distribution Consumer
returns (marketing) returns
Manufacturing
External source enterprise External source for
for the reverse the reverse flows
flows supply supply

Source: Own work based on [Stindt, Sahamie 2012].

The manufacturing returns are the returns that result from the goods
manufacturing processes and they pose an internal source of supply for the reverse
flows. In turn, the distribution and consumer (marketing) returns come from external
sources, thus it is impossible to subject them to the manufacturer’s inspection,
therefore their management is more complicated.
What is more, the manufacturing returns are characterized with the fact that
they usually are not related to finished products, but only to their parts, components,
by-products from the manufacturing process, products that do not meet the project
specification, etc. but they sometimes include whole batches of final products, mainly
out of quality reasons. This groups includes first of all the surpluses of raw materials,
returns from quality inspections, post-production remains.
The distribution returns are the returned caused by damage (e.g. in transport),
completion or weakening of sales (the source is posed by wholesalers and retailers),
or generally understood pollution (e.g. in transport or displayed products), i.e. mainly
commercial returns or surpluses of stock.

49
 The consumer (marketing) returns are product that came to an end of life,
end of use or which require a repair, service or were returned in the guarantee period.
These returns come from the final market, from the final customer or user (division
of returns made based on: [Talbot, Lefebvre, Lefebvre 2007]).
The second, classic division of returns presents their characters in more details,
and refers to the quality of returned products to a greater degree. This division
includes [Rogers, Tibben-Lembke 2001]:
 damaged products (failed during use, but may be repaired or reused);
 outdated products (still representing a certain value);
 seasonal products (they may be reused in the next season);
 products unsold in retail (they may serve as raw materials or components
for repeated production, or they may be sold on another market);
 products withdrawn from sales (may be used as raw materials or components
for repeated production);
 products erroneously taken as faulty (after refurbishment they may be sold
again on the primary market);
 product components (still representing a certain value);
 waste- and by-products (must be neutralized or employed for production
of energy);
 packagings (must return to the starting point or be delivered to the recycling
organization)16.
At the same time, the defective products that supply the reverse flows
of enterprises may be divided into five main categories, taking into account the reason
for the return. According to that divisions, they are as follows [de Brito, Dekker 2002]:
returns of products with ended life cycle, commercial (or marketing) returns,
guarantee returns (products with valid guarantee), post-production waste and by-
products (mainly manufacturing returns) and packagings.
According to another division, reflected in the literature, there are five main
categories of the returns differentiated, while the analysis of those categories
approximates and complements them towards the division that was mentioned first
(manufacturing, distribution and consumer returns) [Lambert 2008]:
1. Consumer returns - most numerous category of returns. They are made by the
purchasers out of highly differentiated reasons (e.g. faults in products, not
matching the purchaser’s liking, no possibility to use the product), and they
emerge mainly in manufacturing enterprises that are characterized with
a liberal returns policy.
2. Marketing returns, made by the participant of the business surrounding.
They are most often caused by the weak sales of the products, problems with
quality or the need to free some space in a warehouse. This category
additionally includes the returns that arise from withdrawal from or closure

16 These two presented classic divisions are generally considered as crucial in the literature, which is why the
further theoretical and research parts of this work adopt them for interpretation of the issues related to
categorization of the returns.

50
 of business activity (first-quality products, which are returned because the
seller resigned from the contract with the manufacturer or liquidated their
business), returns from a byout (related to the practices of unhealthy
competition, when other manufacturer bough out a seller, and forbid the sales
of products from other manufacturers in the contract), seasonal returns
(returns of first-quality products returned because the sales period ended),
returns from surpluses (returns of products ordered in excessive amounts). The
marketing returns result from specificity of a given market and management
practices implemented in an improper manner. What is more, they often pose
a significant share in the general amount of returns.
3. Asset returns refer to the manufacturer’s willingness to recover and/or
reposition a part or whole value employed for creation of those products,
meaning that the manufacturer attempts to have them returned. These returns
are most often related to reusable packaging and transport materials.
4. Product returns pose a specific and unique category of returns. This form
of returns is initiated by the manufacturer, who makes such a decision because
the products failed to meet the security requirements or they show significant
faults in quality. This category of returns may have a form of voluntary
decisions (the customers make their own decision on whether to return the
product
or not), or obligatory ones (the customers are obliged to return the product, and
the manufacturer must make sure they do so, e.g. following the governmental
order). The characteristic features of those returns comprise of their
suddenness and abundance, which is why they require an especially well-
planned and well-organized management.
5. Environmental returns are related to products that include hazardous and toxic
materials or that were permanently withdrawn from sales by applicable legal
and environmental regulations. This kind of returns differs from the remaining
ones because the applicable regulations may exclude, and thus limit, certain
options for final disposal of such returns. What is more, full and comprehensive
documentation is necessary in their case, and additional inspection and audits
are often required.
The manufacturing enterprises’ acceptance of the defective products returns
is founded on three dimensions: economic, marketing and legislative (the applicable
legal and environmental regulations) [Meyer 1999]. The returns can be accepted by an
enterprise that seeks for the benefits in only one dimension, in two dimensions or in all
three dimensions, as it generally depends on the type of products and kind of the
industrial sector that a given enterprise operates within. The economic dimension
is related to the companies’ noticing certain financial benefits that arise from
the possibility to process and dispose the returns. The marketing dimension is referred
to meeting the customer’s expectations, who finds it more comfortable to purchase
products than to return the goods that are not satisfactory in any manner [Rubio,
Jiménez-Parra 2017]. The legislative dimension somehow forces the manufacturers

51
to accept the returns, as they are either obliged to do so by legal provisions, or forced
by environmental requirements, where rejection of returns may result in financial
fines [Ait-Kadi et al. 2012].
Numerous authors refer to quantitative and qualitative research presenting the
benefits for manufacturers, arising from effectively implemented reverse logistics
processes in the area of defective products, in a form of an increase in sales
[Jayaraman, Luo 2007] or an increase in profitability along with a decrease in the
operational costs by reuse of the accepted product returns [Stock, Mulki 2009].
Furthermore, the analysis of the literature of the subject stresses certain
determinants that encourage the manufacturing enterprises to implement
an effectively functioning reverse flows management system. First of all, in some
industrial sectors, the volume of defective products’ returns is larger than in others 17,
as a result of which the manufacturers must find a way to dispose the returns in an
appropriate manner [Trebilcock 2002]. What is more, the returned defective products
exert significant influence on the increase of costs in the enterprise, and this is where
the reverse logistics operations are helpful, including reuse of materials
or components, processing of goods or another manner of their disposal [Blackburn et
al. 2004]. The enterprises, while analyzing their operations, notice that sales of the
returned defective products on the secondary markets may provide them with a new
source of income [Meyer 1999] what does not contradict the additional benefits arising
from such an action in a form of following the legal regulations that are increasingly
more advantageous for ecologic development and the ecologic and social liability for
their products [Fishbein 1994; Toffel 2003]. The pressure exerted by customers on the
manufacturers is also significant when it comes to new manners of products
management. Especially such that are toxic or hazardous, as the customers are not
willing to bear the liability for such goods on their own [Brzeziński 2012], and the
manufacturer who intends to maintain good relations with the customers, must
respect their expectations [Dües, Tan, Lim 2012]. Finally, a highly significant issue
regarding the defective products’ flows management, which in this case is at the same
time closely related to the waste management process, is the limited and at the same
time depleting capacity of landfills (with both municipal and industrial waste).
Therefore, solutions regarding reverse flows management that employ the reverse
logistics processes, other than depositing waste on landfills, are highly desired and met
with a political and social approval [Thierry et al. 1995]. Determinants for
implementation of the defective products’ flows management are not limited to only
those mentioned above, however those seem to be the most significant ones from the
perspective of economy, law and society.
The defective products’ flows that emerge in that fields in a form of returns,
appear in majority in manufacturing enterprises, as it seems that it is impossible
to eliminate them completely in the present reality [Rogers et al. 2001].

17For example, based on the literature review, they might be manufacturing of electronic devices, automotive
equipment, household appliances, clothing or the publishing industry.

52
 The product returns, especially the returns of defective products, are not
desired within flows of the enterprises, as they usually prove failure of any of the
strategic or operational actions [Misni, Lee 2017]. However, it is the nature of the
returns that although being unwelcome, they are inevitable [DeCroix, Zipkin 2005].
Since they are an inevitable and necessary element in logistics of enterprises, the
satisfaction from such actions can be ensured only by organization of proper handling
both by the customers and participants of the business surrounding, including the
manufacturers themselves [DeCroix, Song, Zipkin 2005].
To sum up the general characteristics and specificty of the defective products
returns, it must be stated that it is necessary to emphasize one more aspect, namely the
difficulties in management. All types of returns that supply the return flows are
characterized with a high level of uncertainty [Kiesmueller, van der Laan 2001;
Cheung, Yuan 2003], related to the moment of their emergence in the enterprise’s
flows, to the time and place they appear in, and to their quantity and quality [Lieckens,
Vandaele 2007]. All of those elements, burdened with lack of information must be
considered in the manufacturing enterprises - attempts must be taken to anticipate
and forecast them [Grondys 2016], and facilitate the information flows, as this is the
only way the correct organization of the defective products’ flows management is
possible, which covers implementation of the reverse logistics concept.

2.3. Reverse logistics processes in the defective products’ flows management

There are numerous authors in literature of the subject who present the reverse
logistics processes by differentiating the perspective, which the reverse flows are
grasped in. However, while considering the reverse logistics processes in general
terms, they may be presented in a graphical form, as in the Figure 2.10.
Within the scope of implementation of the reverse logistics, the defective
products’ flows are first of all subjected to the conventional operations in logistics,
such as among others transport, warehousing or stock management 18. However, they
are complemented by specific processes (Fig. 2.10), related to collecting, gathering,
controlling and sorting of returns, and making decisions about their further disposal
[Simões et al. 2017].
Bearing in mind the reverse logistics processes presented in Figure 2.10, special
attention must be drawn to two processes: avoidance of returns and gatekeeping,
which are crucial when it comes to creation of reverse flows, therefore they influence
the correctness and effectiveness of implementation of further reverse logistics
processes in the enterprises within the area of defective products [Luthra et al. 2017].
The process of avoiding the returns in the reverse logistics is certainly
of a concept character.
It refers to seeking possibilities for minimization of the amount of returns that
supply the reverse flows. Avoidance aims to find ways to minimize return requests
18The conventional logistics operations in the reverse logistics are based on the generally assumed theory
and practice in this scope, thus the monograph does not describe these themes, rather focusing on the
complementary processes that are specific for defective products’ flows management in manufacturing enterprises.

53
[Rogers et al. 2002; Lambert 2004] or returns by developing and selling products
in such a manner. It is first of all related to the decisions that will further ensure that
before the products are sold and dispatched, their quality and user-friendliness
for customers on a feasible level are ensured [Lisiecka 2013]. Hence, the final recipient,
while receiving the product, will have no reservations or reasons to return it.
This process also refers to numerous decisions that will change the promotional
program in order to achieve the highest possible sales of products that have already
been dispatched to the final recipients, and towards which it is already known that
there have or will be certain problems with their sales in current conditions.

Figure 2.10. Defective products’ flows and reverse logistics processes in the scope of their
management

Raw materials Production Retail Consumers

Distribution
and resources

Avoidance
of returns

Gatekeeping

Collecting
the returns
Final disposal processes
Gathering
the returns

Controlling
Final disposal
and sorting

Forward logistics

Reverse logistics
Waste
management

Source: Own work based on [Rogers, Tibben-Lembke 1999: Fleischmann et al. 2000; Fleischmann 2001;
Guide, Wassenhove 2002].

Therefore, there is a need for interference that will avoid the possibility of returns
[Janse, Schuur, de Brito 2010; Bernon, Rossi 2011; Genchev, Glenn Richey, Gabler
2011; Rogers, Melamed, Lembke 2012].
Gatekeeping takes place on the contact point of forwards and reverse flows
in an enterprise. It consists in determination on whether the products accomplish the
forward flows should be qualified for reverse flows. The gatekeeping activity is meant
to guide the individual returns to the best individual disposition, given the returns cost
and possible value recovery [Thierry et al. 1995]. This is the process where the crucial
decision is made on which products will supply the reverse flows and take part in the
further reverse logistics processes [Genchev, Glenn Richey, Gabler 2011; Rogers,
Melamed, Lembke 2012; Meade, Sarkis, Presley 2007].

54
 In the literature, the gatekeeping process is classified in the category of the first
process of reverse logistics, as without it the remaining processes do not only lose their
value and quality significantly, but are actually not implemented at all. When it comes
to management of reverse flows, great emphasis is put on determination of practices
employed by enterprises, intended to identify which products or materials meet the
criteria of those flows, and which are not eligible, so they are not accepted there.
The term gatekeeping applies to the moment the enterprise makes a decision in this
scope, posing the essence of supplies acquisition for reverse flows.
Having gained the acceptance in the gatekeeping process, the returned products
or materials that support the reverse flows undergo the collecting process, which
is preceded by activities that are intended to derive them from various sources
of origin. Afterwards, the content of reverse flows is controlled in term of the general
conditions, first of all quality, and it is sorted to various categories of returns on that
basis. The next stage is redirection of the reverse flows, according to the previous
sorting, to the units that can repair, reuse, or employ them for repeated production,
recycle them or adopt another action that will reinstate its efficacy and/or usefulness,
or eventually deliver the product to a landfill.
Another process of reverse logistics - collecting of the returned defective
products – consists in recovery of whole products, their parts, components and
materials from final users to subject them to further processes intended to recover the
value. This process is especially significant for operation of the reverse logistics, as the
returns of defective products are characterized with a significant level of uncertainty as
regards the time of their use, and it is impossible to predict when a product will
transform from a product of full value into a defective one, and supply the reverse
flows as a return [Fleischmann et al. 1997]. At the same time, collecting the returns
of defective products, despite being the first stage in the reverse logistics, is also
a process of the greatest significance regarding the fact that it is a basis for
determination of profitability and effectiveness of further reverse logistics processes
[Guide, Wassenhove 2003].
Another crucial process in reverse logistics is gathering of the returned
defective products and their delivery to the specialized units that deal with their
controlling, sorting and decision-making in the scope of further disposal. The gathering
of returns is related to the actions, during which the enterprises become owners of the
defective products, acquired previously within the collecting process, to manage them
freely on the next stages of value recovery [Fleischmann, Van Nunen, Grave 2003].
Therefore, the main subject that realizes the process of gathering the defective product
is the manufacturer. Its physical flows on the stage of collecting of defective products
may be supplied with returns flowing from three directions: directly from the final
users or indirectly, with consideration of intermediaries in a form of retailers or third
parties [Kumar, Putnam 2008]. At the same time, the manufacturer does not have the
possibility to gather the returns by employing one of the two alternative methods
based on determination of the control degree (regarding quality and quantity) towards
the returned defective products. In the first alternative, there is no control over

55
the returned defective products, and in the second, which is the individual gathering
method, the manufacturer has full control over the returned products [Webster, Mitra
2007]. The first method brings great risk as to the amount and quality of the collected
defective products, while the second one reduces this risk to a significant extent, but
makes the collecting process much more strenuous, time-consuming and expensive.
Therefore, the selection of the method for the gathering process depends on the cost
structure and the budget devoted to actions related to reverse flows management
[Atasu, Toktay, van Wassenhove 2013], as well as on the decisions made in the scope
of returns management - in this case from the decision determining the quantitative
volume of returned defective products what will allow to achieve the assumed results
[Pochampally, Gupta 2004].
Another crucial reverse logistics process is the sorting and controlling process
composed of two coordinated actions. While assuming that is common in the literature
of the subject, to state that the consumers return the products out of known and
unknown reasons [Rogers, Tibben-Lembke 1999], it is also assumed that the condition
of returned products is highly differentiated. Therefore, the control carried out
separately for each product that supplies the flows is so significant and required, and
therefore this control is an action that precedes the sorting of gathered defective
products. During the control, evaluation is carried out on both the appearance and
condition of the returned product and its components. The products and components
may be adequately sorted only after the evaluation is completed [de Brito, Dekker
2002].
The last crucial process in the reverse logistics is the decision-making process
regarding further management of the returned defective products, i.e. their final
disposal according to actions (options) intended to recover the value from those
products. On the initial stages of development of science regarding reverse logistics,
the decision-making process related to the returns management was based on three
main possibilities, i.e. reuse of product, recovery of materials or inclusion of the
product into the waste management processes [Thierry et al. 1995]. The fourth
possibility appeared at the beginning of the 21st century, namely the possibility to
upgrade the product [Krikke, Bloemhof-Ruwaard, van Wassenhove 2003; Tibben-
Lembke, Rogers 2002], and a moment later, based on the market research, there was a
hierarchy for five disposal actions agreed on: sales of products as new, repair or
repackage and sales of products as new, repair or repackage and sales of products as
used, sales of products as outdated, sales of products as outdated at a lower price, sales
of products as outdated at a price equal to the manufacturing costs [Norek 2003;
Lambert, Riopel, Abdul-Kader 2011; Ait-Kadi et al. 2012].
In subsequent years, there were numerous propositions emerging in the
literature of the subject, in varied combinations, related to the possibilities of further
disposal of defective products’ returns. However, the economic practice implements
five most popular and common groups of alternative final disposal actions for returned
defective products, along with the options implemented in their field [Thierry
et al. 1995; de Brito, Dekker 2002; Fleischmann et al. 1997; Mutha, Pokharel 2009]:

56
  reuse - repackage, upgrade/modernization, charity donation, sales on another
market,
 reprocessing - disassembly, reconfiguration, regeneration,
 repair,
 recycling,
 final disposal in waste management.
A decision on the manner of further disposal is a key process directly
embedded in the reverse logistics [Sangwan 2017].

Figure 2.11. A pyramid with hierarchy of actions within the final disposal of defective products

Final disposal options

for the returns
of defective products

Depositing on a landfill

Recycling

Repair

Reprocessing
(disassembly, reconfiguration, remanufacture)

Reuse
(repackage, upgrade / modernization, charity donation, sales on another market)

Recovery of value, economic

and environmental effectiveness
Source: Own work based on: [van Wassenhove, Zikopoulos 2011; Nikolaidis 2013].

This decision is related to determination of an action (option), during which

the products or value it holds will be recovered. Generally, the value recovery is carried
out, first of all, because of applicable legal and environmental regulations, and second
of all, regarding the market requirements, and third of all, bearing in mind the
economic value included in the returned defective products (Fig. 2.11).
While making a decision on reusing the products, we may choose the option
of repackage, upgrade/modernization, charity donation and sales on the market other
than the primary one. Only few returned defective products are suitable for these
options, as in the general characteristics, they consist in lack of interference with the
returns (or the interference is slight), and then such products are reuse in their
standard applications. More specifically, the repackage option includes the products
returned in their original quality conditions, but with a damaged packaging that must

57
be replaced with a new one, and afterwards the product may supply the forward
logistics flows. When it comes to the upgrade or modernization option, the returned
products are also in a very good quality condition, but they require a slight
modification, which will make them look more modern or improve their functionality
so they correspond to the current market trends (e.g. seasonal or electronic products)
[Mitra 2007]. This option is related to the moral aging of the products, which means
that the products of full value, as a result of rapid technological, technical or other
changes (e.g. fashion trends), become defective products as they fail to meet the
ongoing standards of use. Charity donation from the defective products is related
to their good quality, but it also means that the enterprise regards them as unwanted.
Therefore, the company willing to improve its image may decide to hand donate those
products to charity. In turn, sales of products on another market means that the
products do not match the primary market out of numerous reasons, but regarding
their good quality, there is a need to change e.g. the language of the manual
or packaging - in other words, adjust the products to requirements of another market,
and afterwards sell them on that market [Krumwiede, Sheu 2002]. Most frequently,
in the literature, the actions of reuse cover the returns of packaging products.
An example here may be posed by bottles [Gonzales-Torre, Adenso-Diaz, Artiba 2004],
palettes or containers [Kroon, Vrijens 1995; Kelle, Silver 1989]. Furthermore, reuse is
related to products that the users did not use, so their quality condition corresponds
to their initial version. Other products are usually unsuitable for reuse within final
disposal because of their frequently not the best quality condition [Zikopoulos, Tagaras
2007].
The recovery of value from the returns may also take place through
reprocessing, i.e. the options of disassembly, reconfiguration and regeneration.
The returned products are disassembled, and afterwards their parts are used
in manufacturing of the same or different products. The case is similar with
reconfiguration and regeneration, which adopt minor repairs, renovations,
replacement of parts, refurbishment or cleaning to reinstate the returned products to
their original form what is the goal of reprocessing. This option is usually adopted in
the automotive, electronic industry – cell phones [Mitra 2007; Guide, Teunter, van
Wassenhove 2003], copying machines [Wendy, Chris 2001], computers [Ferrer 1997],
and at production of tires [Ślusarczyk, Kot 2017; Lebreton, Tuma 2007]. This option
may be integrated with recycling [Hoshino, Yura, Hitomi 1995]. Having been
reprocessed, the products may be sold as first-quality goods [Thierry et al. 1995].
Repair is another action allowing to recover value from the returned products.
Its objective is to reinstate functionalities to the damaged/faulty products what at the
same time is related to a loss in quality, thus it does not mean reinstatement of the
primary quality [Amini, Retzlaff-Roberts, Bienstock 2005]. This action can also mean
renovation of products, namely their reinstatement to a certain quality condition,
which however is not equal the primary quality. The repair/renovation often
accompanies the reprocessing actions in relation to the component that are employed
there [Ferrer 2001].

58
 The last action that serves recovery of value from the returns through their final
disposal is recycling. The objective of recycling is to acquire secondary materials, thus
it is performed in a manner not maintaining the primary structures of the product
[Fagundes, Amorim, da Silva Lima 2017]. It consists of processing of returned products
in such a manner that the acquired materials are characterized with desired quality
that depends on the manufacturing process, where they are employed as raw
materials. Examples for that may be posed by recycling of plastic [Pohlen, Farris 1992],
paper [Pati, Vrat, Kumar 2008], glass [Gonzalez-Torre, Adenso-Diaz 2006], metals
[Logozar, Radonjic, Bastic 2006], automotive parts [Bellmann, Khare 2000], electronic
products [Nagurney, Toyasaki 2005], carpets [Biehl, Prater, Realff 2007].
Decision on depositing the returned products on a landfill is not an action
of value recovery. This is the least desirable solution in the reverse logistics as apart
from the potential incineration of the waste in order to generate energy
for manufacturing processes, it represents no value recovery [Walther, Spengler 2005].
The enterprises try to avoid it as far as possible, and instead make use of other final
disposal options. This is also related to their environmental policy, which imposes an
obligation to limit the generation of industrial and hazardous waste to a necessary
minimum [Li, Olorunniwo 2008].
Management of reverse flows requires a highly precise planning of actions
and their effective control in order to ensure correct operation of manufacturing
companies. The most significant actions, from the perspective of the manufacturing
enterprises’ strategies, are those related to implementation of gatekeeping processes
and avoidance of returns, as they are directly reflected in effective management
of defective products’ flows. This implementation must be preceded with the analysis
and evaluation of influence exerted by the returns on the enterprises’ finances so it can
have a correct course.
At the same time, all of the above-mentioned processes, regarding the fact that
they are integrated elements of the reverse flows management in an enterprise, are
based on a strategic and operational management formula. Basically, the effectiveness
of reverse flows management is related to actions on the strategic and operational
level, as the purpose of management is not only the value recovery [Wood 2001], but
also generation of value [Autry 2005]. Therefore, all actions in the scope of defective
products’ flows management must be permanently embedded into strategic
and operational actions undertaken by enterprises, through implementation of the
reverse logistics processes [Mollenkopf, Russo, Frankel 2007].
There are developmental and implementation procedures arranged at the
strategic level, while the coordination of the reverse logistics processes takes place on
the operational level. The analyzed defective products’ flows management is based in
its strategic part on the structure related to implementation of the reverse logistics
processes in the enterprises. In turn, the operation part of management consists
in implementation of those processes in a form, in which they were implemented
on the strategic level.

59
 Therefore, Table 2.2 presents the sequence of management processes of reverse
flows in an enterprise, divided into the strategic and operational level processes, along
with interactions between those processes on both levels. All of those interactions are
related to multi-dimensional functions, including marketing, finances, manufacturing
or logistics in an enterprise (Table 2.2).
When considering the specificity of the defective products’ flows, it is necessary
to pay attention to the fact that these flows have a highly significant function
in operations of enterprises that follow the sustainable development concept [Grabara
2013]. Actions related to defective products’ flows management are currently
increasingly more popular in operation of business activity related to manufacturing
of physical goods, first of all because of the intensively diminishing accessibility to raw
materials and the progressing degradation of the natural environment [Rogers,
Tibben-Lembke 2001].
Majority of states require the manufacturers to observe the applicable law in
the scope of environmental protection and preservation of raw resources,
by introducing among others the extended producer responsibility (EPR) [Lifset, Atasu,
Tojo 2013]. The manufacturers are imposed with liability for products that came to an
end of life (EoL) [Hanafi, Kara, Kaebernick 2008] of an end of use (EoU) [Mutha,
Pokharel 2009; Dehghanian, Mansour 2009] and are or may become products that are
toxic, hazardous, polluting and degrading the environment and natural resources
[Guide, van Wassenhove 2009]. The extended producer responsibility is the most
important basis for development of policy related to natural environment protection
and preservation of natural resources [Adamczyk 2009], related to avoidance
of environmental impact exerted by the manufactured products what means collection
of those products when they become the returns of defective products [Forslind 2005].
The authors raising this theme in the literature suggest that EPR is a factor that
stimulates the manufacturing enterprises to create products based on ecological
designing, as such products exert small impact on the environment, and at the same
time less often adopt a form of a return of a defective product [Brouillat, Oltra 2012;
Zailani et al. 2012; Fleckinger, Glachant 2010].
The EPR concept adopts two main forms [Xiang, Ming 2011; Forslind 2005]:
1) the customers’ obligations to return the products that are used or that fail to meet
their expectation, 2) the manufacturers’ liability for management of returns flows that
come from the customers.
Essentially, the extended producer responsibility is enforced in well-developed
countries such as Germany, Sweden, Switzerland, the USA or Canada, but its premises
can be also noticed in developing countries that introduce this concept with increased
intensity year by year [Manomaivibool 2009].
Hence, the enterprises noticed that the defective products’ flows management
may bring an opportunity for not only improving the attractiveness of their business
by developing the competitive advantage [Jack, Powers, Skinner 2010], but also for
general acceleration of development of the sustainable concept [Pabian 2013].

60
 This is first of all referred to the manufacturing enterprises that must accept
returns of their products and manage them in the defective products’ flows [Srivastava
2007; Toffel 2004]. What is more, such actions are motivated, apart from legal and
economic conditions, by the customers themselves, who require that their expectations
are respected, who exert pressure on the manufacturers to create efficiently operating
programs for management of the returns of defective products [Srivastava, Srivastava
2006].

Table 2.2. The processes of management of reverse flows in an enterprise in the strategic
and operational perspective

PROCESSES OF REVERSE FLOWS MANAGEMENT

STRATEGIC OPERATIONAL

Characteristics Subprocess Subprocess Characteristics

 Determination of the role of  Receipt of a return request;

strategies of returns management
Determination of objectives and

returns in the enterprise’s  Implementation of

Receipt of a return request

strategy; guidelines for gatekeeping.

 Determination of the most
advantageous ways for value
recovery;
 Determination of
1
environmental and legal
requirements in the
enterprise’s surrounding;
 Determination of limitations
and possibilities of the supply
chain in the scope of returns
management.
Development of guidelines

 Determination of the type of  Review of the guidelines

for the returns avoidance,

Determination of routing
gatekeeping and final

returns in the enterprise; of routing;

disposal processes

 Determination of structure  Specification of the routing

regarding the possibilities for plan;
avoidance of returns;  Generalization of
2
 Development of a returns authorization for the
policy and the gatekeeping returned products.
mechanisms;
 Determination of the final
disposal option.

61
 network of returns
Establishment of a
 Determination of a network of  Acceptance of the returned

Receipt of returns
and a scheme of
the reverse logistics; goods;
 Selection of transport methods  Verification of the returns

flows
and means; 3 in the gatekeeping process;
 Development of a planning  Determination of the causes
structure for the undertaken for the returns.
returns

Establishment of the
crediting principles
 Establishment of the  Application of the guidelines

Selection of final
determination manner for the for final disposal;

disposal
returns value;  Transport of returns to the
 Establishment of guidelines for 4 final disposal spot.
the authorization of crediting;
 Determination of the crediting
policy.

customer/supplie
Determination of

 Identification and examination  Coordination of the

Crediting a
of potential secondary market; crediting process
secondary
markets

 Determination of principles for in the whole supply chain;

5

r
using the secondary markets;  Arrangements from
 Determination of the returns negotiations.
processing strategy.
Establishment of the structure of

 Combination of the returns  Analysis of returns

measurements of efficiency

management process with the and determination of

Analysis of returns and

economic balance of the possibilities to avoid them;

enterprise;  Estimating processual
measurements

 Determination of the structure measurements and

of measurements and strategic connecting them to the
6
objectives in the scope of enterprise’s economic
returns management. balance;
 Determination of objectives
for improvement of
operations in the scope
of returns.

Processes: 1) Management of customer relationships, 2) Management of customer service, 3) Management

of demand, 4) Implementation of orders, 5) Manufacturing flows management, 6) Management of relations
with suppliers
Source: Own work based on: [Croxton et al. 2001].

The theoretical grasp of the logistics flows problem in enterprises, with special
emphasis on the reverse flows, their scope and specificity, and the processual
perspective of the reverse logistics, explaining its role in the defective products’ flows
management allowed exploring the new areas for implementation of the reverse
logistics processes in enterprises, which are related to management of the defective
products’ flows. It also allowed to identify the reverse logistics processes and factors
that influence them what is reflected in the level of implementation of actions in the
scope of management of the defective products’ flows in the manufacturing
enterprises.

62
 EMPIRICAL PART – IN THE LIGHT OF RESEARCH PRACTICE
OF MANUFACTURING ENTERPRISES

The contents presented in the theoretical part constituted the substantive basis
and research background for the implemented studies, presented in the empirical part.
The studies on reverse logistics both in the theoretical and practical field have
been performed and explored in the literature of the subject for about 20 years.
However, the scientific papers related to those issues, recorded in various databases,
published in books or post-conference materials reveal that the approaches to the
research carried out in the scope of reverse logistics are characterized with great
differentiation and variety. It can be observed especially by analyzing literature
reviews, which meticulously explore all English publications on reverse logistics
published in a specific time interval. At this point it is worth mentioning the results
from literature studies performed by C.R. Carter and L.M. Ellram [1998], S. Pokharel
and A. Mutha [2009], P. Chanintrakul, A.E.C. Mondragon, C. Lalwani and C.Y. Wong
[2009], K. Govindan, H. Soleimani and D. Kannan [2015], S. Agrawal, R.K. Singh and Q.
Murtaza [2015], or J.J. Wang et al. [2017]. The published literature reviews suggest
differentiated directions of reverse logistics studies in their various aspects.
The reverse logistics is explored, among others, from the objective and subjective,
processual, decision-making, organizational and implementation perspectives.
All of those angles are demonstrated both theoretically and practically, and the studies
are performed in selected countries, sectors of industry or particular enterprises.
In the group of significant publications describing various aspects of reverse
logistics, special attentions should be drawn to the book by D.S. Rogers and R.S.
Tibben-Tembke [1999]. It is one of the first works on reverse logistics, presenting the
studies related to implementation and adoption of reverse logistics in American
enterprises.
Special attention should be also paid to the doctoral dissertation by M. de Brito
[2004], which combines the concept of reverse logistics with management sciences
in a comprehensive manner.
The studies on reverse logistics of defective products in Polish manufacturing
enterprises were inspired by multi-annual and deep analysis of publications related to
reverse logistics, mainly the English ones. This allowed to find a research gap regarding
the deficit in connecting the reverse logistics concept with logistics management in the
practice of manufacturing enterprises in Polish economic realities, especially in the
field of defective products.
Identification of this research gap and proving a possibility to fill it allowed the
author of this monograph to acquire financial resources from the National Science
Center19 for broad studies over this topic, as the NSC considered the proposed form
of studies as original and innovative, and their implementation as valuable and

19 Project entitled “Logistics management of defective products in Polish manufacturing enterprises” financed
by National Science Centre with the decision No. DEC-2012/07/D/HS4/02071.

63
necessary for development of Polish Science and support for the Polish industry with
new solutions.
Realization of the empirical studies related to the reverse logistics of defective
products in Polish manufacturing enterprises justified their implementation.
Presentation of the studies results in a form of a monograph created the first
comprehensive study related to reverse logistics in the Polish industrial sector.

64
3. Reverse logistics practice of defective products
3.1. Research objectives and sampling criteria

A basis for the empirical part is posed by the research over the reverse logistics
processes in management of defective products’ flows in Polish manufacturing
enterprises. The research is intended to determine the place and significance
of the reverse logistics processes in the field of management of the defective products’
flows in the mentioned enterprises.
Characteristics and evaluation of practices adopted by the Polish manufacturing
enterprises as regards the use of the reverse logistics processes in management
of the defective products’ flows are based on an analysis of primary data acquired from
the performed survey research and on own observations and direct interviews carried
out with representatives of the manufacturing enterprises.
Following comprehensive literature studies performed in the first place, there
was the quantitative research drafted. It was developed as a survey, a questionnaire
of which was composed of 15 substantive questions, particulars and a final confidential
part that was to be filled in voluntarily20.
There was a pilot study on the first stage, carried out on a sample consisting
in 10 Polish manufacturing enterprises, intended to eliminate any possible ambiguities
so the respondents had no doubts about the questions’ essence. Afterwards the main
research was performed on a representative sample of 302 Polish manufacturing
enterprises.
While designing the research that would adopt the representative method, the
goal was the maximum possible reduction in the sample size, but at the same time
to maintain the required certainty and accuracy of conclusions. Classic sampling
schemes offer some formulas that allow to calculate an approximate size of such
a sample.
In case of fraction estimation (structure ration, percentage) in the simple
random sampling scheme, the minimum sample size can be identified from the
following formula [Steczkowski 1995]:
ua2 p(1- p) N
n= 2
ua p(1- p) + ( N - 1)d 2

where:

α — statistical significance (0.1–0.01);

uα — value from normal distribution tables for the assumed level

of significance;

20 The survey questionnaire is provided in Attachment 1 of this monograph.

65
p — structure ratio (fraction) based on the pilot study; where the fraction
value cannot be determined even as an approximate value, the least advantageous
situation is assumed p = (1 – p) = 0.5;

d — maximum estimation error determined on the level of 1-5%.

The assumed significance level for the performed research was 0.1, and the
maximum estimation error was 5%, thus the sample size was identified as follows:

n=

Hence, the minimum sample size is 267 enterprises. The sample of 302
enterprises identified for the research is the representative sample.
Furthermore, the next stage was where the researched population was stratified
according to operational activities undertaken the enterprises, based on the Polish
Classification of Activity [pl. Polska Klasyfikacja Działalności, PKD), into 13 strata
[Steczkowski 1995]:
Nh
nh = n
N
where:
nh — estimated size of the sampling units in subsequent strata,
h — number of strata,
Nh — size of subsequent strata,
N — size of the researched population (41,680),
n — sample size (302).
In case of stratified sampling, there is a specific number of units sampled from
each strata is searched for, so the average error of the parameter evaluation was as low
as possible. Proportional allocation was selected in case of the researched sample
out of four sample distribution methods (even, proportional, Neyman, optimum).
It consists in sampling of subsamples from particular strata in such a way that
the relation between each subsample’s size to the general sample’s size was equal
to fraction of particular strata, expressed in relation to the size of the whole general
population. This results in a self-weighting sample that meets the requirement stating
that probability of getting into the sample should be identical for all units that compose
the general population.
Identification and surveying of the representative sample of 302 Polish
manufacturing enterprises allowed for the analyzis of the collected results with

66
interference extended to the general group of the enterprises. The sampling process
consisted in selecting a certain number of Polish manufacturing enterprises, as this
was the population of theirs that was the base for the research. Thanks to randomness
of the sampling process, the sample is a mini picture of the whole population, reflecting
the research features and variables [Zawada 2004].

Table 3.1. Research sample’s structure

Type of Major Description Size in the

Activity sample
according to
PKD

14.13 Manufacture of other outerware 87 (28.8%)

14.19 Manufacture of other wearing apparel and accessories 11 (3.6%)

26.3 and 26.4 Manufacture of [tele)communication equipment 6 (2.0%)

Manufacture of consumer electronics

26.7 and 26.8 Manufacture of optical instruments and photographic equipment 4 (1.3%)

Manufacture of unrecorded magnetic and optical media

27.2 Manufacture of batteries and accumulators 1 (0.3%)

27.5 and 27.9 Manufacture of domestic appliances 5 (1.7%)

Manufacture of other electrical equipment

28.0 Manufacture of machinery and devices, not elsewhere classified 45 (14.9%)

29.3 Manufacture of spare parts and accessories for motor vehicles 10 (3.3%)

30.9 Manufacture of transport equipment, not elsewhere classified 3 (1.0%)

31.0 Manufacture of furniture 120 (39.7%)

32.2 Manufacture of musical instruments 2 (0.7%)

32.3 Manufacture of sports goods 3 (1.0%)

32.4 Manufacture of games and toys 5 (1.7%)

Source: Own work.

The survey questionnaire was carried out on the manufacturing companies

from sectors characterized with some high potential for occurrence of defective
products, i.e. mainly furniture, clothing, automotive, household appliances and
electronic equipment. The sample structure is presented in detail in Table 3.1
providing general characteristics of its operations and its size (with percentage share).
The main survey questionnaire was performed in the first quarter of 2014.
It was carried out as an interview via a telephone, with the CATI method. The group

67
of respondents covered representatives of the enterprises working on managerial
positions on the level of whole companies or persons that they designate
as responsible for management of the defective products’ flows, i.e. among other
receiving returns of products and developing the company’s strategy and policy in that
field.
The survey questionnaire comprised of notions related to defective products
and management of their flows through the reverse logistics processes. There were
mostly closed and multiple-choice questions, and such that allowed scores
to be ascribed to particular items. Other questions were also of a closed character,
but with a single answer, considering the percentage values provided as estimations.
While beginning the phone interview, each respondent needed to specify
whether there are any defective products in the represented enterprises, revealed
via returns. Only a positive answer for this question allowed further participation
in the research. Therefore, it was possible to examine the whole group of companies,
which the representative sample’s size was specified for, and it was not necessary
to eliminate the surveys out of formal reasons.
In its main part, covering the substantial questions, the survey questionnaire’s
structure allowed acquisition of information about the reverse logistics processes
related to management of defective product’s flows in the Polish manufacturing
companies. The raised notions were focused on the following thematic areas:
 defective products (returns) categories, places of their emergence, their
quantitative condition and occurrence intensity;
 return period, duration of the returns processing cycle;
 politics and motives for returns acceptance, influence of the return
on the company’s profitability and development of the competitive position;
 problems related to processing of defective products - implementation
of actions in reverse flows management, an analysis of barriers for effective
management of returns, systems supporting the reverse logistics processes.
The survey questionnaire’s results were adopted to illustrate the scale
and scope of the reverse logistics processes in management of defective products’
flows in the Polish manufacturing enterprises, the premises and motives as well
as their manifestations and results.
The research results analysis begun with characteristics of the research sample
based on its structure, considering sizes of the respondents’ enterprises determined
against the rate of employment, as well as the structure of answers distribution
according to the type of logistics activities undertaken by a given enterprise.
Participants of the research were mainly the representatives of manufacturing
enterprises employing up to 9 persons - they were more than a half of the respondents
(Fig. 3.1). The next group in terms of its size was composed of small (30.3%)
and medium-sized (12.3%) enterprises, while the lowest percentage share was taken
by companies that employ more than 250 persons - 3.3% of the general group
of respondents.

68
Figure 3.1. Sample’s structure according to the size of enterprises

3,3%
12,3%

30,3% 54,1%

UP TO 9 PERSONS 10-49 PERSONS

50-249 PERSONS MORE THAN 250 PERSONS

Source: Own work based on results from the survey questionnaire.

At the same time, in order to characterize the sample, the respondents were
asked to specify the type of logistics operations carried out by their enterprise, with
a possibility to make multiple choices. According to the assumption that the target
is posed by the manufacturing enterprises, as much as 97% of the respondents pointed
to operations as a producer or manufacturer. Furthermore, about 13% of enterprises
determined to be retailers and wholesalers. The remaining options were barely
selected (Fig. 3.2).

Figure 3.2. Sample’s structure according to the type of logistics activities

97%
100%
90%
80%
70%
60%
50%
40%
30% 12,6% 13,2%
20% 2,3% 1,0% 0,7%
10%
0%

Source: Own work based on results from the survey questionnaire.

69
 The analysis of results from the survey questionnaire allowed implementation
of the empirical part regarding the reverse logistics processes in management
of defective products’ flows, presented both in this and in three subsequent chapters
of this monograph, and the results interpretation is based on own observations
and direct interviews performed with representatives of the manufacturing companies.

3.2. Interpretation of the survey questionnaire results

3.2.1. Characteristics of the defective products’ flows
Thanks to the results acquired from the survey questionnaire carried out on the
representative sample of Polish manufacturing enterprises, it is possible to diagnose
and identify some business practices employed in management of defective products’
flows.
Based on the in-depth literature studies in the field of the notion in question,
there were nine main categories of defective products identified for the research,
which supply the reverse flows in the manufacturing enterprises 21.
During the survey questionnaire, the respondents’ task was to determine
the categories of returns that appear in the defective products’ flows in their
enterprises along with intensity of those flows (Fig. 3.3).
Intensity of the returns’ occurrence was classified according to three categories
in the survey: (1) numerous - more than 50% of the total annual production,
(2) moderate - between 10 and 50% of the total annual production, (3) - marginal
- up to 10% of the total annual production.
The research results prove that the waste- and by-products occur in the Polish
enterprises with greater intensity. When this indication is considered in case
of defective products, it can be seen that the reverse flows are composed in a greater
part from waste- and by-products than from the defective products. However, this
results from the fact that the waste- and by-products are a natural consequence
of manufacturing processes. While a high number of defective products in reverse
flows could indicate inefficiency of manufacturing processes or other actions
undertaken by a given enterprise what would be disadvantageous for its image and
operations within increasingly more competitive markets.
Analysis of the remaining answers provided by the respondents suggests
that defective products are mostly present in the returns of packaging products
and product components.
Average occurrence of returns is related mainly to the same categories
of products as those specified above, but there are also some damaged products
pointed out.

21Even though waste- and by-products are not defective products (according to a theoretical interpretation of the
defective products and classification of returns presented in sub-chapter 2.2), they are included in the performed
research and its results analysis. Inclusion of those products into the empirical research is an intended action,
motivated by the willingness to show that the waste- and by-products are first of all the part of reverse flows in
manufacturing enterprises, and second of all the background for comparisons and references for defective products.

70
Figure 3.3. Categories of returns in defective products ’ flows and intensity of their occurrence

15,9%
PACKAGING PRODUCTS 8,3%
2,0%

45,0%
WASTE- AND BY-PRODUCTS 22,2%
13,9%

18,5%
PRODUCT COMPONENTS 7,0%
1,7%

PRODUCTS ERRONEOUSLY TAKEN AS 7,3%

1,7%
FAULTY

5,3%
WITHDRAWN PRODUCTS 0,3%
0,7%

4,6%
UNSOLD PRODUCTS 1,0%
0,7%

3,6%
SEASONAL PRODUCTS 1,7%
0,3%

5,0%
OUTDATED PRODUCTS 0,3%
0,7%

29,8%
DAMAGED PRODUCTS 9,6%
0,7%

0% 20% 40% 60%

NUMEROUS MODERATE MARGINAL

Source: Own work based on results from the survey questionnaire.

While analyzing the marginal intensity, the emergence of all listed products
categories can be observed, while most often the answers are related to waste-
products, by-products, damaged products, components of products and packagings.

71
 Outdated, seasonal, unsold products and products withdrawn from sales are
characterized with marginal or moderate occurrence intensity, while numerous
occurrence is almost not applicable in their case at all.
Products erroneously taken as faulty present a small share for the marginal
intensity group and almost no share for the moderate intensity, and no share at all for
the numerous intensity.
Analysis of the respondents’ answers for this question suggests that the
defective products are indeed present in the reverse flows of Polish manufacturing
enterprises, thus it is justified and necessary to undertake actions intended
to implement the reverse logistics processes in the field of those flows’ management.
Another analysis regards the qualitative condition of defective products
in reverse flows of the Polish manufacturing enterprises. A starting point for
determination of the defective product’s qualitative condition is to refer to the original
quality of that product. While considering the issue of returns quality, the respondent
could evaluate it on the 6-grade scale, which was as follows: (1) terrible, (2) poor,
(3) sufficient, (4) good, (5) very good, (6) perfect (Fig. 3.4).
According to the respondents, the damaged products are most numerous
in a form of good (almost 45%) or sufficient quality (almost 35%), while they appear
in the reverse flows in perfect and very good conditions only to a marginal degree.
A similar distribution of respondents’ answers occurs in case of outdated
products in a good (almost 50%) and sufficient condition (more than 30%) - similar
to damaged products, they are most numerous in this condition. At the same time,
5% of respondent pointed that they occur in the flows both in poor and very good
conditions, and as much as 10% in a perfect condition.
In case of seasonal returns, the most frequent qualitative conditions of the
returns were the perfect (almost 45%) and very good (more than 20%) conditions.
Such a condition of those return may undoubtedly result from the character
of products, the production and sales of which are based on seasonality. Concurrently,
more that 15% of respondents suggested that the seasonal products appear in their
reverse flows in good and sufficient conditions. There are no poor and terrible quality
products in this category of returns.
The defective products that were returned as unsold in retail are most often
characterized with perfect (more than 35%) and then good quality condition (more
than 25%). About 10% of those products are returned in a very good condition, and
a little more than 20% in a poor condition. The products in a sufficient condition
are 5% and the terrible-condition returns do not occur.

72
Figure 3.4. Quality condition of the defective products in reverse flows

1,20%
PACKAGING PRODUCTS 13%
20,8%
33,8%
0,5%
WASTE- AND BY- 10,2%
PRODUCTS 35,2%
14,30%
1,2%
PRODUCT 16,7%
COMPONENTS 48,8%
9,5%
13,3%
PRODUCTS
ERRONEOUSLY TAKEN 30%
23,3%
AS FAULTY
18,2%
WITHDRAWN 13,6%
PRODUCTS 36,4%

36,8%
UNSOLD PRODUCTS 26,3%
21,1%

44,4%
SEASONAL PRODUCTS 16,7%
16,7%

10,50%
OUTDATED PRODUCTS 47,4%
31,6%

0,8%
DAMAGED PRODUCTS 44,1%
33,1%
1,7%

0% 20% 40% 60%

PERFECT VERY GOOD GOOD

SUFFICIENT POOR TERRIBLE
Source: Own work based on results from the survey questionnaire.

73
 The defective products withdrawn from sales and returned are most often
in the sufficient quality condition (more than 35%) according to the respondents.
More than 20% of the respondents specified their quality condition as very good,
and more than 15% as perfect. For more than 10% the products’ quality was good
and it was poor for 5%. The terrible-quality products do not occur also in this category.
Another category of the defective products’ returns is comprised of products
erroneously taken as faulty. Their quality condition was mostly determined as good,
and less frequently as very good and sufficient. More than 10% of the respondents
regarded condition of those returns as perfect in terms of quality, and 5% as poor.
Also these products were not claimed to remain in a terrible quality condition.
Almost 50% of respondent determined the product components that supply
the reverse flows of the Polish manufacturing companies as sufficient in terms of their
quality condition, 20% as poor and 10% as terrible. Only a little more than 15%
of respondents believed that the product components were returned in a good quality
condition, less than 5% said they were in a very good and 1% that in a perfect
condition.
In case of waste- and by-products, their quality condition, similarly as in case
of the product components is not satisfactory. More than 35% of respondent specified
this condition as bad and sufficient. For almost 15% of respondents, quality of this
category of defective products was terrible, only 10% stated it was good, and 5%
claimed it was very good. These returns do not occur in a perfect condition.
The last category of returns of defective products, i.e. packagings, is dominated
by the terrible (almost 35%) and poor (slightly more than 30%) quality condition.
The sufficient quality of packagings was claimed by 20% of respondents, while good
by 15%. The packaging products remaining in a very good condition are completely
absent, and those in a perfect condition appear in answers from 1% of the respondents.
Furthermore, apart from the nine categories of returns, the defective products
may be also classified elsewhere - in three main categories regarding their place in the
flow, where they emerge as a return. These are:
1) manufacturer returns - surpluses of raw materials, returns after quality control,
manufacturing remains, etc.;
2) distribution returns - trade returns, surpluses in stock, etc.;
3) marketing returns - guarantee and post-guarantee products, products that came
to an end of life, etc.
Within the survey, the respondents were intended to estimate the percentage
share of defective products’ returns based on the total annual production rate in the
enterprises, and allocate such returns to one of the three aforementioned categories
(Fig. 3.5).

74
Figure 3.5. Categories of returns according to the place of their emergence

EMERGENCE
OF RETURNS

80% - 100%
5,6%

25% - 79% 9%
5,6%

10% - 24% 18,2%

19,5%

28,6%
5% - 9% 36,4%
27,8%

28,6%
2% - 4% 9,1%
8,4%

42,8%
≤ 1% 27,3%
33%

0% 10% 20% 30% 40% 50%

MARKET RETURNS DISTRIBUTION RETURNS
MANUFACTURER RETURNS

Source: Own work based on results from the survey questionnaire.

The analysis of the respondents’ answers pictures the general trend stating that
the higher the estimated percentage of defective products the lower the number
of enterprises that select it.
The manufacturer returns category occurs in all estimated ranges, while the
greatest number of respondents point them in reverse flows on the level lower
or equal 1%, and then 5%-9% and 10-24%. The next range is 2%-4%, and the lowest
number of responses suggesting manufacturer returns can be identified in ranges
of 25%-79% and 80%-100%.
At the same time, the 80%-100% range suggests that the manufacturer returns
category is the only one in some enterprises.

75
 The distribution returns are most numerous in the range of 5%-9%, and then
not more than 1%, 10%-24% and 2%-4%. When it comes to the 80%-100% estimation
range, the distribution returns were not pointed at all what means that they
do not occur in such quantities.
The last category of return - marketing returns are most numerous in the lowest
estimation range, i.e. up to 1%. Then, they were pointed are the most in the same
quantities by the respondents within the ranges of 2%-4% and 5%-9%. The marketing
returns category does not occur in higher ranges what means that in the Polish
enterprises the marketing returns are maximum 10% of the total annual production
size in the enterprise.
General interpretation allows of conclusion that the most numerous type
of defective products’ returns in the Polish manufacturing enterprises is the
manufacturing returns. The distribution returns also occur, while they pose maximum
80% of the total annual production rate in the enterprise. When it comes to marketing
returns, they are numerous but their percentage does not exceed 10% of the total
annual production rate in the enterprise.

3.2.2. Parameters of actions related to management of defective products’ flows

After characterization of the defective products’ returns, subsequent stages
of the research were intended to determine the parameters of actions undertaken
in an enterprise in relation to flows management.
At first, the analysis was employed in case of the actions by the manufacturing
enterprises in the scope of defective products’ flows management. In this question,
the respondents had a chance to specify the listed actions that they carry out on their
own, which they commission to third parties (3PL) and which they do not carry
out at all when it comes to the reverse flows management (Fig. 3.6).
Actions related to management of the defective products’ flows were
determined based on the previously performed literature studies, and the following
processes were considered here: returns acceptance, allocation for donations,
charitable purposes, repackage and sales of products as new, sales in such a form
as the product was accepted, renovation, production from recovered components
or raw materials, sale, recovery of components, recycling, scraping.
Analysis of acquired data allows for observation that a great number
of respondents stressed that certain actions are not implemented. However, regarding
the fact that it was a multiple-choice question, it cannot be assumed that the companies
do not undertake actions related to the reverse flows management, as the equally high
number of respondents pointed to independent implementation of actions related
to returns.

76
Figure 3.6. Actions undertaken within reverse flows management

80,1%
SCRAPPING 12,9%
7%

51,7%
RECYCLING 15,6%
32,7%

76,2%
COMPONENTS RECOVERY 5,6%
18,2%

72,5%
SALE 0%
27,5%

PRODUCTION FROM RECOVERED 70,2%

7%
COMPONENTS OR RAW MATERIALS 22,8%

48,6%
RENOVATION 6%
45,4%

SALES IN A FORM A PRODUCT WAS 79,8%

1%
RECEIVED 19,2%

REPACKAGING AND SALES AS A NEW 78,8%

1,7%
PRODUCT 19,5%

81,5%
ALLOCATION TO DONATIONS 1,3%
17,2%

33,1%
ACCEPTANCE OF RETURNS 3,3%
63,6%

0% 20% 40% 60% 80% 100%

NOT UNDERTAKEN OUTSOURCED INDEPENDENTLY

Source: Own work based on results from the survey questionnaire.

More than 60% of respondents carry out the process of returns acceptance
independently, and almost 50% perform the renovation procedures on their own.
The manufacturing companies deal with scrapping of the defective products in the
lowest number of cases.
At the same time, we can observe a scarce trend to outsource the actions related
to management of the defective products’ flows. It most often takes place in case
of recycling and scrapping, on a smaller scale in case of production from recovered
components of raw materials, renovation and recovery of components, and marginally
77
in case of returns acceptance, allocation for donations, repackage and sales of the
products as new ones and sales in such a form in which the product was received.
In case of sale, this action is not commissioned to third parties.
To sum up, it may be concluded that majority of the Polish manufacturing
enterprises carried out the actions related to management the defective products’
flows independently, while the companies implement them selectively and not
comprehensively, meaning that they do not exercise all possibilities available
in thescope of reverse flows management, only the options of their choice.
Furthermore, there is a tendency visible that the manufacturing companies
are not willing to outsource actions related to the reverse flows management.
The survey questionnaire also researched the most frequent return period
for the defective products. Bearing it in mind that the survey questionnaire
was prepared for respondents representing manufacturing enterprises, the return
period was determined as the time that passed from the moment of releasing
the product from the manufacturing process for distribution, to the moment of its
return to the manufacturer. The respondent could choose one out of ten time intervals
(Fig. 3.7).
Figure 3.7. Average return period of defective products

MORE THAN 3 YEARS

FROM 2 TO 3 YEARS 0,4%

FROM 18 MONTHS TO 2 YEARS 0,4%

FROM 12 TO 18 MONTHS 5,1%

FROM 6 TO 12 MONTHS
FROM 3 TO 6 MONTHS 4,3%

FROM 1 TO 3 MONTHS 13,6%

FROM 1 WEEK TO 1 MONTH 43%

UP TO 1 WEEK 33,2%

0% 10% 20% 30% 40% 50%

Source: Own work based on results from the survey questionnaire.

According to the respondents, the defective products most often occur

in reverse flows of the manufacturing enterprises within a week to a month (more than
40%), and up to one week (more than 30%). Other three time intervals - 1 to 3 months,
3 to 6 months, and 12 to 18 months - are pointed less often. The return period
of 1 to 3 months is recorded by about 15% of the respondents, while the intervals of 3
to 6 and 12 to 18 months by about 5%.

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 The return periods from 1 month to 2 years and from 2 to 3 years were claimed
by under 0.5% of respondents. The returns were absent in the time intervals
of 6 to 12 months and more than 3 years.
Summing up, it may be noticed that the return period of defective products
in the Polish manufacturing enterprises is relatively short what proves the positive
character of actions related to the reverse flows management of those products.
Thanks to the return period of the defective products in the researched
enterprises being short, it is possible to quickly undertake actions related to the
returns processing. The survey questionnaire’s respondents were asked to specify
duration of the returns processing period in their enterprises. Here, similarly to the
previous question, the possible answers were included in eight time intervals (Fig. 3.8).
Figure 3.8. Average duration of the returns processing cycle

MORE THAN 6 MONTHS 1,2%

FROM 2 TO 6 MONTHS 9,3%

FROM 1 TO 2 MONTHS 2,8%

FROM 2 WEEKS TO 1 MONTH 11,7%

FROM 1 TO 2 WEEKS 13,3%

FROM 2 DAYS TO 1 WEEK 31,9%

FROM 1 TO 2 DAYS 8,9%

LESS THAN 1 DAY 21%

0% 5% 10% 15% 20% 25% 30% 35%

Source: Own work based on results from the survey questionnaire.

Similarly as in case of the product return period, the data analysis regarding
the returns processing cycle proves that these actions take relatively little time.
According to the most numerous group of respondents, the average returns processing
period in a manufacturing enterprise last from 2 days to 1 week (more than 30%).
Many responses - more than 20% - suggest that the processing cycle lasts less than
1 day, while the smallest group of respondents (little more than 1%) claimed that
it takes more than 6 months.
Generally, the data analysis allows to conclude that the average returns
processing period is short in the Polish manufacturing enterprises - up to one month.

79
There are cases that it can be expanded and it may last even more than 6 months, but
they are not frequent as they result from specificity of the product, branch
or manufacturing process.

3.2.3. Objectives and motives of the policy of defective products returns

The performed survey questionnaire also considered the analysis of the
manufacturing enterprises’ policy as regards returns acceptance of the defective
products. The respondents could assess it in the scale from 1 to 6 scores, where 1
meant a highly restrictive policy and 6 - a highly liberal one. The liberal policy means
that in this case the rules assume openness towards customers, allowing them trouble-
free complaints and returns of products in justified cases (Fig. 3.9).

Figure 3.9. Assessment of the returns policy

VERY LIBERAL 6 33,8%

5 24,3%

4 23,1%

3 11,4%

2 3,5%

VERY RESTRICTIVE 1 3,9%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Source: Own work based on results from the survey questionnaire.

The analysis of the respondents’ answers for this question shows that majority
of them states to have a liberal returns acceptance policy in their enterprises what
speaks in favor on a given company and its approach to customers. Just less than
5% of the respondents evaluated the policy of their company as very restrictive.
Generally, this might lead to conclusions that Polish manufacturing enterprises
have appropriate priorities and one of their features is openness to customers what
in case of management problems with defective products’ flows is highly significant
and helpful.
To carry on with the notion of the returns acceptance policy in case of defective
products the research determined a change in this policy within last 5 years in the
manufacturing enterprises (Fig. 3.10).

80
 The results clearly indicate there are no changes what was claimed by more
than 95% of the respondents. This means that the companies have been into the liberal
approach to the returns policy for at least 5 years.
Figure 3.10. Evaluation of change in the returns policy within last 5 years

2,7%

97,3%

HAS NOT CHANGED HAS CHANGED

Source: Own work based on results from the survey questionnaire.

All of the respondents whole confirmed change in policy were asked to develop
their response and specify the direction of changes. The here, the statements were
related to transformation of the policy into a more liberal one, and only 1 out of 302
enterprises claimed to tighten up its returns acceptance policy within last 5 years.
The development of actions related to defective products flows management
in an enterprise is time-consuming and labor-intensive. Not all companies are willing
to get involved in solving the problems with returns, but at the same time they
are often forced to seek good solutions regarding the pressures from the market.
The respondents were asked about their motives for accepting the returns of defective
products, and required to evaluate their significance in the following scale:
(1) non-significant motive, (2) significant motive, (3) very important motive (Fig. 3.11).
Analysis of the results obtained from the research allows of conclusion
that almost every motive for acceptance of the product returns out of the listed seven
was treated as non-significant by at least 30% of respondents. However, as it was
a multiple-choice question, such a response distribution must also be considered.

81
Figure 3.11. Motives for returns acceptance

36,1%
LIMITATION OF LOSS IN VALUE 29,8%
34,1%

PREVENTING DISPLACEMENT OF NEW 16,9%

28,8%
PRODUCTS 54,3%

DEVELOPING AN ENVIRONMENTALLY- 32,1%

29,8%
FRIENDLY COMPANY REPUTATION 38,1%

RECOVERY OF COMPONENTS AND 30,8%

28,1%
MATERIALS 41,1%

FULFILLMENT OF LEGAL AND 44,7%

28,8%
ENVIRONMENTAL REQUIREMENTS 26,5%

WITHDRAWING UNNECESSARY PRODUCTS 11,3%

30,5%
FROM THE MARKET 58,2%

IMPROVEMENT IN QUALITY OF 42,7%

14,60%
CUSTOMER SERVICE 42,7%

0% 10% 20% 30% 40% 50% 60% 70%

VERY IMPORTANT
IMPORTANT
NON-IMPORTANT
Source: Own work based on results from the survey questionnaire.

Two the most important motives for acceptance of defective product returns
by a manufacturing enterprises are the improvement in the customer service quality
and fulfillment of legal and environmental requirements. Improvement in the customer
service quality was a very important motive for more than 40% of respondents
and at the same time non-significant for the same number of responding individuals.
It was claimed to be significant by 15% of representatives of the enterprises.
While fulfillment of the legal and environmental requirements was a very important
motive for about 45% of the respondents, significant for almost 30% and non-
significant for about 25%.
It turns out that getting rid of unnecessary products from the market does not
pose a significant motive for returns acceptance, as only a little more than 10% of the
respondents claimed it was very important, 30% stated the was significant and 60%
non-significant.

82
 Distribution of answers about significance of the following motives: recovery
of components and materials, development of an environmentally-friendly company
reputation and reduction in losses from unsold or defective products is similar
in its structure. The greatest number of respondents, i.e. about 40% claims these
motives are non-significant, while more than 30% states that they are very important
and 30% that they are significant.
The last motive is prevention of displacement of new products by products
from the secondary market. More than 50% of respondents believe that it is a non-
significant motive and only 20% are think it is very important. This motive
is significant for about 30% of the respondents.
Based on the distribution of answers for this question, it may be generally
stated that the motives for accepting returns of defective products in the Polish
manufacturing enterprises are varied. Each motive out of the seven listed is very
important for a part of enterprises, while at the same time it is totally non-significant
for others. The cause of this is specificity of products, manufacturing branches and
other elements that vary the manufacturing enterprises. Nevertheless, it is a good
signal that companies pay attention to such motives as improvement of customer
service or fulfillment of legal and environmental requirements, as well as the other
listed items, as it undoubtedly has some positive impact on their activities, and
generally it poses some added value for the enterprises.

3.2.4. Barriers of effective management of defective products’ flows and ways

of overcoming them
The management of defective products’ flows in manufacturing enterprises
is often limited and/or hindered by existing barriers. Literature of the subject most
often mentions such barriers as the company’s policy, issues of competitiveness 22,
financial resources, lack of significance, lack of adequate organizational solutions, legal
conditions, no attention from the managerial staff, incompetent personnel.
Bearing in mind the aforementioned barriers, there was a question developed
for the survey questionnaire, and respondents’ answers in this scope are presented
in Fig. 3.12.

22 There is a series of factors causing the enterprise’s worries of losing the competitive character. According to an
enterprise they can reduce or even render it impossible to compete with other entities within a given market. In the
reverse logistics processes and defective products’ flows management these factors are, among others: lack
of measurable effects from the reverse logistics processes regarding management of defective products’ flows, and
the measurable effects are present in a long time horizon, difficulties in implementation of innovative methods
or modern technologies, no investment opportunities, customer’s interest in the product return and at the same
time no attention paid to further actions in that scope, a new product adopting materials and components utilized
in other products, etc.

83
Figure 3.12. Barriers for effective management of defective products ’ flows

INCOMPETENT PERSONNEL 0,7%

NO ATTENTION PAID BY THE… 0,7%

LEGAL CONDITIONS 2,3%

NO ADEQUATE ORGANIZATIONAL… 1,7%

NON-SIGNIFICANCE 3,3%

FINANCIAL RESOURCES 5,6%

COMPETITIVENESS 9,6%

COMPANY’S POLICY 8,9%

0% 2% 4% 6% 8% 10% 12%
Source: Own work based on results from the survey questionnaire.

Plenty of respondents provided no answer for the question about the barriers
that hinder effective management of the reverse flows in an enterprise. This might
result from lack of knowledge about the difficulties and no practical reflection of theory
in this field. It is true that correct determination of barriers for implementation and
operation of the defective products’ flows in an enterprise is not easy, and the
enterprises - despite the fact that they have implemented such procedures - are not
capable of identifying such problems.
The respondents who answered that question most frequently pointed
the competitiveness features as the main barrier. The next listed were the company’s
policy, financial resources, non-significance, legal conditions, no adequate
organizational solutions, and equally - no attention from the managerial staff and
incompetent personnel.
Generally speaking, the analyzing of answers for this question allows
of conslusion that there are some barriers for effective management of reverse flows in
the Polish manufacturing companies but the problem is their identification.
The respondents’ answers for subsequent questions allow to analyze the
manner that the manufacturing enterprises see the elements of defective products’
flows management in relation to development of the company’s competitive position
within the market. The following aspects have been listed below, which influence the
competitiveness: reduction of costs, price, quality, returns policy, time of delivery,
variety of products, and the respondents could assess them on the scale from 1 to 6,
where 1 means a totally non-significant aspect and 6 - a very important aspect
(Fig. 3.13).

84
Figure 3.13. Aspects of the reverse flows management in development of a competitive position

51,2%
24,3%
VARIETY OF PRODUCTS 15,6%
6,6%
2%

49,1%
24,6%
DELIVERY TIME 16,9%
6%
2,7%

41,5%
17,7%
RETURNS POLICY 14%
8,6%
5,6%

58,1%
30,6%
QUALITY 9,6%
1,7%

50,2%
31,6%
PRICE 13%
5%
0,3%

34,2%
40,9%
REDUCTION IN COSTS 11,6%
11%
2,3%

0 0,1 0,2 0,3 0,4 0,5 0,6 0,7

6 VERY IMPORTANT 5 4 3 2 1 NON-IMPORTANT

Source: Own work based on results from the survey questionnaire.

The respondents’ answers clearly indicate that all elements are very important
or significant for them when it comes to development of the enterprise’s competitive
position within the market. In the order of significance, the most important aspect
is quality, then variety of products, price, delivery time, returns policy and reduction
of costs. At the same time, the least important aspect turned out to be the element
of return policy, where some answers claimed it was totally non-significant. Taking
into account the current customers’ requirements towards the possibility to return the
defective products it is quite surprising.
Generally, when the competitive position development is being interpreted
in terms of manufacturing enterprises within the market, their care of this strategic
aspect is being noticed.

85
 Furthermore, information and IT systems along with computer software
may be employed to support the defective products’ flows management. A diagnosis
of implementations of such solutions in the manufacturing enterprises is presented
in Fig. 3.14.
Figure 3.14. Solutions supporting the reverse flows management

98%
RFID 1%
1%

92,1%
EDI 3,3%
4,6%

89,1%
COMPUTERIZED RETURNS
5,6%
TRACKING SYSTEM 5,3%

93,7%
2D CODES 2,65%
3,65%

84,1%
BAR CODES 6,3%
9,6%

0% 20% 40% 60% 80% 100% 120%

NONE PLANNED INSTALLED
Source: Own work based on results from the survey questionnaire.

Unfortunately, as suggested from the above distribution of the respondents’

answers, about 90% admit that there are no hardware or software solutions employed
in their enterprises that would support management of reverse flows. What is more,
only a small percentage (maximum up to 6%) claims that the company is planning
to implement such a solution. Enterprises that make use of the support systems
for management of reverse flows are scant - 1% has RFID (Radio-Frequency
IDentification), 4.6% — EDI (Electronic Data Interchange), 5.3% — a computerized
system for returns tracking, 3.6% — 2D codes, 9.6% — bar codes.
Such results are not impressive and they suggest that Polish manufacturing
enterprises should try to make some investments in that scope.
Each manufacturing enterprise has certain objectives that it strives for through
adequate control over the carried-out activities. Hence, it was necessary to verify
the influence exerted by implementation of actions related to management of the
defective products’ flows on implementation of the company’s objective (Fig. 3.15).

86
Figure 3.15. Impact of the reverse flows management on implementation of the enterprise ’s
objectives

2% 2%
10,6%
29,8%

37,6%

18%

1 NEGATIVE 2 3 4 5 6 POSITIVE

Source: Own work based on results from the survey questionnaire.

The respondents’ task was to determine that influence on the scale from 1 to 6,
where 1 means negative influence and 6 is positive influence. The Majority of the
respondents pointed to positive influence - almost 30% gave it 6, 18% provided it with
5 and almost 40% with 4 scores. The influence of the reverse flows management
had negative impact on implementation of the company’s objectives for almost 15%.
This suggests that Polish enterprises have a positive view on the reverse flows
management in terms of the company’s objectives implementation.

3.2.5. Effects of defective products’ flows management

To determine the results from influence exerted by the defective products’ flows
management within an enterprise on its financial issues, the respondents were asked
a question on the impact by the returns on the profitability of the enterprise (Fig. 3.16).
The majority of respondents (almost 70%) claimed that the defective products
returns have no impact on the company’s profitability. This means that the Polish
manufacturing enterprises deal well with management of reverse flows and they
are capable of using them adequately in such a scope that it has not impact on their
financial results.
Almost 30% of respondents suggested that the returns reduce the profitability,
but in a minor manner that has no greater impact on the above interpretation.

87
Figure 3.16. Impact of reverse flows management on the enterprise’s profitability

3,5%

29,3%

67,2%

SIGNIFICANT NON-SIGNIFICANT NO IMPACT

Source: Own work based on results from the survey questionnaire.

Only 3.5% of the respondents state that returns of defective products reduce
the company’s profitability to a great extent. This means that management of defective
products’ flows in some enterprises does not function properly, as the returns should
not reduce the company’s profitability. An additional reason is the specificity of the
companies’ activities, unique qualities of products, and to a high extent complexity of
the production process, which is why it is impossible to recover the value from the
returns in whole or at least partially.

3.3. Identification of key premises for introduction and implementation

of reverse logistics

The survey questionnaire carried out in the Polish manufacturing enterprises

and its results on the reverse logistics processes in the defective products’ flows
management prompt to present some general conclusions on the problems
in questions.
1. The Polish manufacturing enterprises carry out the processes in management
of the defective products’ flows in their activities.
2. The defective products occur in the Polish manufacturing enterprises in a form
of returns creating reverse flows / flows of defective products.
3. The Polish manufacturing enterprises encounter defective products in a form
of returns that may be divided into nine groups: damaged products, outdated
products, seasonal products, unsold products, withdrawn products, products
mistakenly taken as faulty, product components, waste- and by-products, packaging
products.

88
4. All categories of defective products occur in the Polish manufacturing enterprises
with different intensities, while most numerous are the waste- and by-products
as well as packagings and product components, moderate intensity is ascribed
to, apart from the previously mentioned, also the damaged products, and marginal
intensity is most often related to waste- and by-products, damaged products,
product components and packagings.
5. Major percentage share of the defective products is received by the Polish
manufacturing enterprises in good, very god or perfect quality conditions. Less
often their quality condition is determined as sufficient or poor, and it is barely
stated to be terrible.
6. When we consider division of the defective products into three main categories
of returns (manufacturer, distribution, market), it can be stated that in case
of the flows in the Polish manufacturing companies the production returns are
most frequent and numerous, the distribution returns pose maximum 80% of the
whole annual production rate in the enterprises, and the marketing returns are
numerous, but their percentage rate does not exceed 10% of the total annual
production rate in the enterprises.
7. The return period of the defective products in the Polish manufacturing enterprises
is relatively short (most often from 1 week to 1 month, up to 1 week and from
1 to 3 months). The return periods of more than 6 months are scarce.
8. The processing period for the defective products in the Polish manufacturing
enterprises is also relatively short (from 2 days to one week and less than 1 day).
The returns processing cycle taking more than 6 months is rather scarce.
9. The Polish manufacturing enterprises undertake the following actions as a part
of the reverse logistics processes: returns acceptance, allocation for donations,
charitable purposes, repackage and sales of products as new, sales in such a form as
the product was accepted, renovation, production from recovered components
or raw materials, sale, recovery of components, recycling, scraping.
10. The Majority of Polish manufacturing enterprises implement actions related
to the defective products’ flows management independently. Outsourcing of those
actions is rather marginal.
11. The policy adopted by the Polish manufacturing enterprises as regards acceptance
of the defective products’ flows is liberal, meaning it is characterized with rules
assuming openness towards the customers, allowing them to make complaints
about the product without any problems, and to return them in justified cases.
It was not amended within last 5 years.
12. The Polish manufacturing enterprises accept returns of the defective products
because of at least one of the seven different motives: improvement in customer
service quality, getting rid of unnecessary products from the market, fulfilling legal
and environmental requirements, recovering the components and materials,
developing reputation of an environmentally friendly company, preventing
displacement of new products and limitation in the loss of quality.

89
13. The Polish manufacturing enterprises most often accept the returns while
considering the improvement in customer service quality and fulfillment of legal
and environmental requirements.
14. The elements of the defective products’ flows management related to development
of a competitive position of the Polish manufacturing enterprises are as follows:
reduction of costs, price, quality, returns policy, delivery time and variety
of products. All of those elements are of great significance for the companies,
and they pose an important strategic element for the activities that are carried out.
15. The Polish manufacturing enterprises encounter the following barrier for effective
management of the defective products’ flows (listed in the order of significance):
competitiveness issues, company’s policy, financial resource, non-significance, legal
conditions, lack of adequate organizational solutions, no attention paid by the
managerial staff and incompetent personnel.
16. The Polish manufacturing enterprises scarcely use any hardware and software
solutions that support management of reverse flows. Only a minor percentage
plans implementation of such solutions in the near future.
17. Activities in the scope of defective products’ flows management in the Polish
manufacturing enterprises is reflected positively in implementation of those
companies’ objectives what means that they do not pose a barrier, or they even may
turn out to be helpful in achievement of goals.
18. In majority of cases, the defective products in the reverse flows of Polish
manufacturing enterprises do not contribute to reduction in the company’s
profitability.
The general summary of results from the survey questionnaire carried out in
the Polish manufacturing enterprises suggests that those companies are active
in implementation of the reverse logistics processes in management of the defective
products’ flows, despite the fact that the scope of those processes and that
management is different in particular enterprises.

90
4. Organization and functioning of reverse logistics
4.1 Decisions in reverse logistics management processes

All reverse logistics processes are based on adequate decisions in the scope
of their course and functioning, which may be made on various level of management in
an enterprise. They should be strictly coordinated with defective products’ flows
management. Good practices in the area of the reverse flows management through
implementation of the reverse logistics concept point to crucial significance of the
decision-making processes for successful realization of those actions. Especially the
manufacturing companies, struggling with problems related to the reverse flows,
should make every effort so the decisions they make contribute to adequate
organization of the reverse logistics processes in management of the defective
products’ flows.
Making decisions in the reverse flows management is of key importance for the
manufacturing enterprises. The success of the whole undertaking related
to functioning of the reverse logistics in the enterprise is in general based on accuracy
of those decisions and their proper timing. While making decisions related
to implementation of the reverse logistics in the scope of the reverse flows
management the enterprises first of all need to focus on such optimization of the
decision-making process that the decisions are most adequate for the scale of the flows
emerging in the enterprise, and that it is possible to reuse the value they hold.
Making decisions related to the reverse flows management in manufacturing
enterprises take place on three levels identified according to a time horizon: long-term,
medium-term and short-term [Gupta 2013]:
 The main long-term decisions refer to the following problems:
o Integration of the reverse flows with forward flows;
o Appropriate distribution of financial sources;
o Categorization and definition of the returns policy;
o Determination of reasons, shareholders, etc. in reverse logistics;
o Determination of actions in reverse logistics and the decision on whether
outsource some or all of those actions;
o Implementation of environmental management systems and knowledge
acquisition about environmental directives, law and principles;
o Selection of actions regarding final disposal and specification of their
potential location;
o Risk estimation (value of information and uncertainty).
 The main medium-term decisions cover the following areas:
o Decisions about the means of transport and arrangement of transport
routes;
o Determination of the operational policy (production and stock);
o Definition of returns policies for each product;
o Definition of technical support for the offer;
o Implementation of the reverse logistics actions;

91
 o Development of a planning system for various reverse logistics actions
and determination of their quality standards;
o Decision on location and allocation of the reverse logistics units’ flow
capacity;
o Definition of operational measures, optimization of policy.
 While the main short-term decisions refer to:
o Development of logistics and process schedules;
o Stressing the monitoring costs;
o Actions in collecting and gathering of returns;
o Considering the time value for returns;
o Personnel training regarding the concept and practices of returns
management;
o Information management;
o Specification of the disassembly level;
o Returns analysis to improve the final disposal.
All of those decisions are more complex and extensive in practice because of additional
and more detailed decisions made on the same three levels of the time horizon
but regarding particular reverse logistics processes, which are also highly
differentiated according to an individual character of each enterprise.
Based on the characteristics of the decisions in the scope of reverse logistics,
its processes, specificity of defective products in enterprises, performed literature
studies and business practices, it is possible to develop a general descriptive model
of organization the reverse logistics processes related to defective products 23.
The foundation of the descriptive model of organization the reverse logistics
processes related to defective products24 are four main processes, implemented in the
following order:
1) gatekeeping,
2) collecting and gathering,
3) control and sorting,
4) final disposal.
The model’s structure is also based on decisions that are made within the
aforementioned processes and connected with their implementation. The decisions,
depending on their weight and the process they refer to, are made for a long, medium
or short time (period), and their detailed characteristics are presented in Table 4.1.

23 The descriptive model was drafted based on [Lambert, Riopel, Abdul-Kader 2011; Ait-Kadi et al. 2012].
24 In the following part the model name is shortened to the synonymous name: the reverse logistics model
of defective products.

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Table 4.1. Characteristics of the decisions in the scope of the reverse logistics processes
management in the area of the defective products flows according to time periods

REVERSE LOGISTICS PROCESSES

time hierarchy for decision-making

Long-term decisions Medium-term decisions Short-term decisions

time

2 – 5 years 1 – 2 years Day by day

characteristics of decisions

Most significant decisions; Decisions intended to Spontaneous decisions,

their results govern further implement the actions directed undertaken as regards the
operation of the enterprise and at and supporting the long- current needs.
serve implementation of its term decision-making.
primary objectives. Personnel training.
Organization of training
Evaluation of the enterprise’s programs in the scope of the Management of current
activity in the scope of the reverse logistics processes. problems.
reverse logistics processes. Control over costs.
Development of cost estimates
Determination of the products for the reverse logistics Development of reports from
return policy. processes. operations.
Determination of the reverse Determination of functioning Development of analyses related
logistics’ objectives and ways for indicators of the reverse logistics to the returns, based on which
their implementation, i.e. processes. designs of new products are
decisions on the policy of the improved.
reverse policy implementation Determination of the supplies
and on the products return management system.
policy implementation. Determination of the production
Determination of the scope of planning system.
independent or outsourced
implementation of the reverse
logistics processes.

Determination of procedures for

handling hazardous materials.

Adjusting the enterprise to the

applicable environmental law
and regulations.

Source: Own work based on: [Guide, Jayaraman 2000; Schwartz 2000; Marcoux, Riopel, Langevin 2001].

93
 Knowledge of the reverse logistics processes and decision made in the scope
of their implementation allows graphical presentation of the general model of reverse
logistics processes organization in the field of defective products, in the form presented
in Fig. 4.1.
Figure 4.1. General descriptive model of the reverse logistics processes in the scope of defective
products’ flows

Source: Own work.

This model reflects only the generalized formula of processes and marks the
decision-making area. In case of the reverse logistics processes regarding the defective
products’ flows, this generalization is crucial because each enterprise has a different
way of the reverse flows organization and management. Furthermore, there are
individualized decisions made in this scope. The difference occur even in the scope
of manufacturers that produce within the same branch of industry. This is conditioned
first of all by the contents of reverse flows, their uncertainty and no possibility
to control them directly, as well as by specificity and individuality of the enterprises
themselves.
What is more, a characteristic feature of the general model is that it does not
explore the described processes and decisions precisely but it points to basic
and feasible to use options related to the reverse logistics processes employed
in management of the defective products’ flows.
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[Link] of reverse logistics of defective products

The presented reverse logistics model of defective products is a general view

on the problems raised in this work. To present the processes in the reverse flows
management carried out by manufacturing enterprises the model was extended in the
scope of processes with their sequences and operations, unitary processes and
elementary actions as well as relationships between them, from the “input” of the
returns into the enterprise’s flows, through implementation of the reverse logistics
processes, to the “output” of the results from management of those returns.
The drafting procedure for that model was divided into three stages.
1. Development of the general reverse logistics model of defective products (Fig. 4.1).
2. Specification of the general reverse logistics model of defective products (Fig. 4.2):
a) determination of boundaries for the defective products’ flows [input/output),
b) definition of the reverse logistics processes and particular operations carried
out within the scope of those processes,
c) development of a reverse logistics model of defective products,
d) reviewing and improving the model on that basis.
3. Verification of the reverse logistics model of defective products compared to factual
processes in manufacturing enterprises.
The defective products that supply the reverse flows come from final customers
or from other participants of the enterprises’ business environment (e.g. other
enterprises, sub-contractors, logistics services providers). However, before the
products become returns and supply the defective products’ flows, there is a contact
between the customer/ participant of the business environment with the manufacturer
at the end of forward flows (usually with the customer service center) to request
acceptance of the return, or the customer/participant of business environment returns
the goods to the manufacturer following the operating manual.
The customer/participant of the business environment, holding the product/s
with the attached manual describing the possibility to return the goods to the
manufacturer should follow the served instructions. It usually means that the goods
are delivered to the address pointed by the manufacturer. As such a return of the
defective product25 is a return authorized by the fact of having the operating manual,
it is handed directly to the reverse flow.

25 The presented model does not relate to returns of products of full value. The products of full value returned
pursuant to the Act of 30 May 2014 on Consumer Rights, the Journal of Law Set of 2014, item 827 (e.g. Internet
sales), or according to individual conditions arranged by a given manufacturer/seller (e.g. return of unwanted
products in a retail shop), remain within the forward logistics flows.
The exception is posed by the products of full value, which were mistakenly classified as defective products by the
customer/participant of the business environment or employees of the customer service center, and were returned
as such. However, this mistake is eliminated in the gatekeeping process or at the latest during the collecting
and gathering procedure.

95
 NO Advice on possibilities of independent
Obligation of return take
NO Contact with customer back? final diposal of a product
Instruction provided by
Customer producer? service

YES YES
Return of product
Information on possible
return delivery channels
Collection and gathering
YES
Satisfactory solution? End
Returns collection Preliminary diagnosis
NO NO
YES
Return
NO Gatekeeping Return verification Return acceptance?
Defective product? authorization?

NO
YES YES
Compensation
YES
Compensation Return of product
Technical support Fast repair possible?

NO
Controlling, sorting,
Final disposal
etc.
Compensation Returns gathering
NO

96
YES
Control and
Product repaired? Inspection
sorting

Source: Own work.

NO
Return verification Treatment option? Landfill
YES
YES
YES
Return
Question / Compensation
? acceptance? Additional
choice treatment options? Repackage Repair Disassembly Reconfigure Remanufacture
NO

Activity Charity Sell on other

Contact with Upgrade or update Recycling
donation market
customer NO

Process Re-inspection
NO YES
Return
acceptance?
Sub-process Forward or reverse flows

Flow direction
Fig. 4.2. General reverse logistics model of defective products in manufacturing enterprises
 It does not undergo the gatekeeping process and it is supplied directly to the
first process of the reverse logistics implemented within the scope of the defective
products’ flows, i.e. the process of collecting and gathering the returns. While if there
are no instruction as to the goods return, the customer/participant of the business
environment must contact the manufacturer (customer service center).
The contact between the customer/participant of the business environment
with the manufacturer is significant in two cases. First of all, it of elimination of the
products lub eliminating the products the products that are potential returns already
at the stage of their emergence within forward flows (preventing the returns), and
second of all, it allows eliminating the gatekeeping process, directing the approved
products in a form of a return directly to the reverse flow.
In the first situation the client/participant of the business environment contact
the manufacturer (most often through the customer service center) by telephone,
personally, via Intranet or e-mail, to solve the problem with the product. It is possible
that having received appropriate support from the manufacturer, the person will
decide not to submit the return. This is the most desired situation as it allows to
preventy the returns. But it is probable that the proposed solution will not be
satisfactory, and then the product will be directed to the gatekeeping process.
In the second situation, the customer/participant of the business environment
contacts the manufacturer to return the product that has come to an end of life or end
of use. Thus, there is no solvable problem with the product, as it can clearly be
returned26 as a defective product or based on the information provided by the
returning party27. In such a situation, having identified correct qualification of the
product for the reverse flow, the customer obtains information on how to hand the
product to the manufacturer. Afterwards, the product is included into the reverse flow
and it undergoes the collecting and gathering process. The product may sometimes not
be eligible for the reverse flow (e.g. if it is produced by another manufacturer or if
there is no law that would oblige the manufacturer to accept the return), but then the
manufacturer may advise the customer to carry out the final disposal of the product
independently.
In both presented situations, responsibility for the decisions made during the
contact between the customer/participant of the business environment and the
manufacturer is borne by the customer service center’s employees. They are the ones
that control the further course of a given situation. At the same time, in this moment
these are the persons who decide on whether to change the flow from forward to
reverse or not. These decisions are not always made correctly - even if the employees
follow the guidelines regarding the returns acceptance policy strictly. Regarding
erroneous interpretation of this polity or its over-interpretation, the justified returns
may not be accepted, and the unjustified returns may be approved. However, such

26 An example may be the applicable Polish Act of 11 September 2015 on used electrical and electronic equipment,
the Journal of Law Set of 2015, item 1688, stipulating the principles of conduct with such equipment, and obliging its
manufacturer to collect the used equipment from household free of charge.
27 The customer/participant of the business environment reports such a failure of the product which clearly

indicates its defective nature.

97
errors are successfully eliminated within the reverse logistics processes which cover
the reverse flows.
The contact between the customer/participant of the business environment
with the manufacturer may be established by an external company or by the functional
unit of the enterprise. Usually, in the latter case, such a unit is also responsible
for implementation of the gatekeeping process.
The gatekeeping process consists in identification of the returns, i.e. making an
adequate decision as to determination of a suitability degree of the product or material
for reverse flows. This process allows to determining not only the quality of returns
included in the reverse flows but also the quantitative limit for those returns.
Therefore, it is possible to keep the qualitative monitoring and reduce the number
of returns what exerts advantageous influence on improvement of the customer
service standards. What is more, the gatekeeping process protects the reverse flows
from returns not intended for them (non-authorized, e.g. coming from another
industry or manufacturer). It means minimization of costs related to returns
of products which should not be returned, meaning qualified to the category of returns
of defective products, and thus should not be included into reverse flows. This also
reduces the costs related to the products returned in an incorrect manner or to an
improper place (inclusion into the inadequate reverse flow). At the same time, as this
process is a starting point for reverse flows, it is also the best point for elimination
of all unnecessary costs and management of materials through filtration of goods to
avoid unjustified returns.
The information obtained within this process are crucial and they pose a basis
for implementation of the reverse logistics processes in management of the defective
products’ flows.
It is very important within the gatekeeping process that the decisions are made
without any physical contact with the product intended to be returned. They are made
solely based on information obtained by the manufacturer (customer service center)
from the returning party. These decisions are very often of an indicative character,
based on the returns acceptance policy. The decisions made within that process are
of definitely more accurate and objective nature that during the first contact of the
party reporting the product for a return, as here verification is applied to a whole
set of factors that determine a given product and its suitability in reverse flows.
On the gatekeeping stage, there are long-term decisions made, related to such
notions as: whether the process is to be implemented independently or via agents,
whether the process is to be of a centralized or dispersed character, where the process
implementation should be located. Apart from that there are also medium-term
decisions which refer to possible technical support, language of communication,
requirements towards authorization of the returns, elements and scale of evaluation
necessary for acceptance of the returned defective products as well as decisions
on whether the products are returned in whole or in parts.

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 Subsequent reverse logistics processes within the scope of the defective
products’ flows management are: collecting and gathering, control and sorting,
and final disposal of the returns.
The collecting and gathering process is employed in case of defective products
that have been verified positively and qualified for reverse processes during the
gatekeeping, as well as the returned products, according to the instruction, directly
by the customer/participants of the business environment. This process
is implemented by a specific functional unit of the enterprises or specialist companies.
The collection is related to the products returned by the customers/participants
of the business environment and their handing to the manufacturer. This action
is intended to deliver the returns to the enterprise’s location. This is the place where
the first physical contact between the manufacturer and the returned products occurs.
While holding the returns and information about them that was collected during
gatekeeping, it is possible to carry out the preliminary diagnosis of their condition.
This action consists in first verification of the information about the product’s defective
nature28. Afterwards, based on this diagnosis, there is a decision made about the
possibility of fast repair of the defective products. If this occurs impossible,
then the products are directed to the subprocess of technical support.
There is a technical support subprocess within the collecting and gathering
of returns, which is highly significant and characteristic for manufacturing enterprises.
Bearing it in mind that the strategy of those enterprises is based on maximum possible
reduction of returns, the technical support subprocess is highly developed there.
Technical support has broad possibilities regarding elimination of the returned
defective products. It is implemented into the manufacturing companies in order to
limit the number of returns, also to improve the customer service. Having diagnosed
the problem with a given defective product [independently by the returning party,
during the first contact, during the gatekeeping or even within the returns collecting
process) the technical support may have an opportunity to reinstate the original
condition of the product so there is no need for its further presence in the reverse flow
and involvement into other processes of the reverse logistics. The technical support is
based in majority on possibilities of immediate repair of the defective products or
quick reinstatement of their original quality by adopting spare parts. The technical
subprocess is most often employed in case of products with valid guarantee. However,
it also covers the products based on after-sales services. The repaired products that
were not handed to the reverse flow are returned to the customer/participant of the
business environment. In turn, the product the repair of which failed and other goods
that had no chance for a quick repair undergo the gathering process.
Collecting, as regards the complexity level of the reverse flows in a given
enterprises and its business surroundings, consists in or a more or less complex

28 Regarding lack of previous physical contact with the products (customer service and gatekeeping are based solely
on information and evaluations delivered by the customer; the customer may return the product independently,
following the operating manual), it is possible that there will be some products of full value within the collecting and
gathering process. The preliminary diagnosis allows to elimination them from the reverse processes.

99
sorting and consolidating of the defective products’ returns to hand them to another
process of control and sorting.
The process of collecting and gathering of the defective products’ returns
is based on long-term decisions in the following scope: whether the process should be
implemented independently or via agents, determination of the desired service level
for the returns, determination of the general need for collecting and gathering of the
returns in a given quantity and quality, making decisions about financing of this
process. It is also based on medium-term decisions regarding: selection of the way of
transport, type and means of transport, determination of the possible course of the
transport routes, deciding on whether it is necessary to ensure a temporary
or a permanent replacement product for a given return, decide whether the return are
to be accumulated and stored or rather handed further immediately, and short-term
decisions related to planning of current transport routes.
The next reverse logistics process in management of defective flows is the
controlling and sorting process. The returns collected and gathered in the reverse
flows are directed to this process in order to validate information acquired during
gatekeeping and authorization of their suitability in particular options of the next
reverse logistics process - final disposal.
The controlling and sorting process is to ensure compliance of the returned
defective products with information collected at the preliminary selection stage
(or included in a card in the operating manual). The returns are subjected
to verification in terms of product data correctness, quality, quantity, elements, visual
condition, etc. If any significant discrepancies or problems are found out, it is necessary
to contact the returning party again in order to obtain additional clarifications. If they
are not satisfactory, the return may no longer be acceptable for a reverse flow, and it
might be handed to the source (customer/participant of the business surroundings).
The defective products that have been verified positively undergo a series
of actions that are intended for their most precise control and sorting so they comply
with requirements of particular options in the final disposal. The course of the returns
control and sorting process ends with consolidation for the need of handing the
process for final disposal.
The long-term decisions, undertaken during the returns controlling and sorting
process for defective products are related to specification of: location of the process
implementation, its centralization or dispersion, independence of the process
implementation or handing it to the agents, methods of service and manipulation.
The medium-term decisions are related to: selection of the manner, type and means
of transport, determination of possible transport routes, determination of the general
need for controlling and sorting of the returns (in a given quantity and quality),
determinations of controlling and sorting procedures, selecting of the returns intended
for storage, determination of strict criteria for acceptance of the returns. While the
short-term decisions are related to: planning of the vehicle routes.
At this point the attention should be paid to the subprocess of granting
compensation for a defective process. The compensation consists in awarding the

100
customer/ participant of the business environment with temporary or permanent
replacement products. They may also receive compensation in another satisfactory
form. The compensation may be awarded, regarding the product’s level
of defectiveness and/or the enterprise’s policy, at the gatekeeping, during return of the
product, if it is impossible to implement technical support or at the stage of acceptance
of the return in the controlling and sorting process. The decisions made in this
subprocess are to a great extent financial decisions, they refer to methods and
possibilities of granting compensation to customers/participants of the business
environment.
The last process of the reverse logistics in management of the defective
products’ flows is the final disposal process. It is a complicated and comprehensive
process as there are various options for recovering value from the returns, thus it is
necessary to make numerous decisions in this field. The returns in the final disposal
process undergo a thorough inspection at first. Its purpose is to ensure accuracy
of undertaken decisions regarding their further direction to an appropriate final
disposal option. Within the previous controlling and sorting process, the decision
about the returns’ final disposal option is also undertaken, but it is not a final decision.
Some additional information about e.g. the condition of the returns may appear in the
final disposal process, so the final decision is the one regarding the final disposal
option made in this process.
The long-term decisions, made in the final disposal process, are related to:
selection of whether the process should be implemented independently or through
agents, choice of a location, disposal of actions among various units of the enterprise,
estimation of the return volume that can be disposed by the enterprises, selection
of the service method. The medium-term decisions in this process are related to:
periodical review of the location needs, determination of quality standards for various
disposal options, determination of feasible action for each return, the use of stock.
In turn, the medium-term decisions are related to: determination of criteria for
management of current actions and stock and arrangement of the actions schedule.
There are ten options that can be identified in the defective products’ final
disposal process. These are: repackage, repair, disassembly, reconfiguration,
remanufacturing, upgrade/modernization, recycling, donation to charitable purposes,
sales on another market, delivery to a landfill. Each option (except delivery to
a landfill) ends with a repeated inspection of the products or material collected within
the final disposal process. It is necessary as some defective products, after
implementation of one final disposal option, may require other option to optimize the
value recovery. Hence, the final disposal process is characterized with recirculation
of reverse flows on this stage of the reverse logistics.
Medium- and short-term decisions are made within the determined final
disposal options. Repackage is the simplest option for final disposal of returns.
The product is repackaged into the same packaging, or if it causes any reservations as
to the quality, then it is packed into a new packaging. The decisions made within the
scope of this process are of a medium-term character and they are related

101
to determination of whether the cost of repackage will not be higher than the value
obtained from sales of the product, and whether the repackage will improve the sales
of products. The short-term decisions are related to the need of repackage
and determination of the product’s condition related to its suitability for repackage.
Repair consists in reinstatement of the damaged or non-operational products
into service. In this scope, the medium-term decisions are related to: searching
for a solution if the repair fails, repeated storage of the repaired products,
determination of whether the repair is more advantageous in cost terms than
replacement of the product with a new one or financial compensation. The short-term
decisions are related to determination of whether the repair is feasible.
Disassembly consists in obtaining modules or components from the products
and reuse them. When it comes to disassembly, the made environmental decisions
are related to specification of whether the reuse is limited solely to the components
that come from the returned defective products.
Reconfiguration consists in implementation of minor modifications in the
product’s configuration to prepare it for reuse in conditions similar to the original
ones. It is mainly related to switching the language of the operating manual, so the
product can be sold in another country, change of the label and replacement of some
parts to adjust the products for requirements of consumers in a different state.
The medium-term decisions made in the reconfiguration process are related
to determination of whether reconfiguration cost is lower that the profit from sales
of the products, while the short-term decisions are related to finding a different
solution if the reconfiguration fails.
Remanufacturing is a process similar to the repair as it consists in reinstatement
of modules, components or whole products to their original conditions, which may
then be reused. Remanufacturing is different from repair as it allows regular
modification on a greater number of used or damaged products, remaining a more
specialized and deeper process. Within the remanufacturing process, the made
medium-term decisions are related to finding an alternative solution if the
remanufacturing fails, determination of whether the regenerated product will be
stored or not and whether it is worth regenerating the product in cost terms, when
compared to the profit from its sales. While the short-term decisions are related to
determination of whether remanufacturing is possible in case of particular defective
products.
Upgrade/modernization is intended to bring older types of the products to the
latest version. This is related to adding new functionalities to products by replacing
parts, components or modules. This process is very similar to the remanufacturing
process, but it differs with the purpose - the remanufacturing is intended to prolong
the product’s life cycle, and this process is intended to improve functionality
or appearance of the product. Upgrade/modernization is related to medium-term
decisions made in the following scopes: identification of an alternative solution if the
process fails, determination of whether the product will be stored and whether the
costs exceed the future profit from sales of the product. The short-term decisions are

102
related to determination of whether the process is feasible in relation to particular
defective products.
Recycling is based on extraction of raw materials from the returned defective
products. Hence, the necessity to use primary materials for production is reduced,
as they can be replaced with some recycled goods. The medium-term decisions made
during the recycling process are related to determination of whether the costs
of disassembly of the products to collect recycled materials are indeed lower than
purchase of the original materials. In turn, the short-term decisions are related
to determination of which defective products are eligible for that process and whether
the returned products include any parts that could be recycled.
Donation for charitable purposes consists in handing the products to a non-
profit organization. Generally, the only advantage for enterprises in this case
is improvement of image. The decisions regarding this process are made only
in a medium-term time horizon and they are related to determination of implications
arising from donation of the products for charitable purposes (taxes and other),
and verification of the demand for products that are planned for handing.
Sales on another market consists in directing the correctly functioning products
to a different, alternative market, characterized with lower customer expectations
regarding the fact that the returned defective products do not correspond to the
requirements of the current market or fail to meet the quality criteria for this market.
The medium-term decisions on this sales process on another market are related to
determination of whether the costs of planning and implementation of sales
on a different market are not higher that the profits from that operation, verification
or existing secondary conditions and checking whether there is any risk
for cannibalization of sales on the main sales market.
Delivery to a landfill is actually related only to a part of products that hold
no value, and thus they become waste. This option also means that the waste
is allocated for incineration. The waste must be free from hazardous qualities before
implementation of the process, which is the least desired option, as despite the
possibility to generate energy it brings no advantages for the enterprises. The medium-
term decisions in the scope of this process cover determination of its costs, which
should be lower than costs of other options, while the short-term decisions refer
to verification of presence of the hazardous materials in waste.
Each final disposal process of the defective products, apart from the delivery
to a landfill - what is an adverse but sometimes necessary action - leads to recovery
of the value included in these products. Thanks to the final disposal options,
the recovered secondary value in a form of whole products, parts and components
or raw materials can supply the traditional or reverse flows in the enterprises again.
The presented general reverse logistics model of defective products can be
verified in the Polish manufacturing enterprises to obtain information about adequacy
of the described process in the economic practice.

103
4.3. Verification of procedures in reverse logistics of defective products

The concept of descriptive reverse logistics model of defective products

developed within the performed research was verified in five selected manufacturing
enterprises. They were selected with consideration of the research sample
and parameters allowing general interference as to this type of economic entities.
All of the five enterprise carry out the manufacturing activities in Poland, the type
of their major activity complies with assumption of the performed research and there
are defective products’ flows in the area of their activities, as a result of which the
enterprises have implemented certain procedures related to the reverse logistics
in management of the defective products’ flows.
The primary data on implementation of the reverse logistics data
in management of the defective products’ flows within the analyzed manufacturing
enterprises were collected in the third quarter of 2015 with a method based on direct
interviews with senior management staff, designated by authorities of the enterprises.
During the interview, each designated employee was asked to present and describe the
applicable procedures regarding acceptance of the defective products returns
and further handling with such products, along with organization of such actions.
Afterwards, the employee was presented with a concept of a general reverse logistics
model of defective products. Then, the employee was asked to comment on the
concept. Based on that interview, there was an individual reverse logistics model
of defective products developed for each out of the five researched enterprises.
The Polish manufacturing companies selected for the research verifying the
developed model, regarding recognizability of their brands and protection
of confidential data related to their activities did not consent to have their names
published, thus they are marked as X, Y, Z, Q and V.
The X enterprise is a large entity manufacturing household appliances that are
sold on domestic and foreign markets. It is one of the leading enterprises in that field
on the Polish market. In Poland, the production focuses on large household appliances
(washing machines, freezers, dishwashers, both stationary and built-in), while small
household appliances are manufactured by this enterprises in its factories located in
several other European states. Regarding the type of major activity and the
international character of production and distribution, the X enterprises has highly
developed procedures in the scope of reverse logistics in management of reverse flows
(Fig. 4.3).

104
Fig. 4.3. Verification of reverse logistics model of defective products in the X enterprise
manufacturing household appliances

Source: Own work.

105
 NO Obligation of return take back? NO Advice on possibilities of
Contact with customer
Instruction provided by service independent final diposal of
Customer producer? a product
Return of YES
product YES
Information on possible
return delivery channels
Collection and gathering
YES
Satisfactory solution? End

Returns collection Preliminary diagnosis

manufacturing baby strollers

NO

NO Gatekeeping
Defective product?

YES
Compensation Return of product
YES
Technical support Fast repair possible?

NO Controlling, sorting,
etc. Final disposal
Returns gathering

106
Compensation
YES
NO

Source: Own work.

Product repaired? Control and sorting Inspection

NO
Return verification Treatment option? Landfill
YES
Question / YES
?
choice YES
Return
Compensation
acceptance?
Activity Additional Repackage Repair Disassembly Reconfigure Remanufacture
treatment options?
NO
Charity Sell on other
Contact with Upgrade or update Recycling
Process donation market
customer NO

Re-inspection
Sub-process NO YES
Return
acceptance?
Flow direction Forward or reverse flows
Fig. 4.4. Verification of reverse logistics model of defective products in the Y enterprise
Fig. 4.5. Verification of reverse logistics model of defective products in the Z enterprise
manufacturing furniture

Source: Own work.

107
4.6. Verification of reverse logistics model of defective products in the Q enterprise
manufacturing male clothing

Source: Own work.

108
4.7. Verification of reverse logistics model of defective products in the V enterprise
manufacturing automotive parts

Source: Own work.

109
 The Y enterprise is a medium-sized company that manufactures baby strollers
that are sold mainly on the national market and in neighboring countries, but the
company is gradually expanding to other European states. Production of this company
is based on prams, buggies, multi-functional stroller and accessories. This enterprise
has also implemented some reverse logistics processes in management of the reverse
flows, first of all because of the security requirements for the products that they
manufacture (Fig 4.4).
The Z enterprise is another a medium-sized unit, but from the furniture sector.
The company manufactures furniture accessories and pieces of furniture based
on systemic solutions. Its products are sold mainly in wholesale, but retail is also
implemented, however at a smaller scale. The company operates on the domestic
market, having its chain of wholesale stores first of all in the southern part of Poland.
While planning the expansion to the European market, the Z enterprise has had some
developed procedure standards for some years, regarding the reverse logistics
processes implemented within management of the defective products’ flows (Fig. 4.5).
The Q enterprise is a small company that manufactures medium- and high-
quality male clothing, first of all for special occasions (weeding suits, first communion
suits). Its operations are based mainly on the local and provincial market, in a form
of retail. The enterprise is a family business, with a perspective for development within
several upcoming years by extending its reach to the domestic market. Even though
the Q enterprise’s production scale is currently small when compared to other four
researched enterprises, some reverse flows also emerge in this case, undergoing the
reverse logistics processes, according to the standards adopted in this company
(Fig 4.6).
The last researched V enterprises is a large manufacturing unit from
the automotive industry. It manufactures automotive parts that are sold on the
domestic, foreign and global market. Furthermore, it manufactures and sells
(on a slightly smaller scale in Poland and Europe) components of motor vehicles, spare
parts and special-purpose vehicles’ equipment - mainly sport cars and motorcycles.
The enterprise has implemented a high standard of procedure regarding the reverse
logistics processes, first of all because of internationalization of production and the
character of the manufactured products, covered with the highest quality standards in
the scope of security (Fig 4.7).
Verification of the approved general descriptive reverse logistics model
of defective products allows to showing the similarities and differences within
the course of those processes. This analysis is solely of an illustrative and diagnostic
character, as regarding the differences between the research entities, it cannot pose
any comparative material. Thus, it is carried out in a form of case analysis.
The first information about the request made by the customer/participant
of the business environment to be allowed to return the product is obtained by the
research manufacturing X, Y, Z, and V enterprises via the customer service center.
The contact is established by the customer/participant of the business environment via
a telephone (or in rare cases via e-mail). In case of the Q enterprises, which das not

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have customer service center differentiated within its structure, the first information
on the return request are received personally, via a telephone to the owner.
In the X, Y and V enterprises, regarding specificity of products - household
appliance, strollers and automotive parts - it is possible to solve the problems with the
products during that contact. The customer service center’s employee may propose
solutions to the problems with faulty goods during their conversation with
the customer, hence the return will not be implemented. In case of the X enterprise,
the contact allows of prevention of about 40% of returns, in the Y enterprises it is
about 25% of the returns and in the V enterprises it is less than 5%. Other return
requests of the products are recorded (usually as a complaint if the product has valid
warranty, or in other form if the product has no valid guarantee) by the customer
service center’s employees and subjected to the gatekeeping process. At the same time,
the products returned to those enterprises based on the operating manual pose from
5 to 15%.
In turn, in both Z and Q enterprises the avoiding of returns can be a problem
as there is no possibility - in case of furniture and furniture accessories and male
clothing - to solve the problem with the product while contacting the customer.
Thus, in case of the Z enterprise, all return requests of the products are recorded by the
customer service center’s employees and directed to the gatekeeping process, while
in the Q enterprise, the return requests are registered by the owner. What is more,
the returns are not submitted to both of those companies based on operating manuals
as they are not attached to the products.
At the same time, the contact between the customer/participant of the business
environment with the customer service center or the owner of the enterprise may
be related to the willingness to return the defective product that has come to an end
of life or end of use. This means that the customer must get rid of such a product.
This contact has special significance in the X enterprises as in case of the
household appliances manufacturing the producers are legally bound to collect the
products of that type from the market. Therefore, when the customer reports their
willingness to get rid of the product, the manufacturer is legally bound to receive these
goods. Hence, the manufacturers of household appliance attach an operating manual
which informs the users on the conduct in case of fault or end of life or end of use.
If the equipment is older and there is no such information in the manual,
the manufacturer of the household appliances should provide information about
the manner of handing the product in a form of a return.
Such a situation is non-existent in the Y, Z, Q and V enterprises, as the industries,
which the companies operate in are not regulated by any laws that would oblige
to collect the products from their users. In this case, the enterprises - while contacting
the customer - may (but are not obliged to) instruct the customer on how to get rid
of the used equipment on their own.
In the situation above, the decisions regarding qualification of a product
as a return are made by employees of the X, Y, Z, V manufacturing companies working
in the customer service center, or the owner in case of the Q manufacturing enterprise.

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Employees of the X, Y, Z and V enterprises follow the conduct procedures stipulated
in the internal policy of the enterprise, determining the principles for accepting the
product returns. The customer service center’s employee from those four research
manufacturing enterprises also carry out the gatekeeping process for the products that
they preliminarily qualified as returns of defective products. While the owner of the
Q enterprises makes the decision on qualification of the returns on their own, more
based on their own experience than the enterprise’s return policy, as it is not
formalized in this case. The owner is also competent in the scope of the gatekeeping
process.
This process has a slightly different course in each of the researched
enterprises. In case of the X manufacturing enterprise, the authorization of the return
that checks if the returned product was manufactured by a given producer consists in
verification of the product against the ascribed name code. Generally, this process is
not intended to reject any products, it only serves to accept a product, and if necessary,
to provide it with an appropriate complaint number. Afterwards, the returned
defective products supply the reverse flows and undergo the reverse logistics
processes.
The gatekeeping process looks similarly in the V enterprise, where the return
authorization is intended to verify the product against the code that is unique for each
item. This is necessary regarding specificity of products, as automotive parts are
subjected to very high quality requirements in the scope of both security
and production what is reflected in the need to verify and record all defects.
These returns, marked as defective products, supply the reverse flows.
In the Y enterprise, the returns are not authorized, as there are no situations
when the customers would like to return a baby strolled of another brand.
Thus, the returns are accepted during the gatekeeping process and at once directed
to the returns collecting and gathering process, or in case of complaints, a complaint
number is ascribed to a given return. It is similar in case of the Q enterprise, where lack
of authorization results from customers not attempting to return male clothing
manufactured by another producer. This process is generally omitted in this enterprise
because if the owner accepts the return, or the product is complained about,
it is immediately directed to the collecting and gathering process, having an ascribed
complaint number.
In case of the Z enterprise, authorization of a product is necessary, as it is crucial
to ensure compliance of the returned product’s brand with the manufacturer’s brand
because of the fact that in case of furniture and furniture accessories the products are
not marked in such a clear and visible manner as e.g. household appliances, baby
strollers or clothing elements. Hence, the gatekeeping process covers verification
of a given return. If it is negative, meaning that the product is not compliant with
product specification adopted in the Z manufacturer, the enterprise does not accept the
return. In turn, if the verification is positive, the returned product is supplied to the
reverse

112
flow and subjected to another reverse logistics process, i.e. collecting and gathering
of returns.
The process of collecting and gathering the returns in the analyzed
manufacturing enterprises begins from collecting the returns, where they undergo
an initial diagnosis. Thanks to that, the X, Y and V enterprises can eliminate the
products of full value that were mistakenly directed to the reverse flows. Afterwards,
the enterprises, regarding their possibilities, attempt to use the technical support what
gives them a chance to limit the quantity of returns that undergo further reverse
logistics processes, and send the products of full value to the customers. The technical
support implemented in the X enterprises directs about 30% of returned products to
fast repair, in the Y enterprises it is about 5% of such products and in the V enterprise
the value is 5%. In the latter case, the technical support is implemented only for
selected categories of products, regarding the current needs, and it is usually employed
for wholesale returns. Retail returns are not applicable in this case. If the technical
support fails to repair the returns, they are directed to the gathering division.
The preliminary diagnosis is not implemented by the Z and Q enterprises, as the
products specificity allows to elimination of the returns of the products of full value
already at the initial stages. At the same time, the returns do not undergo the technical
support subprocess in both enterprises regarding no possibility for a fast repair of this
kind of goods.
The collected products are gathered afterwards. In the X enterprise,
the gathering of the products is the responsibility of the agent. This results from broad
distribution of the household appliances offered by the X enterprise.
Customers/participants of the business environment who are willing to return
a defective product, accepted for the procedure during gatekeeping hand it to the
manufacturer via an intermediary company. Returns of the household appliances in the
X enterprise are collected and gathered by the wholesalers and retailers and then
delivered to its seat to carry out the controlling and sorting process.
In case of the Y, Q and V enterprises the customer returns a defective product
- qualified as a return on previous stages - on their own, to the reverse flows.
Baby strollers, male pieces of clothing and automotive parts are directly sent by the
customers to the manufacturer, where they undergo the controlling and sorting
process.
While the Z manufacturer collects and gathers the defective products’ returns
on its own. The reason for that is that it holds a well-developed chain of manufacturer
stores, so the customers can hand the returned product in such a store, i.e. directly
to the manufacturer.
In another process of the reverse logistics, the defective products’ flows are
controlled and sorted. This process starts with the return verification in all researched
manufacturing enterprises. This verification is based on identification whether the
previously acquired information is correct, and it allows to specifing an accurate
qualitative and quantitative condition of the returned products.

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 The course of the controlling and sorting process looks very similar in the X,
Y and V enterprises. This is the stage, where the return may still be rejected because
of identified discrepancies or no suitability for final disposal. During verification, a final
decision is made as regards acceptance of the return intended for further processing.
In case of a positive decision, the return is subjected to the controlling and sorting
actions. If the decision on acceptance of the return is negative, it is necessary to contact
the customer again. This contact is intended to specify the defective nature of the
product. Afterwards, when the acquired information is still not satisfactory for the
manufacturer, they reject the return and send it back to the customer.
If the obtained information is satisfactory, the return is accepted for further
processing, where all returns undergo the controlling and sorting procedure.
This is intended to determine the manner, i.e. the option the returns should
be processed further. This is the basis, on which the defective products are handed
to the next and at the same last reverse logistics process, meaning the final disposal.
In case of the furniture and furniture accessories manufacturer Z and the male
clothing manufacturer Q, the controlling and sorting process has simplified course,
as verification of returns consists only in determination of qualitative and quantitative
parameters of the returned defective products. What is more, in case of both of these
enterprises, the specificity of product causes that the return acceptance and the
repeated contact with the customer are unnecessary, as all required information was
acquired on previous stages. Thus, after the verification process, the returns in Z and Q
enterprises are subjected to controlling and sorting actions to determine the option for
their further processing, and are afterwards handed to the final disposal process.
A significant issue from the perspective of reverse logistics in the scope
of customer service is compensation of losses that the customer suffered because of the
defective product. While analyzing the procedures in enterprises X, Y and V, the
subprocess of awarding compensation looks similar. Regarding complexity of the
reverse logistics process in those three enterprises as well as specificity of the
products, the compensation may be implemented in three situations. The first
possibility for awarding the compensation is upon the product return, the second one
may be granted by the technical support when fast repair of the product is not possible,
and the third one takes place within the controlling and sorting process - it might be
awarded after verification and acceptance of the return. The moment when the
customer receives compensation is strictly related and dependent on a particular
returned defective product. In case of household appliances, baby stroller and
automotive parts, the compensation is most often based on releasing the same product
of the same or similar parameters to the one that was returned, or less often on a cash
refund.
The compensation awarding procedure in the Z enterprise takes place in the
gatekeeping process, after verification and acceptance of the return, as characteristics
of the furniture products makes it impossible to restore them to their original
condition during the final disposal option in the reverse logistics. This is usually the

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customer who makes the decision on whether they are willing to get compensation
as a refund or a returned product.
In turn, compensation in the Q enterprise is awarded in the sorting
and controlling process, after the return is verified. The returned pieces of clothing
are characterized with varied qualitative and quantitative conditions, which is why
the owner can make a decision on compensation only after a given return is diagnosed.
Compensation is usually a refund here, unless the customer decides otherwise.
The last process of the reverse logistics - final disposal - takes place in all
analyzed production enterprises according to the same scheme. The difference is in the
final disposal options adopted in those enterprises.
Returns of defective products in the final disposal process are inspected in the
first place. First of all, the inspection is intended to eliminate any erroneous decisions
made towards a given refund during previous processes, and second of all verification
of the returned product in terms of the possibility to employ a selected option for final
disposal, and to specify whether this selected option is most advantageous and allows
maximization of the value restoration from this return.
When the final disposal options of the returned defective products are analyzed,
it is visible that their full range is adopted by the Y manufacturing enterprise that
employs all feasible options in case of baby stroller, i.e. repackage (about 2% per year),
upgrade and modernization (about 3% per year), repair (about 45% per year),
recycling (about 10% per year), disassembly (about 5% per year), reconfiguration
(about 10% per year), remanufacturing (about 10% per year), sales on a different
market (about 10% per year) or donation for charitable purposes (about 2% per year)
and delivery to the landfill (about 3% per year).
Also the X enterprise adopts all above options in case of the household
appliance, except the last one - delivery to the landfill - what is caused not only by legal
and environmental regulations but also the products specificity itself, which as returns
allow total recovery of value without being transformed into waste. This enterprise
adopts the options at the following rates per year: repackage of about 5% of returns,
upgrade and modernization - about 15%, repair - about 55%, recycling - about 5%,
disassembly - about 3%, reconfiguration - about 5%, remanufacturing - about 5%, sales
on a different market - about 5% and donation to charitable purposes - about 2%.
The option of recovering value from the returns in the final disposal process
that is most frequently adopted in the V enterprise is recycling (about 65% per year).
Other employed options are repair and disassembly (about 10% per year each), sales
on other market (about 5% per year) and waste delivered to a landfill (about 10%
per year).
The Z manufacturing enterprise, regarding characteristics of the returned
defective products recovers the value from them through adopting the recycling
process (about 85% per year), hence obtaining secondary raw materials.
Minor percentage of the returns (about 5% per year) is suitable for charity donation.
The remaining returns are ascribed with a waste status during the final disposal
process and are delivered to the landfill (about 10% per year).

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 In turn, the Q enterprise, similarly to the Z enterprise, regarding the returns
specificity, can recover the value from defective products by adopting: repair - about
40% of returns per year, remanufacturing and disassembly - about 15% per year
for each process, charity donation - 10% per year. Returns of male clothing in this
enterprises, which are delivered for storage on a landfill pose about 20% per year.
The possibility for returns recirculation is characteristic for the final disposal
option. This happens when employment of a single value recovery option does
not suffice so there is a need to adopt another option to optimize the advantage coming
from the recovery.
In case of all analyzed enterprises, the returns that are subjected to the final
disposal option undergo re-inspection when a decision is made on whether it is
necessary to employ an additional value recovery option in their case. If the decision is
positive, then the returns go back to the inspection point and then are transferred
to another final disposal option. If the decision is negative, the reverse logistics
processes are completed by supplying the forward or reverse flows with the value
recovered during the final disposal process. Regarding specificity of the product and
the performed value recovery from the product return, the manufacturing enterprises
supply flows of their own or of other participants of the business environment.
The Z enterprise that acquires only the secondary raw materials, supplies its
own production process with them. A similar situation takes place in the Q enterprise
that includes the whole recovered value into its own production process. The Y
enterprise keeps the recovered 90% of the value for itself in various forms. The X and V
enterprises utilize about 50% of the recovered value, and they sell the second half on
the secondary market, to supply the logistics flows of other participants of the business
surroundings.
The performed verification of the reverse logistics model of defective products
in five researched Polish manufacturing enterprises X, Y, Z Q and V suggests that they
activities within the analyzed field match the concept developed during the literature
studies29. In general, all analyzed processes are held in accordance with indications
of the general model.
Verification of the model allowed practical presentation of the reverse logistics
processes implementation in management of the defective products’ flows,
and rendered it possible to stress the basic differences in actions undertaken
by enterprises in that scope. They result from both the differentiated parameters of the
research enterprises and from the specificity of the defective products’ flows, which is
different in each of the pointed companies.
Development of the model and discussion about the research that verifies
its correctness allowed conceptualization of the notions in the scope of the reverse
logistics processes in manufacturing enterprises, which were explained at first in the

29It must be stressed here that the Polish manufacturing enterprises, while implementing the reverse logistics
processes in the scope of defective products’ flows management, do not use the terminology ascribed to these
processes in the literature, but rather their own independent nomenclature. However, this has no impact
on characteristics and qualities of both the process and studies.

116
theoretical and then practical perspective. At the same time, there were the scope
and specificity of defective products’ flows within manufacturing enterprises
determined within the presented model. The descriptive characteristics of the general
model, developed in detail at the verification stage in the manufacturing enterprises
also allowed indicating the reverse logistics and its processes as implementation
methods for defective products’ flows management in those enterprises.
However, it is also significant that the concept of the general reverse logistics
model of defective products in manufacturing enterprises is only a proposal for such
companies, which may use it to improve their systems in this scope. As the model
presents a general structure, each manufacturing enterprise must adapt this model
preliminarily to their operational conditions, as its present form is of a universal
nature. Nevertheless, the verification carried out in five manufacturing enterprises
different in terms of parameters proved that the general form of the model allows any
configuration of actions related to the reverse logistics processes, this it may pose the
basis for manufacturing enterprises which do not implement management of the
defective products’ flows or are not highly advanced in that matter.
The general reverse logistics model of defective products should further
undergo all adaptational extensions and a more detailed analysis of the decisions and
actions undertaken in that scope, while striving for establishment of an individual
reverse logistics system in management of defective products’ flows that would be
individual and unique for each manufacturing enterprise.

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5. Interdependence of determinants in reverse logistics management
of defective products

The survey performed in the Polish manufacturing enterprises and its results
presented in the third chapter of this monograph allow carrying out certain analyze
on a more methodologically advanced level. It allows among others to analyze the
interdependencies between factors that determined defective products’ flows
management in Polish manufacturing enterprises, which was carried out based on the
following indicators - x2 and  – Yule’s coefficient.
The x2 measure is adopted for examination of interdependencies of two features
measured on rated scales. It is determined against a contingency table.
The contingency table consists in empirical sizes nij of those sample elements,
for which the X features adopts a xi variant, and the Y feature adopts a yj variant.
The x2 value suggests a stochastic dependence or independence between
X and Y features in the general population that the studies sample comes from.
But it does not indicate strength or direction of the dependences, and it practice
its significance must be verified. The x2 value is determined according to the following
formula [Zeliaś, Pawełęk, Wanat 2002]: wyznaczana jest ze wzoru:

Where , posing a theoretical size, is obtained from the following formula:

that is:

The simples contingency table is the association table [Zeliaś, Pawełęk, Wanat
2002].

X
Y
+ – Total

+ a b a+b
– c d c+d
Total a+c b+d n

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Symbols adopted in the table are as follows:
a — the number of units holding the X feature and holding the Y features,
b — number of units holding the Y feature and not holding the X feature
c — the number of units holding the X feature and not holding the Y feature,
d — number of units holding none of the examined features.
There might be some simplified formulas adopted for data presented in the
association table, the disadvantage of which is limitation in use and the benefit is the
possibility to grasp the dependence direction, though this issue must be approach with
great care.
The x2 measure is directly proportional to the sample size - if with the same
proportions of value in the contingency table the size in increased n times, the x 2 value
will also grow by n times. To eliminate the impact exerted by the size on the x 2 value,
there are standardized indicators calculated [Zeliaś, Pawełęk, Wanat 2002]:

2  n(ad  bc)2
(a  b)(a  c)(b  d )(c  d )

The Yule’s coefficient - φ- is intended to examine the strength of relationship

between two qualitative features with different numbers of variants. It is expressed
with the following formula [Sobczyk 2000]:

For the number of rows not exceeding 2 the - φ Yule’s value cannot be more
than 1, and when the number of rows is higher than 2, that value can be greater than 1.
The x2 value can be calculated only when the frequency of particular cells
in a correlation table is not lower than five (excluding the possibility of the Yate’s
correction). For smaller cell frequencies in a table the calculations are much harder.
While interpreting the value of the φ– Yule’s coefficient, we need to remember
the close its value to 1, the clearer and stronger the dependence between examined
variables.
The basic purpose of performed analyses, the results of which are presented
in this chapter, is to evaluate the dependencies between characteristics of defective
products’ flows, their parameters and qualities, barriers for effective management
of defective products’ flows and manner of overcoming them, and the results
of defective products’ flows management in the Polish manufacturing enterprises.
To perform the interdependence analysis, there was a collection of variables
assumed, divided into groups together with their characteristics:
1st group of characteristics for the defective products’ flows:
1) Variables related to intensity and quality of the defective products’ flows in the
enterprises: damaged products, outdated products, seasonal products, products
unsold in retail, withdrawn products, products mistakenly taken as faulty, product

119
 components, waste- and by-products, packagings. These variables specify either
intensity of reverse flows measured on a scale from 1 to 4, where 1 means that they
are numerous and 4 that they are absent, or the medium qualitative conditions
of the returns in relation to the primary product quality measured on the scale from
1 to 6, where 1 means a terrible condition and 6 is a perfect condition.
2) Variables related to the place where the defective products’ flows appear
in enterprises (as percentage): manufacturer returns, distribution returns,
marketing returns.
2nd group of parameters of actions related to defective products’ flows management:
1) Variables related to the most frequent return period for a defective product
(calculating from the moment of handing it to distribution), where there
are 10 variants of answers - the first one is the period from 1 week, and in the last
one - the period of more than 5 years.
2) Variables related to duration of the average processing cycle for returns in the
enterprises with 8 variants of answers - the first is the period shorter than 1 day and
the last - the period longer than 6 months.
3) Variables related to determination of actions in the scope of the defective products’
flows management, which are carried out independently or by the enterprises, are
commissioned to third parties or not performed at all. These actions cover: returns
acceptance, allocation for donations, charitable purposes, repackage and sales
of products as new, sales in such a form as the product was accepted, renovation,
production from recovered components or raw materials, sale, recovery
of components, recycling, scraping.
3 group of objectives and motives of the policy of defective products returns:
rd

1) Variables related to evaluation of the enterprises’ policy in the scope of accepting

defective products, measured on the scale from 1 to 6 where 1 means a very
restrictive policy and 6 is a very liberal policy, as well as variables related to the
change in the enterprise's policy in the scope of accepting the defective products
returns within last 5 years, also measured on the scale from 1 to 6, where 1 means
a change into a more restrictive policy and 6 into a more liberal one.
2) Changes related to the motives of accepting the defective products returns by the
enterprises: improvement in customer service quality, getting rid of unnecessary
products from the market, fulfilling the legal and environmental requirements,
recovering some components and materials, developing of an environmentally-
friendly company reputation, preventing displacement of new products by the
products from the secondary market, limiting the loss of value on unsold
or defective products. These variables determine the motives that are considered
by enterprises as non-significant, significant or very important.
4 group of barriers of effective management of defective products’ flows and ways
th

of overcoming them:
1) Variables related to barriers of effective management of defective products’ flows,
present or absent in the enterprise: company’s policy, aspects of competitiveness,

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 financial outlays, non-significance, lack of adequate organizational solutions legal
conditions, no attention from the managerial staff, incompetent personnel.
2) Variables related to evaluation of significance of particular aspects in an enterprise
in development of its competitive position: reduction of costs, price, quality, returns
policy, delivery time, variate of products. These variables were measured on the
scale from 1 to 6, where 1 determined the aspects as completely non-significant and
6 as very important.
3) Variables related to installation of hardware and software that support management
of the defective products’ flows: bar codes, 2D codes, a computerized system
for returns tracking, electronic data interchange (EDI), radio frequency
identification (RFID). These variables determine whether the above solutions are
installed, are planned to be installed or are not installed are there are no plans for
their installation in the future.
4) Variables related to determination of influence exerted by the defective products’
flow management in the enterprise on implementation of the enterprise’s
objectives, measured on the scale from 1 to 6 where 1 is negative influence
and 6 - positive influence.
5 group of results from management of defective products’ flows:
th

1) A variable related to the influence of the returns on reduction in the enterprise’s

profits, where this influence could be significant, non-significant or absent.
The interdependence analysis was employed in case of each variable (each pair
of variables), but regarding the fact that the correlation was very weak in numerous
cases or there were no causative relations that could be explained in a logical manner,
this chapter presents only the most important and statistically significant
interdependencies.
Interpretation of the interdependence results is based not only on the
performed calculations but also on observations and performed direct interviews with
representatives of the manufacturing enterprises mentioned in the previous chapters.
The first analyses covered interdependencies between emergence intensity
of defective products in a form of returns in the examined enterprises, i.e.: damaged
products, outdated products, seasonal products, products unsold in retail, products
withdrawn from sales, products erroneously taken as faulty, product components,
waste- and by-products, packagings and particular categories of variables from the
assumed collection of variables divided into groups. Examination of those correlations
proved that significant statistical interdependencies are present in case of emergence
intensity of the defective products and particular categories of variables from the (2nd)
group of parameters of actions in the scope of the defective products’ flows
management, i.e. the variables related to determination of actions in the scope of the
defective products’ flows management in the enterprises. Results of this study
are presented in Table 5.1.
What is more, in case of emergence intensity of outdated and withdrawn
products in the reverse flows of enterprises, no statistically significant correlations

121
with any of the researched variables category were confirmed, so they are not
presented in the table.
Table 5.1. Values of the Yule’s correlation coefficient φ and statistics x2 for emergence intensity
of defective products in reverse flows of enterprises and the accompanying variables category
from the (2nd) group of action parameters in the scope of the defective products ’ flows
management.

Coefficient
x2 φ
Variables

Damaged products

Returns acceptance (1) 8.923* 0.172

Repackage and sales as new (2) 5.866* 0.139

Remanufacture (3) 9.477* 0.177

Production from recovered components or raw materials (4) 19.350* 0.253

Sales (5) 9.654* 0.179

Recovery of components (6) 3.876* 0.113

Seasonal products

Repackage and sales as new (7) 12.308* 0.202

Sales in the same form as the product was accepted (8) 6.781* 0.150

Sales (9) 8.558* 0.168

Recovery of components (10) 5.209* 0.131

Products unsold in retail

Charity donation (11) 4.424* 0.121

Repackage and sales as new (12) 8.838* 0.171

Sales in the same form as the product was accepted (13) 9.421* 0.177

Sales (14) 6.124* 0.142

Products erroneously taken as faulty

Production from recovered components or raw materials [ (15) 5.414* 0.134

Product components

Sales in the same form as the product was accepted (16) 11.086* 0.192

Production from recovered components or raw materials (17) 7.492* 0.158

Sales (18) 6.829* 0.150

Recycling (19) 4.987* 0.129

Waste- and by-products

Remanufacture (20) 6.892* 0.151

Packagings

Recycling (21) 5.218* 0.131

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

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 The interdependencies presented in Table 5.1 confirm occurrence
of correlations reverse flows significantly more often perform actions related to
returns acceptance.
A between emergence intensity of some defective products in the reverse flows
of some enterprises and independence of some actions undertaken in the scope of the
defective products’ flows management by the enterprises.
There is a statistically significant interdependence (1) between independence
of returns acceptance and the damaged products’ emergence intensity in flows of the
returned defective products. Manufacturing enterprises that record damaged products
in their similar situation refers to independence of enterprises in performance
of actions that consist in: repackage and sales of the products as new (2),
remanufacture (3), production from recovered components or raw materials (4), sales
(5) and recovery of components (6).
When it comes to reverse flows management, occurrence of seasonal products
is correlated with the following actions undertaken by the enterprises independently”
repackage and sales of the products as new (7), sales of the products in the form as
accepted (8), sales (9) and recovery of components (10). In this case, these
interdependencies are clear in majority and they become stronger along the increase
in emergence of seasonal products in the defective products’ flows.
The emergence intensity of the products unsold in retail is correlated with
frequency of independent actions carried out by the enterprises, covering: charity
donation of defective products (11), repackage and sales as new products (12), sales
of the products in the form as accepted (13) and sales (14). These interdependencies
are in majority clear also in this case, and they become more intensive along with the
increase in emergence intensity of the products unsold in retail in reverse flows.
The enterprises that employ production from recovered components or raw
materials apart from traditional manufacturing processes more often notice
significance of emergence of products erroneously taken as faulty in the reverse flows
(15).
While emergence intensity of the returned products is correlated with the
enterprises’ undertaking actions related to management of reverse flows in a form
of sales of products as accepted (16), production from recovered raw materials and
components (17), sales (18) and recycling (19). Also these interdependencies are clear
and they intensify along with growing emergence intensity of the product components
among the returns in the defective products’ flows of manufacturing enterprises.
When it comes to actions undertaken by enterprises in relation to the reverse
flows management, the emergence intensity of waste- and by-products in those flows
is correlated with remanufacture (20) as the enterprises that repair their products are
rarer to generate waste- and by-products qualified to the category of returns in the
defective products’ flows.
While emergence intensity of packaging in the reverse flows is correlated
(21) with implementation of recycling by those enterprises, allowing to recovering
at least a part of the value included in this category of defective products.

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 The confirmed correlations suggest that even though Polish manufacturing
enterprises do not have direct impact on the emergence intensity of the defective
products in their reverse flows, they still, indirectly, through actions related to the
defective products’ flows management, influence this intensity. This is first of all
related to situation when the enterprises collect the defective products returns on their
own, seeing their potential to generate economic benefits, and adopting them
in management operations of reverse flows.
What is more, during the examination of interdependence between
the emergence intensity of the defective products in a form of returns in the
researched enterprises and other categories of variables, there were statistically
significant correlations found out with the variables from the (5th) group
of management of defective products’ flows regarding the impact of the returns on
reduction in the enterprise’s income, and from the (2nd) groups of action parameters in
the scope of the defective products’ flows management, related to the most frequent
return period for a defective product return [calculating from the moment of handing it
to distribution). Statistically significant results of this correlation study are presented
in Table 5.2.

Table 5.2. Values of the Yule’s correlation coefficient φ and statistics x2 for emergence intensity
of defective products in reverse flows of enterprises and the accompanying variables category
from the (5th) group of the results of the defective products’ flow management and (2nd) group
of action parameters in the scope of the defective products’ flows management

Coefficient
x2 φ
Variables

Damaged products

Reduction in the
enterprise’s profitability (1) 15.524* 0.233
because of the returns

Seasonal products

Reduction in the
enterprise’s profitability (2) 6.536* 0.151
because of the returns

Products unsold in retail

The most frequent return

(3) 4.261* 0.129
period

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

The interdependencies presented in Table 5.2 confirm occurrence

of correlations between emergence intensity of some defective products in the reverse
flows of some enterprises and reduction in the enterprise’s profitability by returns and
the most frequent return period.
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 The existing statistically significant interdependence between evaluation of the
drop in the enterprise’s profitability regarding emergence intensity of damaged
products (1) and seasonal products (2) in the group of defective products returned
to the reverse flows of those enterprises suggests that the products significantly
contribute to the drop in the enterprises’ profitability. While analyzing this
interdependence there is a need to stress that both the damaged and seasonal products
are indeed a category of defective products, which the enterprises would prefer
to omit. However, on the other hand, while interpreting the obtained results with the
data from Table 5.1, we need to notice that if the products undergo special operations
in the enterprises within the scope of the defective products’ flows management, they
may pose a source of benefits consisting in recovery of the value they hold. Therefore,
just the fact of confirming the above-mentioned interdependence does not need to
prove its negative overtone.
While the statistically significant interdependence between the emergence
intensity of the products unsold in retail in reverse flows of the enterprises and the
most frequent return period (3) seems to result from the character of this kind
of defective products. The products unsold in retail are most often returned directly
or indirectly by retailers and/or whole sellers. As these entities usually cooperate with
manufacturing enterprises, the return period for products unsold in retail in this case
is identified and determined, thus - what was confirmed in the research - there is some
interdependence between them.
Having performed the interdependence analysis between the emergence
intensity of defective products in reverse flows of Polish manufacturing enterprises
and particular variables categories from the (2nd) group of action parameters in the
scope of defective products’ flows management, there was another interdependence
analysis carried out between the qualitative condition of the defective products and
particular categories of variables from the assumed collection of variables divided into
groups. The examination of correlations covered the qualitative condition (in relation
to the original product quality), returns of defective products in the enterprise’s
logistics flows for: damaged products, outdated products, seasonal products, products
unsold in retail, products withdrawn from sales, products erroneously taken as faulty,
product components, waste- and by-products and packagings correlated with
particular categories of variables from the adopted collection of variables divided into
groups. This research proved that there are some statistically significant
interdependencies between the qualitative condition of defective products and
variables categories from the (2nd) group of action parameters in relation to the
defective products’ flows management, i.e. variables related to determination
of actions from the scope of the defective products’ flows in enterprises, and the (4th)
group of barriers for effective management of the defective products’ flows and
manner of overcoming them, meaning the variables related to evaluation
of significance of particular aspects in an enterprise in development of its competitive
position. Results of this research are presented in Table 5.3.

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 At the same time, when it comes to the qualitative condition of the outdated
products, seasonal products, products unsold in retail, products withdrawn from sales,
products erroneously taken as faulty and product components in reverse flows
of enterprises, there were no statistically significant correlations confirmed with
any of the researched variables categories, hence they are not covered by the table.
Table 5.3. Values of the Yule’s correlation coefficient φ and statistics x2 for qualitative conditions
of defective products in reverse flows of enterprises and the accompanying variables category
from the (2nd) group of action parameters in the scope of the defective products ’ flows
management and from the (4th) group of barriers for effective management of defective products ’
flows and ways of overcoming them

Coefficient
x2 φ
Variables

Damaged products

(2nd) Implementation of actions related to reverse Remanufacture (1) 6.075* 0.227

flows management
Sales (2) 4.089* 0.186

Waste- and by-products

(2nd) Implementation of actions related to reverse

Recycling (3) 15.835* 0.255
flows management

(4th) Significance of developmental aspects for the Costs reduction (4) 6.190* 0.159
enterprise’s competitive advantage Delivery time (5) 8.287* 0.184

Packagings

(4th) Significance of developmental aspects for the

Costs reduction (6) 6.005* 0.279
enterprise’s competitive advantage

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

Data presented in Table 5.3 confirm existence of statistical interdependencies

between the qualitative condition of some defective products in the reverse flows
of enterprises and implementation of selected actions related to the defective
products’ flows management and significance of chosen aspects of developing
a competitive position of enterprises.
In the scope of the enterprises’ actions related to management of reverse flows,
the statistically significant correlations are observed for evaluation of the qualitative
condition of the returned damaged products and independent implementation
of remanufacture (1) and sales (2). There was the interdependence with independent
implementation of recycling also in case of evaluation of the qualitative condition
of waste- and by-products (3). In both cases, the enterprises that implement those
actions on their own evaluated the quality of returned products as higher.
In turn, while analyzing the statistically significant interdependencies between
the qualitative condition of the returned waste- and by-products and the variables

126
related to evaluation of significance of particular aspects of the enterprise
in development of its competitive position, the stressed interdependencies were
related to: costs reduction (4) and delivery time (5), and in case of researching the
interdependence between the qualitative conditions of the returned packagings
and evaluation of significance of particular aspects in the company regarding
development of the competitive position, the stressed statistically significant
interdependencies were related to costs reduction (6).
Other interdependencies analyses related to actions measured with their
duration - between the most frequent period of the defective products return
(calculating from the moment of handing the product to distribution) to the
enterprise’s reverse flow and duration of an average returns processing cycle in an
enterprise and particular variables categories from the assumed collection of variables
divided into groups.
This research proved that there are some statistically significant
interdependencies between the most frequent return period of defective products to
the enterprise’s reverse flow and variables categories from the (2nd) group of action
parameters in relation to the defective products’ flows management, i.e. variables
related to determination of actions from the scope of the defective products’ flows in
enterprises, and the (4th) group of barriers for effective management of the defective
products’ flows and manner of overcoming them, meaning the variables related to
installation of hardware and software solutions that support the defective products’
flows. Results of this research are presented in Table 5.4.

Table 5.4. Values of the Yule’s correlation coefficient φ and statistics x2 for the most frequent
return period of defective products in reverse flows of enterprises and the accompanying
variables category from the (2nd) group of action parameters in the scope of the defective
products’ flows management and from the (4th) group of barriers for effective management
of defective products’ flows and ways of overcoming them

Coefficient
x2 φ
Variables

Return period of defective products

(2nd) Implementation of actions related to reverse

Returns acceptance (1) 6.852* 0.164
flows management

(4th) Hardware and software solutions that support

Bar codes (2) 4.411* 0.131
the reverse flows management

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

Table 5.4 points to a statistically significant correlation between the most frequent
return period of the defective products to the enterprise’s reverse flows and actions
undertaken in connection to the defective products’ flows management, consisting
in independent returns acceptance (1) - in some cases, the enterprises that accept the

127
returns on their own are capable of reducing or extending the products return times.
This applies mainly to a situation when the returns come from partners of a given
enterprise. Then, thanks to efficient exchange of information, the manufacturing
enterprises have updated data on their products, and in case of returns they
are capable of collecting them quicker or extend the time for their emergence
in reverse flows.
A statistically significant correlation is also found out between the most
frequent return period for defective products into the enterprise’s reverse flows and
the hardware and software solutions that support the reverse flows management in
the form of employed bar codes (2). Thanks to such a solution, the manufacturing
enterprises, while cooperating with other enterprises that use their product, are
capable of - similarly as in the previous case - control the return periods via efficient
exchange of data on the products.
While the research of interdependence between duration of the average
processing cycle of returns in the defective products’ flows of the enterprises and
particular categories of variables from the assumed collection of variables divided into
groups suggested emergence of statistically significant interdependencies for the
variables category from the (2nd) group of actions related to the defective products’
flows management, i.e. variables related to determination of actions in the scope of the
defective products flows in enterprises, from the (3rd) group of objective and motives
of the returns policy for defective products, meaning the variables related to the
evaluation of the enterprise’s policy regarding acceptance of defective products
returns and motives for accepting the defective products returns by the enterprises, as
well as the (4th) group of barriers for effective management of the defective products’
flows and ways of overcoming them, i.e. variables related to evaluation of significance
of particular aspects of an enterprise in development of its competitive positions, and
the (5th) group of effects from the defective products’ flows management, i.e. the
variable related to the influence of returns on reduction in the enterprise’s profits.
The research results are presented in Table 5.5.
The analysis of correlations presented in Table 5.5 suggests that there
is a statistically significant interdependence between duration of the average
processing cycle of defective products in reverse flows of the enterprise and evaluation
of the returns acceptance policy by the enterprise (1). This interdependence suggests
that the more liberal the returns policy is, the longer the time for returns processing in
the enterprise lasts. This might be related to the fact that in case of the liberal returns
acceptance policy, more returns emerge in the defective products’ flows, and this in
turn expands the time for their processing.
There are some statistically significant interdependencies between the duration
of the average processing of returns and motives of accepting the returns by the
enterprise, which are as follows: improvement in the customer service quality (2),
recovery of components and materials (3) and development of an environmentally-
friendly company reputation (4). These interdependencies reflect a situation when the
enterprises, while accepting the returns, are willing to improve the customer service

128
quality, develop some reputation as an environmentally-friendly enterprise, recover
some components and materials from the returned products, as while striving for the
objectives they shorten the returns processing duration what has positive impact
on their implementation.
Table 5.5. Values of the Yule’s correlation coefficient φ and statistics x2 for duration
of an average processing cycle of returns in the defective products ’ flows of an enterprise
and the accompanying categories of variables from the (2nd) group of action parameters related
to the defective products’ flows management, from the (3rd) group of objective and motives
of the defective products returns policy, from the (4th) group of barriers of effective management
of the defective products’ flows and ways of overcoming them, and from the (5th) group of effects
of the defective products’ flows management

Coefficient
x2 φ
Variables

DURATION OF THE AVERAGE PROCESSING OF RETURNS

(3rd) Evaluation of the returns acceptance policy (1) 7.362* 0.174

Improvement in customer service quality (2) 19.995* 0.284

(3rd) Motives for acceptance of the Recovery of materials and components (3) 9.327* 0.194
returns by an enterprise
Development of an environmentally-friendly
(4) 5.024* 0.142
company reputation

(5th) Reduction in the enterprise’s profitability because of the returns (5) 6.035* 0.156

Remanufacture (6) 4.253* 0.131

(2nd) Implementation of actions
related to reverse flows Sales (7) 12.308* 0.223
management
Recycling (8) 5.703* 0.152

(4th) Significance of developmental

aspects for the enterprise’s Costs reduction (9) 4.552* 0.135
competitive advantage

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

Within the course of research there was also a statistically significant

interdependence confirmed between the average duration of processing of the
defective products in the reverse flows of an enterprise and reduction in profitability
of the enterprise because of the returns (5). This interdependence proves that the long
processing time of the returns by the enterprise is not beneficial, and it contributes
to a decrease in profitability because of excessive extension of the process.
When it comes to independence in performance of actions related to the reverse
flows management by the enterprise and average duration of the returns processing
cycle, there is a statistically significant interdependence regarding: remanufacture
(6), sales (7) and recycling (8). The enterprises that implement those actions on their
own intend to shorten the returns processing cycle as much as possible, because then
they are capable of recovering the value included in those returns quickly.

129
 The research also confirmed the statistically significant difference in time
between the average duration of processing of the defective products in the reverse
flows of an enterprise and cost reduction as a significant aspect of development of the
enterprise’s competitive advantage (9). Therefore, the enterprises that intend
to reduce the costs strive for a maximum reduction in the returns processing cycle
duration, as it allows them to recover the value from the returns and re-use it in their
operations.
Other correlation analyses were carried out between the enterprise’s policy
in returns acceptance, influence of the returns on reduction of the enterprises’
profitability and impact of the defective products’ flows management
on implementation of the enterprise’s objective and particular variables categories
from the assumed collection of variables divided into groups, and certain scores were
granted.
The first interdependence analysis is related to the correlations between
the enterprise’s policy evaluation in the scope of returns acceptance and other
categories of variables from the assumed groups.
Table 5.6. Values of the Yule’s correlation coefficient φ and statistics x2 for evaluation of the
enterprise’s policy regarding returns acceptance and the accompanying variables category from
the (2nd) group of action parameters in the scope of the defective products ’ flows management,
from the (3rd) group of objectives and motives of the policy of the defective products’ returns,
and from the (4th) group of barriers for effective management of defective products ’ flows
and ways of overcoming them

Coefficient
x2 φ
Variables

Evaluation of the returns acceptance policy

Improvement in
(3rd) Motives for acceptance of the returns by an
customer service (1) 16.084* 0.251
enterprise
quality

(2nd) Implementation of actions related to reverse

Returns acceptance (2) 31.435* 0.351
flows management

(4th) Impact of the reverse flows management on implementation of the

(3) 23.212* 0.306
enterprise’s objectives

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

The research proved that the evaluation of the returns acceptance policy
is correlated with the variables from the (2nd) group of actions in the scope of the
defective products’ flows management, meaning the variables related to determination
of actions in the scope of the defective products’ flows management, from the (3rd)
group of objectives and motives of the policy of the defective products’ returns, i.e.
variables related to the motives for acceptance of the defective products’ returns by an
enterprise, and from the (4th) group of barriers for effective management of the

130
defective products’ flows and ways of overcoming them, i.e. variables related to
determination of influence exerted by the defective products’ flows management in the
enterprise on implementation of its objectives. Results of this study are presented in
Table 5.6.
While analyzing the obtained results, there were some statistically significant
correlations stressed between evaluation of the enterprise’s policy regarding returns
acceptance and the motive for returns acceptance that is improvement of the customer
service quality (1), independence in realization of an action related to the reverse flows
management, which consists in acceptance of the returns (2) and influence exerted
by the reverse flows management on implementation of the enterprise’s objectives (3).
All of those correlations adopted not only significant but also high values.
The enterprises that improve the customer service quality, accept the returns on their
own and having positive views on the impact exerted by the reverse flows
management on implementation of the company’s objectives have a more liberal policy
in the scope of accepting the defective products returns.
The second interdependence analysis is related to the correlation between the
evaluation of the returns’ impact on reduction in the enterprises’ profitability
and other categories of variables from the assumed groups. The research proved that
the evaluation of impact from the returns on reduction in the enterprises’ profitability
is correlated with the variables from the (2nd) group of actions in the scope of the
defective products’ flows management, meaning the variables related to determination
of actions in the scope of the defective products’ flows management, from the (3rd)
group of objectives and motives of the policy of the defective products’ returns, i.e.
variables related to the motives for acceptance of the defective products’ returns by an
enterprise, and from the (4th) group of barriers for effective management of the
defective products’ flows and ways of overcoming them, i.e. variables related to
evaluation of significance of particular aspects of an enterprise in development of its
competitive position. Results of this study are presented in Table 5.7.
There is a statistically significant interdependence between evaluation of the
returns’ impact on reduction of the enterprises’ profitability and motives for
acceptance of the returns by an enterprise, such as: improvement in the customer
service quality (1), fulfillment of legal and environmental requirements (2), developing
an environmentally-friendly company reputation (3) and preventing displacement of
new products by the products from the secondary market (4). Enterprises that stress
significance of those motives pointed to the returns’ impact on reduction of the
enterprise’s profitability.
When it comes to evaluation of the returns’ impact on the enterprise’s
profitability and operations related to the reverse flow management, carried out
independently by the enterprises, there as a statistically significant correlation found
out with: returns acceptance (5), charity donation (6), repackage and sales as new
(7), sales in the form as accepted (8), remanufacture (9), production from recovered
raw materials or components (10), sales (11), components recovery (12)

131
and scrapping (13). The enterprises stating the returns reduce the profitability made
attempts to carry out the mentioned actions on their own - except the scrapping.
Table 5.7. Values of the Yule’s correlation coefficient φ and statistics x2 for evaluation of the
returns’ impact on reduction in the enterprise’s profitability and the accompanying variables
category from the (2nd) group of action parameters in the scope of the defective products ’ flows
management, from the (3rd) group of objectives and motives of the policy of the defective
products’ returns, and from the (4th) group of barriers for effective management of defective
products’ flows and ways of overcoming them

Coefficient
x2 φ
Variables

Evaluation of the returns’ impact on reduction of the enterprise’s profitability

Improvement in customer service quality (1) 8.815* 0.175

Meeting the legal and environmental requirements (2) 8.819* 0.175

(3rd) Motives for
acceptance of the returns Development of an environmentally-friendly
(3) 12.288* 0.207
by an enterprise company reputation

Prevention of displacement of new products by

(4) 4.167* 0.120
products from the secondary market.

Returns acceptance (5) 9.052* 0.178

Charity donation (6) 18.528* 0.254

Repackage and sales as new (7) 9.048* 0.178

Sales in the same form as the product was accepted (8) 23.984* 0.289
(2nd)Implementation of
Remanufacture (9) 34.435* 0.346
actions related to reverse
flows management Production from recovered components or raw
(10) 9.204* 0.179
materials

Sales (11) 24.245* 0.291

Recovery of components (12) 5.864* 0.143

Scrapping (13) 4.384* 0.124

(4th) Significance of
developmental aspects for
Returns policy (14) 4.709* 0.128
the enterprise’s
competitive advantage

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

The course of research also proved that the enterprises that treat the returns
policy significant regarding the competitive position development as non-significant,
evaluated the returns’ impact on the enterprise’s profitability as faint (14).
The third interdependence analysis is related to determination of correlations
between evaluation of impact of the defective products’ flows management
on implementation of the enterprise’s objectives and the remaining categories
of variables from the assumed groups. The research proved that the evaluation
of impact from the reverse flow management on implementation of the enterprise’s

132
objectives is correlated with variables from the (2nd) group of actions in the scope
of the defective products’ flows management, meaning the variables related
to determination of actions in the scope of the defective products’ flows management,
and from the (3rd) group of objectives and motives of the policy of the defective
products’ returns, i.e. variables related to the motives for acceptance of the defective
products’ returns by an enterprise. Results of this research are presented in Table 5.8.
Table 5.8. Values of the Yule’s correlation coefficient φ and statistics x2 for evaluation of the
impact from the reverse flows management on implementation of the enterprise ’s objectives and
the accompanying variables categories from the (2nd) group of action parameters in the scope
of the defective products’ flows management, from the (3rd) group of objectives and motives
of the policy of the defective products’ returns

Coefficient
x2 φ
Variables

Impact of the reverse flows management on implementation of the enterprise’s objectives

Meeting the legal and environmental

(1) 6.032* 0.154
(3rd)Motives for acceptance of the requirements
returns by an enterprise Development of an environmentally-
(2) 4.425* 0.132
friendly company reputation

(2nd) Implementation of actions related

Returns acceptance (3) 12.659* 0.223
to reverse flows management

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

There is a statistically significant interdependence in the scope of following

motives between evaluation of impact exerted by the reverse flows management
on implementation of the enterprise’s objectives and motives for returns acceptance:
meeting the legal and environmental requirements (1) and development
of an environmentally-friendly company reputation (2). The enterprises stressing the
significance of those motives maintained that the reverse flows management
is of negative impact on implementation of the company’s objectives.
When it comes to evaluation of impact exerted by the reverse flows
management on the enterprise’s objectives implementation, there was also
a statistically significant correlation observed with independent returns acceptance as
an action related to the reverse flows management (3). The enterprises’ negative
evaluation of the impact exerted by the reverse flows management on the company’s
objectives implementation led to their dropping the independent acceptance of the
defective products returns.
Further correlation analyses in the research was employed in case
of interdependencies between the motives of accepting the defective products returns
by the enterprises (improvement in customer service quality, getting rid
of unnecessary products from the market, fulfilling the legal and environmental
requirements, recovering some components and materials, developing of an
environmentally-friendly company reputation, preventing displacement of new
133
products by the products from the secondary market, limiting the loss of value on
unsold or defective products) and particular variables categories from the assumed
collections of variables divided into groups. Examination of those interdependencies
proved that significant statistical interdependencies are present in case of motives for
acceptance of the defective products returns by the enterprises and particular
variables categories from the (2nd) group of parameters of actions in the scope of the
defective products’ flows management, i.e. the variables related to determination
of actions in the scope of the defective products’ flows management in the enterprises.
Results of this study are presented in Table 5.9.
Table 5.9. Values of the Yule’s correlation coefficient φ and statistics x2 for motives of acceptance
of defective products returns by the enterprise and the accompanying variables category from
the (2nd) group of action parameters in the scope of the defective products ’ flows management

Coefficient
x2 φ
Variables

Improvement in customer service quality

Returns acceptance (1) 7.063* 0.153

Charity donation (2) 9.042* 0.173

Repackage and sales as new (3) 15.052* 0.223

Sales in the same form as the product was accepted (4) 21.246* 0.265

Remanufacture (5) 54.767* 0.426

Sales (6) 25.871* 0.293

Recycling (7) 20.902* 0.263

Getting rid of unnecessary products from the market

Repackage and sales as new (8) 4.187* 0.118

Sales in the same form as the product was accepted (9) 9.834* 0.180

Remanufacture (10) 5.742* 0.138

Scrapping (11) 5.221* 0.131

Meeting the legal and environmental requirements

Returns acceptance (12) 9.801* 0.180

Charity donation (13) 14.857* 0.222

Sales in the same form as the product was accepted (14) 6.311* 0.145

Remanufacture (15) 11.621* 0.196

Scrapping (16) 18.584* 0.248

Recovery of materials and components

Returns acceptance (17) 17.662* 0.242

Charity donation (18) 4.551* 0.123

134
 Recovery of components (19) 6.538* 0.147

Scrapping (20) 7.229* 0.155

Development of an environmentally-friendly company reputation

Charity donation (21) 4.812* 0.126

Repackage and sales as new (22) 7.956* 0.162

Sales in the same form as the product was accepted (23) 14.279* 0.217

Remanufacture (24) 18.042* 0.244

Sales (25) 6.554* 0.147

Recycling (26) 7.508* 0.158

Scrapping (27) 3.905* 0.114

Prevention of displacement of new products by products from the secondary market

Remanufacture (28) 7.392* 0.156

Sales (29) 4.056* 0.116

Scrapping (30) 5.973* 0.141

Reduction in the loss of value on unsold or defective products

Returns acceptance (31) 14.873* 0.222

Repackage and sales as new (32) 10.085* 0.183

Remanufacture (33) 11.374* 0.194

Scrapping (34) 12.449* 0.203

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

The enterprises that accept the returns to improve the customer service quality
most often undertake independent actions in the scope of returns acceptance (1),
charity donation (2), repackage and sales of the returns as new (3), sales in the
assumed form (4), remanufacture (5), sales (6) and recycling (7). These actions
undertaken by the enterprise on its own contribute to improvement in the customer
service quality.
The enterprises that accept returns because they are willing to discard
unnecessary products from the market significantly more often undertake
independent operations in the scope of repackage and sales of the returns as new (8),
sales in an accepted form (9), remanufacture (10), and scrapping (11).
In turn, the enterprises where the motive for the returns acceptance is to meet
the legal and environmental requirements, significantly more often undertake
independent operations in the scope of returns acceptance (12), charity donation
(13), sales in a form as the product was accepted (14), remanufacture (15) and
scrapping (16).

135
 The enterprises that accept returns because they are willing to recover some
components and materials significantly more often undertake independent operations
in the scope returns acceptance (17), charity donation (18), recycling (19) and
scrapping (20).
If the motives for returns acceptance provided by the enterprises cover
development of an environmentally-friendly company, they significantly more often
undertake operation in the scope of charity donation (21), repackage and sales of the
returns as new (22), sales in the form as the product was accepted (23), remanufacture
(24), sales (25), recycling (26) and scrapping (27).
When the enterprise is motivated by prevention of displacement of new
products by the secondary-market products, the enterprises significantly more often
undertake independent actions in the scope of remanufacture (28), sales (29) and
scrapping (30).
The enterprises that accept returns because they are willing to limit the loss
of value on the unsold or defective products, they significantly more often undertake
independent actions in the scope of returns acceptance (31), repackage and sales
as new (32), remanufacture (33) and scrapping (34).
At the final, there were analyses over interdependencies between operations
in the scope of the defective products’ flows management, which are carried
out independently by the enterprise, and the particular variables categories from
the assumed collection of variables divided into groups. These actions cover: returns
acceptance, allocation for donations, charitable purposes, repackage and sales
of products as new, sales in such a form as the product was accepted, renovation,
production from recovered components or raw materials, sale, recovery
of components, recycling and scraping.
Examination of those correlations proved that the statistically significant
interdependencies are related to actions from the scope of the defective products’
flows management carried out independently by the enterprise, and particular
variables categories from the (4th) group of barriers for effective management
of defective products’ flows and ways of overcoming them, i.e. variables related to
installation of hardware and software that supports the defective products’ flows.
Results of this correlation examination are presented in Table 5.10.

136
Table 5.10 Values of the Yule’s correlation coefficient φ and statistics x2 for actions in the scope
of the defective products’ flows management, which are carried out independently by the
enterprise, and the accompanying variables categories from the (4th) group of barriers
for effective management of the defective products flows and ways of overcoming them.

Coefficient
x2 φ
Variables

Returns acceptance

Bar codes (1) 11.231* 0.193

Charity donation

Bar codes (2) 5.713* 0.138

Repackage and sales as new

Bar codes (3) 23.695* 0.280

Computerized returns tracking system (4) 9.409* 0.177

EDI (5) 5.967* 0.141

Sales in the same form as the product was accepted

Bar codes (6) 26.409* 0.296

2D codes (7) 5.368* 0.133

Computerized returns tracking system (8) 13.894* 0.214

EDI (9) 13.429* 0.211

Remanufacture

Bar codes (10) 10.694* 0.188

Production from recovered components or raw materials

Bar codes (11) 8.698* 0.170

Computerized returns tracking system (12) 10.464* 0.186

EDI (13) 9.696* 0.179

Sales

Bar codes (14) 23.200* 0.277

Computerized returns tracking system (15) 16.280* 0.232

EDI (16) 11.870* 0.198

Recovery of components

Bar codes (17) 3.975* 0,115

Computerized returns tracking system (18) 6.623* 0,148

Recycling

Bar codes (19) 6.034* 0.141

2D codes (20) 10.456* 0.186

Computerized returns tracking system (21) 6.773* 0.150

* - statistically significant values on the level of α= 0.05.

Source: Own work based on results from the survey questionnaire.

137
 In case of scrapping, when it comes to actions from the scope of defective
products` flows management, no statistically significant correlations were confirmed
with any of the researched variables categories, therefore it was not covered
in the table.
The enterprises that accept returns on their own (1), similarly to those
employing charity donations (2) and remanufacturing (3), significantly more often
make use of bar codes to support the defective products’ flows management.
The enterprise that repackage and sell the returns on their own as new
significantly more often use the bar codes (4), computerized return tracking system
(5) and electronic data interchange (6) to support the reverse flows management.
The same solutions are significantly more often employed by enterprises that
produce from recovered components or raw materials on their own: bar codes
(7), computerized returns tracking system (8), electronic data interchange
(9) and enterprises that organize sales on their own: (10), computerized returns
tracking system (11) and electronic data interchange (12).
The enterprises that sell the returns in a form that the product was accepted
significantly more often make use of the reverse flows management support,
by employing bar codes (13), two-dimensional codes (14), computerized returns
tracking systems (15) and electronic data interchange (16).
The enterprises that recover the components on their own significantly more
often adopt the bar codes (17) and the computerized returns tracking system
(18), while managing the defective products’ flows.
While the companies that carry out the recycling operations significantly more
often make use of the bar codes (19), two-dimensional codes (20) and the
computerized returns tracking system (21).
The manufacturing enterprises that carry out actions in the scope of the
defective products’ flows management on their own, employ hardware and software
solutions supporting management of the flows because they allow better supervision
over the returns that emerge within the reverse flows of those enterprises.
Summing up, the empirical studies’ results presented in this chapter allow
of evaluation the interdependence between description of the defective products’ flows
in the Polish manufacturing enterprises and the results of those flows’ management.
It is possible among others thanks to development of a set of principles (variables)
related to shaping of the defective products’ flows in the researched enterprises what
at the same time allows to improving effectiveness and efficiency of the flows.

138
6. Relationships of reverse logistics processes and differences in their
management

Thanks to the existing original data collected from the survey questionnaire
performed in the Polish manufacturing enterprises and the results from descriptive
and statistical research, it was possible to carry out some graphic simulations for
selected relationships in management of defective products’ flows.
The presented fields allow generalized interference, and all simulation were
carried out to stress the relationships between shaping of particular variables
in comparison to the changes of other variables.
At first, within the research adopting the distance weighted least squares
smoothing methods [Szajt 2014] there was a simulation carried out regarding
relationships between the motives for accepting the returned defective products by the
enterprises and evaluation of the returns policy and assessment of changes
in profitability regarding returns acceptance in the Polish manufacturing enterprises
(Fig. 6.1).
Figure 6.1. Simulations of relationships between the motives for accepting the returned defective
products (0X axis) and evaluation of changes in profitability (0Y axis) in relation to returns
acceptance in the Polish manufacturing enterprises

a) improvement in customer service quality

139
b) getting rid of unnecessary products from the market

c) meeting the legal and environmental requirements

140
d) recovering components and materials

e) developing an environmentally-friendly company reputation

141
f) preventing displacement of new products

g) reduction in the loss on value on unsold or defective products

Source: Own work in the Statistica 12 package.

The performed research, the results of which are illustrated on the Figure 6.1
was related to simulations of relationships between the motives for accepting the
returned defective products by the enterprises and evaluation of the returns policy and
assessment of changes in profitability regarding returns acceptance in the enterprises.
Motives for returns acceptance that were considered are as follows: improvement
in customer service quality, getting rid of unnecessary products from the market,
fulfilling the legal and environmental requirements, recovering some components

142
and materials, developing of an environmentally-friendly company reputation,
preventing displacement of new products by the products from the secondary market,
limiting the loss of value on unsold or defective products.
Results of the performed simulations of relationships between all seven motives
for the returns acceptance and evaluation of the returns policy and assessment of the
enterprises’ profitability allow of the following conclusions.
Along with the increase in evaluation of the returns policy significance in operations
of the enterprises and the increase in assessment of profitability related to acceptance
of the returned products, there is certain growth in significance of the motive
of returns acceptance by the enterprises, which is improvement in the customer
service quality. This motive looks a little weaker for enterprises with a general high
evaluation of the returns policy significance when it comes to the impact.
Along with the increase of the returns policy significance in operation of the
Polish manufacturing enterprises, regardless of the assessment in the profitability
changes related to the returns, the significance of the motive of returns acceptance by
the enterprises - namely getting rid of the unnecessary products from the market
- is increased. In this perspective, assessment of changes in profitability regarding the
returns, if low, exerts some positive impact on significance of this motive, and when
high, simultaneously with a low general evaluation of the returns policy’s role,
influences the significance of this motive in a negative manner, meaning it diminishes
it. Along with the increase of the returns policy significance in operation of the Polish
manufacturing enterprises, regardless of the assessment in the profitability changes
related to the returns, the significance of the motive of returns acceptance by the
enterprises - namely meeting the legal and environmental requirements - is increased,
dynamically. In this perspective, assessment of changes in profitability regarding the
returns, if low, exerts some positive impact on significance of this motive, and when
high, simultaneously with a low general evaluation of the returns policy’s
role, influences the significance of this motive in a negative manner, meaning
it diminishes it.
Along with the increase in evaluation of the returns policy significance
in operation of the manufacturing enterprises, in terms of low evaluations of changes
in profitability related to the returns, the significance of the motive, meaning recovery
of components and materials, as a motive for returns acceptance by the enterprises,
at first raises slowly, and after a certain express level is exceeded for the general
evaluation of the returns policy - it raises very dynamically. For high evaluations of the
roles of returns in diminishing of the company’s profitability, the general evaluation
of the returns policy on the low and high level leads to strengthening of the mentioned
motive, and for the medium evaluation of the returns policy to a smaller role of the
components and raw materials recovery as the motive for returns acceptance by the
enterprises.
Along with the increase in evaluation of the returns policy significance
and moderate or low evaluation of changes in profitability of enterprises through
returns, the significance of the motive that is development of an environmentally-

143
friendly company reputation is increased as the motive for acceptance of defective
products returns. In this context, assessment of changes in profitability regarding the
returns, if low, exerts some positive impact on significance of this motive, and when
high, simultaneously with a high general evaluation of the returns policy’s
role, influences the significance of this motive in a negative manner, meaning
it diminishes it.
Along with the increase in evaluation of the returns policy significance
in operation of the enterprises and moderate or low evaluation of changes
in profitability because of the returns, the significance of the motive that is prevention
of displacement of new products by the secondary-market products is increased as the
motive for returns acceptance by the enterprises. Evaluation of returns in diminishing
of profits, if low, exerts some positive impact on significance of this motive, and when
high, simultaneously with a high general evaluation of the returns policy’s role,
influences the significance of this motive in a negative manner, i.e. it diminishes the
motive. The highest evaluation of this motive regards a situation when the profit
diminishing is evaluated high and at the same time justifiability of the returns policy is
assessed moderately in general. Along with the increase in evaluation of the returns
policy significance in operation of the enterprises, in terms of low evaluations
of changes in profitability related to the returns, the significance of the motive,
meaning reduction of loss on unsold or defective products, as a motive for returns
acceptance by the enterprises, at first raises slowly, and after a certain express level is
exceeded for the general evaluation of the returns policy - it raises very dynamically.
For high evaluations of the roles of returns in diminishing of the company’s
profitability, the general evaluation of the returns policy on the low and high level
leads to strengthening of the mentioned motive, and for the medium evaluation of the
returns policy to a smaller role of the components and raw materials recovery as the
motive for returns acceptance by the company.
Afterwards, there were some simulations of relationships between the
emergence intensity of the returns accepted by the enterprises carried out and
independence of their acceptance of the returns as an action related to management
of reverse flows and duration of the average returns processing time
in a manufacturing enterprise (Fig. 6.2).
In the researched simulations of relationships between emergence intensity
of the returns accepted by the enterprises and independence of their acceptance of the
returns as an action related to management of reverse flows and duration of the
average processing cycle of the returns in the manufacturing enterprise, the following
returns categories were considered: damaged products, outdated products, products
erroneously taken as faulty, product components and waste- and by-products. For the
remaining categories of accepted returns, i.e.: seasonal products, products unsold in
retail, products withdrawn from sales and packagings, the simulations of relationships
between their emergence intensity were not presented because their interpretation
was non-significant.

144
Figure 6.2. Simulations of relationships between the emergence intensity of the returns accepted
by the enterprises carried out and independence of their acceptance of the returns (0X axis)
as an action related to management of reverse flows and duration of the average returns
processing time (0Y axis) in a manufacturing enterprise

a) damaged products

b) outdated products

145
c) products erroneously taken as faulty

d) product components

146
e) waste- and by-products

Source: Own work in the Statistica 12 package.

Results of the performed simulations of the relationships between the

emergence intensity of the mentioned categories of returns accepted by the
enterprises and independence of their acceptance of the returns as an action related to
management of reverse flows and duration of the average returns processing time
in a manufacturing enterprise allow of the draw the following conclusions.
The damaged products emerge in high amounts in the enterprises that accept
the returns independently only when the returns processing time reaches the period
from two to four weeks. In the remaining cases, the emergence of those returns
is marginal. In case of enterprises that commission actions related to the reverse flows
management to third parties, this level is also not high, and it decreases along with
extension of the service time. In turn, the enterprises that do not operate the defective
products returns within their standard operations, encounter their noticeable
emergence almost in every situation, especially in case of short and very long returns
processing cycle. It may be assumed that this regards the possibility of exchange (very
short period) and waiting for the complaint (repair) to be resolved by the
manufacturer - the period is very long.
The noticeable level of the outdated returns refers to - regardless of the
operation manner - the period from two weeks to one month. In practice, apart from
those periods, such returns are not present at all.
The products erroneously taken as faulty are present regardless of the manner
of the defective products’ flows management only in a very short returns processing
cycles - up to 1 week. In the remaining situation, such returns are present in a marginal
scope at the most.

147
 Only the enterprises not implementing the processes of reverse flows
management - with short-term implementation of actions in this scope, consisting in
returns acceptance - encounter an increase in the returns rate in the field of the
product components. Such returns are also recorded on a noticeable level in the same
group of enterprises for long-term returns of defective products. In the remaining
cases their significance is marginal at most. When the waste- and by-products are
analyzed for the short-time returns processing cycle, their level is high only in the
enterprises that deal with returns acceptance on their own, while in case of the long-
term cycle the situation is opposite - this refers mainly to the enterprises that do not
perform any formal actions in the reverse flows management.
Next simulations of relationships were performed between the emergence
intensity of the returns accepted by the enterprises and independence of the charity
donation of the returns as an action related to management of reverse flows and
duration of the average returns processing time in a manufacturing enterprise
(Fig. 6.3).
Figure 6.3. Simulations of relationships between the emergence intensity of the returns accepted
by the enterprises carried out and independence of charity donation of the returns (0X axis)
as an action related to management of reverse flows and duration of the average returns
processing time (0Y axis) in a manufacturing enterprise

a) products erroneously taken as faulty {1}

148
a) products erroneously taken as faulty {2}

b) product components

149
c) waste- and by-products

Source: Own work in the Statistica 12 package.

In the researched simulations of relationships between emergence intensity

of the returns accepted by the enterprises and independence of charity donation of the
products as an action related to management of reverse flows and duration of the
average processing cycle of the returns in the manufacturing enterprise, the following
returns categories were considered: products erroneously taken as faulty, product
components and waste- and by-products. For the remaining categories of accepted
returns, i.e.: damaged products, outdated products, seasonal products, products unsold
in retail, products withdrawn from sales and packagings, the simulations
of relationships between their emergence intensity were not presented because their
interpretation was non-significant.
Results of the performed simulations of the relationships between the
emergence intensity of the mentioned categories of returns accepted by the
enterprises and independence of charity donation of the returns as an action related
to management of reverse flows and duration of the average returns processing time
in a manufacturing enterprise allow to draw the following conclusions.
The enterprises that carry out independent actions in the scope of reverse flows
management, consisting in charity donations of the returns, record an express increase
in the number of returned products in the category of products erroneously taken
as faulty both justifiably (simulation variant {1}) and unjustifiably (simulation variant
{2}) along with extension of the returns processing cycle to up to several months.
The enterprises that commission charity donations of the returns to third
parties within the scope of reverse flows management record a very high level
of returns of the product components in case of short- and long-term returns
processing cycle. In turn, those that deal with returns acceptance on their own or do

150
not deal with it at all, register high returns level only in case of short-term returns
processing cycle for defective products. Enterprises that carry out independent actions
in the reverse flows management in the scope of charity donations of the returns
record an express increase in the number of returns of waste- and by-products in case
of very short-term returns processing cycle and its extension to more than several
months. The enterprises that do not carry out the actions of reverse flows management
in this scope observe a decrease from the high to a definitely low level of waste- and
by-products returns along with extension of the returns processing cycle to more than
several months.
Further simulations of relationships were performed between the emergence
intensity of the returns accepted by the enterprises and independence of repackage
and sales of the returns as new products as an action related to management of reverse
flows and duration of the average returns processing time in the Polish manufacturing
enterprises (Fig. 6.4). The category of returns accepted by the enterprises in this
research covers: damaged products, products erroneously taken as faulty and waste-
and by-products. For the remaining categories of accepted returns, i.e.: outdated
products, seasonal products, products unsold in retail, products withdrawn from sales,
product components and packagings, the simulations of relationships between their
emergence intensity were not presented because their interpretation was non-
significant.
Figure 6.4. Simulations of relationships between the emergence intensity of the returns accepted
by the enterprises carried out and independence of repackage and sales of the returns as new
products (0X axis) as an action related to management of reverse flows and duration
of the average returns processing time (0Y axis) in a manufacturing enterprise

a) damaged products

151
b) products erroneously taken as faulty

c) waste- and by-products

Source: Own work in the Statistica 12 package.

Simulations presented in Fig. 6.4 allow drawing the following conclusions.

The enterprises that do not carry out the actions of reverse flows management
on their own in case of repackage and sales of returns as new products observe
a moderate intensity of the defective products returns along with extension of the
returns processing cycle to more than several months.
The enterprises that carry out the actions of reverse flows management on their
own in case of repackage and sales of returns as new products observe an express

152
growth in the returns of products erroneously taken as faulty along with extension
of the returns processing cycle to more than several months.
The enterprises that carry out the reverse flows management on their own
regarding the action of repackage and sales of the returns as new products and
commissioning those operation to third parties record a high level of returns of waste-
and by-products, regardless of the returns processing time; the enterprises that do not
manage the reverse flows in this aspect do not record them at all.
The last simulations of relationships were performed between the emergence
intensity of the returns accepted by the enterprises and independence of the sales
of returns as accepted as an action related to management of reverse flows and
duration of the average returns processing time in manufacturing enterprises
(Fig. 6.5). The category of returns accepted by the enterprises in this respect covers:
damaged products, products erroneously taken as faulty and waste- and by-products.
For the remaining categories of accepted returns, i.e.: outdated products, seasonal
products, products unsold in retail, products withdrawn from sales, product
components and packagings, the simulations of relationships between their emergence
intensity were not presented because their interpretation was non-significant.
Figure 6.5. Simulations of relationships between the emergence intensity of the returns accepted
by the enterprises carried out and independence of repackage and sales of the returns
as accepted (0X axis) as an action related to management of reverse flows and duration
of the average returns processing time (0Y axis) in a manufacturing enterprise

a) damaged products

153
b) products erroneously taken as faulty

c) waste- and by-products

Source: Own work in the Statistica 12 package.

Effects of the performed simulations of the relationships between the

emergence intensity of the mentioned categories of returns accepted by the
enterprises and independence of sales of the returns as accepted as an action related to
management of reverse flows and duration of the average returns processing time
allow to draw the following conclusions. The enterprises that sell the returns
as accepted on their own record the moderate increase in the damaged products
returns at the most, along with shortening of the returns processing cycle to less than
several months. The enterprises that do not manage the reverse flows in this aspect
154
record an opposite situation - the returns reach moderate intensity along with
extension of the returns processing cycle to more than several months. The enterprises
that carry out sales of returns as accepted on their own observe an express growth in
the returns of products erroneously taken as faulty along with extension of the returns
processing cycle to more than several months. The enterprises that commission the
sales of returns as accepted observe an express growth in the returns of waste- and by-
products along with extension of the returns processing cycle to more than several
months. In turn, the enterprises that deal with this aspect of reverse flows on their own
or do not implement it at all, record high levels of waste- and by-products returns only
for the short-term returns processing cycle.
All of the above simulations were performed for selected sets of original data
categories, where consideration was given to the possibilities of obtaining some
interesting interpretative threads. These threads were presented and discussed under
graphically represented simulations. The remaining simulation that are not considered
in the presented comparison did not prove any significant correlations from the
research task’s perspective, or were non-feasible regarding lack of data or their
incompleteness.
In the last part of the empirical study, to determine the interdependence
between variables related to the defective products’ flows management, or more
precisely in order to determine the significance of difference between the main
categories of the defective products and the actions in the scope of their flows
management in groups of Polish manufacturing enterprises selected regarding
the number of employees, the Mann-Whitney U test on statistical significance
was carried out.
The Mann-Whitney U test (a non-parametric test for means significance
differences) is one of the most common alternatives for the t-Student test for
independent samples. It is intended to compare two independent groups. The zero
hypothesis says that the samples come from the same population, i.e. there are no
significant differences towards them, in comparison to the alternative hypothesis
stating that the samples being compared come from various populations
(they are significantly different).
The testing statistics is as follows [Aczel 2000]:

 n (n  1)  n1 n2
 Rmin( k )  k k 
Z  2  2

n1 n2 (n1  n2  1)
 
n1 n2  t i3  t i
 i 1

12 12(n1  n2 )(n1  n2  1)

where:

Rmin (k) — sums of ranks for the group where the sum is lower
nk — number of observations in the group with a smaller sum of ranks

155
n1 — first group size

n2 — second group size

t — number of observations with the same rank

p (p-value) is the probability of making the I type error (rejecting the tested
hypothesis). It is the lowest significance level leading to rejection of the tested
hypothesis.
If p (p-value) is lower than the assumed significance level, then the tested hypothesis
is rejected to the benefit of an alternative hypothesis.
The Mann-Whitney U test was employed to find out whether the differences
in evaluation of the main returns categories and actions in the scope of the defective
products’ flows management are statistically significant in the groups of manufacturing
enterprises selected according to the number of their employees.
The manufacturing enterprises that took part in the research were divided into
groups regarding the employment level - i.e. micro, small and medium-sized
enterprises. There were no large enterprises considered in the research because
the share of their representative taking part in the survey was too low. Therefore, the
performed test compared:
 micro and small enterprises;
 micro and medium-sized enterprises;
 small and medium-sized enterprises.
The test results along with mean evaluations for particular variables in those
selected groups of enterprises are presented in a table form. Table 6.1 demonstrates
the test values in a case when a variable was assumed as the emergence intensity
and quality of particular returns categories in terms of defective products
in the reverse flows of manufacturing enterprises.
While interpreting the results presented in Table 6.1, it may be concluded that
the emergence intensity of damaged products in the micro enterprises is significantly
different - smaller - than in case of small enterprises (Z = 4.7680; p < 0.0001)
and medium-sized enterprises (Z = 3.4766; p = 0.0005); quality condition of the
damaged products returns in micro enterprises is significantly better when compared
to returns of those products in the medium-sized enterprises (Z = 2.0243; p = 0.0429).
The products unsold in retail emerge in the reverse flows significantly more often
in the group of medium-sized enterprises than in micro (Z = 4.1084; p < 0.0001)
and small enterprises (Z = 3.0485; p = 0.0023). The products erroneously taken
as faulty emerge significantly less often in the group of micro enterprises than in small
enterprises (Z = 3.0221; p = 0.0025) and medium-sized ones (Z = 2.9190; p = 0.0035);
the quality condition of the products erroneously taken as faulty in the micro-
enterprises is significantly worse when compared to small enterprises (Z = –2.4027;
p = 0.0163). The qualitative condition of the waste- and by-products is significantly
better in the micro than in the small enterprises (Z = 2.1017; p = 0.0356).

156
Table 6.1. The Mann-Whitney U test values and mean evaluations for emergence intensity
and quality of particular categories of defective products returns in reverse flows
of manufacturing enterprises as variables in the assumed groups of the Polish manufacturing
enterprises

Mean
Micro/medium- Small/medium- evaluations of
Micro/small sized sized the enterprises
medium-
Variable Z p Z p Z p micro small sized
Damaged products
Intensity 4.7680 0.0000 3.4766 0.0005 0.0366 0.9708 3.7 3.3 3.3
Quality 0.6394 0.5226 2.0243 0.0429 1.4947 0.1350 3.5 3.4 3.1
Outdated products
Intensity 1.3586 0.1743 1.8016 0.0716 0.5829 0.5600 4.0 3.9 3.9
Quality 0.9790 0.3276 0.6620 0.5080 0.4518 0.6514 4.2 3.7 3.8
Seasonal products
Intensity 0.9351 0.3497 1.7511 0.0799 0.8994 0.3684 3.9 3.9 3.8
Quality 1.9167 0.0553 0.2013 0.8405 –0.9527 0.3408 5.5 4.2 5.0
Unsold products
Intensity 0.5077 0.6117 4.1084 0.0000 3.0485 0.0023 4.0 3.9 3.7
Quality 0.9595 0.3373 1.6594 0.0970 0.0955 0.9239 5.4 4.3 4.1
Products withdrawn from sales
Intensity 0.6989 0.4846 0.9069 0.3644 0.3286 0.7425 3.9 3.9 3.9
Quality 0.7859 0.4319 -0.9760 0.3291 -1.2725 0.2032 4.3 3.7 5.0
Products erroneously taken as faulty
Intensity 3.0221 0.0025 2.9190 0.0035 0.3787 0.7049 4.0 3.8 3.8
–
Quality 2.4027 0.0163 -0.5974 0.5502 0.6213 0.5344 3.5 4.6 4.1
Product components
Intensity 0.2187 0.8269 0.8645 0.3873 0.6011 0.5477 3.7 3.6 3.6
Quality 0.4618 0.6442 1.3125 0.1894 0.3014 0.7631 3.0 2.8 2.8
Waste- and by-products
-
Intensity 1.7244 0.0846 -1.4773 0.1396 -0.1841 0.8540 2.6 2.8 2.8
Quality 2.1017 0.0356 0.4664 0.6410 -1.1586 0.2466 2.6 2.3 2.6
Packagings
Intensity 1.2017 0.2295 1.2902 0.1970 0.3648 0.7153 3.7 3.6 3.5
Quality 0.8859 0.3757 0.4203 0.6743 -0.3066 0.7591 2.3 2.0 2.3
Source: Own work in the Statistica 12 package based on the survey questionnaire results.

Table 6.2 presents the test values for the following variables: the most frequent
period for the defective product return (calculating from the moment of handing it to
distribution), duration of the average returns processing cycle in the enterprise,
evaluation of the enterprise’s policy in the scope of the defective products returns
acceptance, impact of the returns on reduction in the enterprise’s profits and influence
of the manner of defective products’ flows management in an enterprise exerted
on implementation of the enterprise’s objectives.

157
Table 6.2. The Mann-Whitney U test value and means evaluations for the return period, duration
of the returns processing cycle, restrictiveness of the returns policy, impact of the returns
to profitability and implementation of the enterprise’s objective as variables in particular groups
of the Polish manufacturing enterprises

Micro/medium- Small/medium- Mean evaluations

Micro/small
sized sized of the enterprises
Variable
medium-
Z p Z p Z p micro small
sized

The most
frequent return -1.2656 0.2057 -0.3253 0.7450 0.7036 0.4817 2.0 2.2 2.0
period

Duration of the
average -
1.7173 0.0859 -0.2085 0.8348 0.1852 3.5 3.1 3.5
processing of 1.3250
returns

Evaluation of
the returns
-0.7829 0.4337 0.7587 0.4480 1.2941 0.1956 4.6 4.8 4.4
acceptance
policy

Reduction in
the enterprise’s
profitability 1.8255 0.0679 1.3639 0.1726 0.0189 0.9850 2.7 2.6 2.6
because of the
returns

Impact of the
reverse flows
management
on -
0.6077 0.5434 -0.0363 0.9710 0.6285 5.1 5.2 5.2
implementatio 0.4839
n of the
enterprise’s
objectives
Source: Own work in the Statistica 12 package based on the survey questionnaire results

The results presented in Table 5.12 allow for the statement that the differences
in the scope of variables: return period, returns processing cycle duration,
restrictiveness of the returns policy, influence of the returns on profitability and
implementation of objective in particular groups of the Polish manufacturing
enterprises, are not statistically significant.
Table 6.3 includes test values where the assumed variables were the motives
for acceptance of the defective products returns by the manufacturing enterprises.

158
Table 6.3. The Mann-Whitney U test and mean evaluations for motives for acceptance
of the defective products returns as variables in particular groups of the Polish manufacturing
enterprises

Micro/medium- Small/medium- Mean evaluations of the

Micro/small
sized sized enterprises
Variable
medium-
Z p Z p Z p micro small
sized

Improvement in
–0.7838 0.4332 -0.0363 0.9710 0.5248 0.5998 2.0 2.1 2.0
customer service quality

Getting rid of
unnecessary products –2.6472 0.0081 –2.0842 0.0371 -0.2230 0.8235 1.4 1.7 1.7
from the market

Meeting the legal and

environmental -1.6314 0.1028 0.2701 0.7871 1.5286 0.1264 2.1 2.3 2.1
requirements

Recovery of materials
-1.7790 0.0752 -1.0286 0.3037 0.1696 0.8653 1.8 2.0 2.0
and components

Development of an
environmentally-friendly -1.3416 0.1797 -1.0831 0.2787 0.0739 0.9411 1.9 2.0 2.0
company reputation

Prevention of
displacement of new
products by products -1.4966 0.1345 –2.3234 0.0202 -1.2040 0.2286 1.5 1.7 1.8
from the secondary
market.

Reduction in the loss on

value of unsold or -1.4030 0.1606 -1.0348 0.3008 0.0577 0.9540 2.0 2.1 2.1
defective products

Source: Own work in the Statistica 12 package based on the survey questionnaire results.

The results presented in Table 6.3 suggest that the micro enterprises believe
that getting rid of unnecessary products from the market is significantly less important
when compared to evaluation of this motive for acceptance of the defective products
returns by small enterprises (Z = –2.6472; p = 0.0081) and medium-sized enterprises
(Z = –2.0842; p = 0.0371). The micro enterprises believe that preventing displacement
of new products by the secondary-market products is less important when compared
to evaluation of this motive for acceptance of defective products returns by medium-
sized enterprises (Z = –2.3234; p = 0.0202).
Table 6.4 covers test values where the assumed variables are the actions in the
scope of the defective products’ flows management undertaken by manufacturing
enterprises.

159
 Table 6.4. The Mann-Whitney U test and mean evaluations for actions related to the reverse flows
management as variables in particular groups of the Polish manufacturing enterprises

Micro/medium- Small/medium- Mean evaluations

Micro/small
sized sized of the enterprises
Variable
medium-
Z p Z p Z p micro small
sized

Returns
4.5058 0.0000 2.8389 0.0045 -0.3592 0.7194 1.9 1.4 1.4
acceptance

Charity
1.8154 0.0695 0.5514 0.5813 -0.6526 0.5140 2.7 2.5 2.6
donation

Repackage and
1.9548 0.0506 2.8572 0.0043 1.1934 0.2327 2.7 2.5 2.3
sales as new

Sales in the
same form as
2.7307 0.0063 1.6194 0.1054 -0.3244 0.7456 2.7 2.5 2.5
the product
was accepted

Remanufacture 1.8879 0.0590 1.3310 0.1832 -0.1264 0.8994 2.1 1.9 1.9

Production
from
recovered 2.9245 0.0035 3.3651 0.0008 0.8431 0.3992 2.6 2.3 2.2
components or
raw materials

Sales 2.7153 0.0066 2.7774 0.0055 0.6510 0.5150 2.6 2.3 2.2

Recovery of
1.1743 0.2403 3.6522 0.0003 2.5344 0.0113 2.7 2.6 2.2
components

Recycling -0.1324 0.8947 0.7955 0.4263 0.8630 0.3881 2.2 2.2 2.1

Scrapping 0.5469 0.5844 1.8792 0.0602 1.2927 0.1961 2.8 2.7 2.6

Source: Own work in the Statistica 12 package based on the survey questionnaire results.

Following the interpretation of results from Table 6.4, it may be concluded that
the micro enterprises undertake actions in the scope of reverse flows management
intended to returns acceptance significantly less often when compared to small
enterprises (Z = 4.5058; p < 0.0001) and medium-sized enterprises (Z = 2.8389;
p = 0.0045). The micro enterprises undertake actions in the scope of reverse flows
management intended to repackage the returns and sell them as new products
significantly less often when compared to the medium-sized enterprises (Z = 2.8587;
p = 0.0043).The micro enterprises undertake actions in the scope of reverse flows
management intended to sell the returns as accepted significantly less often when
compared to the small enterprises (Z = 2.7307; p = 0.0063). The micro enterprises
undertake actions in the scope of reverse flows management intended to perform
production from recovered products or components significantly less often when
compared to the small enterprises (Z = 2.9245; p = 0.0035) and medium-sized
enterprises (Z = 3.3651; p = 0.0008).

160
 The micro enterprises undertake actions in the scope of reverse flows management
intended to organize sale significantly less often than the small enterprises (Z = 2.7153;
p = 0.0066) and medium-sized enterprises (Z = 2.7774; p = 0.0055).
The medium-sized enterprises undertake actions in the scope of reverse flows
management intended to recover the components significantly less often than the
small enterprises (Z = 2.5344; p = 0.0113) and micro enterprises (Z = 3.6522;
p = 0.0003).
Table 6.5 includes test values where the assumed variables were the barriers
for effective management of the defective products’ flows in the manufacturing
enterprises.
Table 6.5. The Mann-Whitney U test and mean evaluations for barriers of effective management
of reverse flows as variables in particular groups of the Polish manufacturing enterprises

Micro/medium- Small/medium- Mean evaluations

Micro/small
sized sized of the enterprises
Variable
medium-
Z p Z p Z p micro small
sized

Company’s policy -0.0330 0.9737 -2.1413 0.0322 -1.8786 0.0603 0.1 0.1 0.2

Aspects of
0.0497 0.9604 0.3263 0.7442 0.2727 0.7851 0.1 0.1 0.1
competitiveness

Financial
1.0255 0.3051 -0.4251 0.6708 -1.1854 0.2358 0.1 0.0 0.1
resources

Non-significance -0.0584 0.9534 0.1175 0.9065 0.1466 0.8834 0.0 0.0 0.0

Lack of adequate
organizational -0.5614 0.5745 -0.6521 0.5143 -0.1786 0.8583 0.0 0.0 0.0
solutions

Legal
0.7676 0.4428 -0.0759 0.9395 -0.6656 0.5057 0.0 0.0 0.0
circumstances

No attention from
the managerial 0.7495 0.4535 -1.1354 0.2562 -1.5684 0.1168 0.0 0.0 0.0
staff

Incompetent
0.7495 0.4535 -1.1354 0.2562 -1.5684 0.1168 0.0 0.0 0.0
personnel

Source: Own work in the Statistica 12 package based on the survey questionnaire results.

Results from Table 6.5 confirm that employees from medium-sized enterprises,
when compared to employee from micro enterprises, stress the company’s policy
significantly more often as the barrier for effective management of reverse flows
(Z = –2.1413; p = 0.0322).
Table 6.6 includes the test values for assumed variables that are the employed
hardware and software solutions supporting the defective products’ flows
management in manufacturing enterprises.

161
Table 6.6. The Mann-Whitney U test and mean evaluations for the employed hardware
and software solutions supporting the reverse flows management as variables in particular
groups of the Polish manufacturing enterprises

Micro/medium- Small/medium- Mean evaluations

Micro/small
sized sized of the enterprises
Variable
medium-
Z p Z p Z p micro small
sized

Bar codes 3.2437 0.0012 5.7304 0.0000 2.5677 0.0102 2.9 2.7 2.3

2D codes 3.4735 0.0005 4.2070 0.0000 0.8642 0.3875 3.0 2.8 2.7

Computerized
returns
4.0477 0.0001 5.7283 0.0000 1.7356 0.0826 3.0 2.8 2.5
tracking
system

EDI 3.3305 0.0009 4.0032 0.0001 0.9629 0.3356 3.0 2.8 2.6

RFID 1.6104 0.1073 2.1586 0.0309 0.6040 0.5459 3.0 3.0 2.9

Source: Own work in the Statistica 12 package based on the survey questionnaire results.

By interpreting of the results presented in Table 6.6, the following conclusions

can be drawn.
Existing or planned installation related to bar codes, supporting the reverse
flows management in micro enterprises is considered significantly more intensively
when compared to small enterprises (Z = 3.2437; p = 0.0012) and medium-sized
enterprises (Z = 5.7304; p < 0.0001). This issue is considered less often also in small
enterprises when compared to the medium-sized ones (Z = 2.5677; p = 0.0102).
Existing or planned installation related to two-dimensional codes, supporting
the reverse flows management in micro enterprises is considered significantly more
intensively when compared to small enterprises (Z = 3.4735; p = 0.0005) and medium-
sized enterprises (Z = 4.2070; p < 0.0001).
Existing or planned installation related to computerized returns tracking
systems, supporting the reverse flows management in micro enterprises is considered
significantly less often when compared to small enterprises (Z = 4.0477; p = 0.0001)
and medium-sized enterprises (Z = 5.7283; p < 0.0001).
Existing or planned installation related to electronic data interchange (EDI),
supporting the reverse flows management in micro enterprises is considered
significantly less often when compared to small enterprises (Z = 3.3305; p = 0.0009)
and medium-sized enterprises (Z = 4.0032; p < 0.0001).
Existing or planned installation related to RFID, supporting the reverse flows
management in micro enterprises is considered significantly less often when compared
to medium-sized enterprises (Z = 2.1586; p = 0.0309).
Table 6.7 presents the test values for variables related to evaluation
of significance of particular aspects of a manufacturing enterprise in development
of its competitive position.

162
Table 6.7. The Mann-Whitney U test and mean evaluations for significance of development
of an enterprise’s competitive position as variables in particular groups of the Polish
manufacturing enterprises

Micro/medium- Small/medium- Mean evaluations

Micro/small
sized sized of the enterprises
Variable
medium
Z p Z p Z p micro small
-sized

Costs -0.1076 0.9143 -1.2983 0.1942 -1.0906 0.2754 3.0 3.0 3.0
reduction

Price -0.1861 0.8524 0.5730 0.5666 0.6291 0.5293 4.9 4.9 5.1

Quality -0.2731 0.7848 -0.1503 0.8805 0.0445 0.9645 5.3 5.3 5.2

Returns -1.2931 0.1960 0.1830 0.8548 1.1500 0.2501 5.4 5.4 5.5
policy

Delivery -1.3832 0.1666 -0.3581 0.7203 0.6230 0.5333 4.3 4.7 4.4
time

Diversity 0.0871 0.9306 0.2667 0.7897 0.1940 0.8462 5.0 5.2 5.2
of
products

Source: Own work in the Statistica 12 package based on the survey questionnaire results.

Leaning against the results from Table 6.7, it was found out that the differences
regarding significance of the aspects of developing a company’s competitive position
in particular groups of the Polish manufacturing enterprises are not statistically
significant.
To put it synthetically (Tab. 6.8): the results of performed tests proved
significant differences in management of the defective products’ flows between the
enterprises divided regarding the employment size into micro, small and medium-
sized30.
The research results presented in this chapter allows determining some
significant differences in the defective products’ flows management in the Polish
manufacturing enterprises, divided in accordance to the employment size. Based on
the results, it may be concluded, among others, that size of the Polish manufacturing
enterprises influences the intensity and quality of the reverse logistics processes in the
field of the defective products’ flows, as well as it determined the effects from
the defective products’ flows management.

30These differences turned out to be significant in the research presented in Table 6.8. In turn, the test of other
variables did not show any significant differences in management of the defective products flows between micro,
small and medium-sized manufacturing enterprises.

163
 Table 6.8. The significance of differences in the research over variables in the scope of the
defective products’ flow management in particular groups of Polish manufacturing enterprises
and their interpretation

Significant differences in Significance interpretation:

the research:

Research over emergence The damaged products emerge in the micro enterprises with lower
intensity of particular intensity than in small and medium-sized ones.
categories of defective The products unsold in retail emerge in the medium-sized enterprises with
products returns in reverse greater intensity than in micro and small companies.
flows in manufacturing The products erroneously taken as faulty emerge less often in the micro
enterprises enterprises than in the small and medium-sized ones.

Research over quality of The quality condition of the damaged products in the micro enterprises
returns emerging in is better than in the medium-sized companies.
categories of defective The quality condition of the products erroneously taken as faulty is worse
products in reverse flows in in the micro enterprises than in small enterprises.
manufacturing enterprises The quality condition of waste- and by-products is better in micro
enterprises than in the small ones.

Research over motives for Getting rid of unnecessary products from the market is thought to be less
acceptance of defective important in the micro enterprises than in the small and medium-sized
products returns by the [Link] displacement of new products by the secondary-market
manufacturing enterprises products is thought to be less important in the micro enterprises than
in the medium-sized ones.

Research over actions in the The micro enterprises less frequently undertake the returns acceptance
scope of the defective when compared to the small and medium-sized companies.
products’ flows management The micro enterprises less frequently undertake the repackage and sales
undertaken by manufacturing of the returns as new products when compared to the medium-sized
enterprises enterprises.
The micro enterprises less frequently sell the returns as accepted when
compared to the small companies.
The micro enterprises less frequently undertake production from the
recovered products or components when compared to the small and
medium-sized companies.
The micro enterprises less frequently undertake the organization of sale
when compared to the small and medium-sized companies.
The medium-sized enterprises more frequently undertake the components
recovery when compared to the small and micro companies.

Research over barriers for The medium-sized enterprises stress the company’s policy as a barrier for
effective management of the effective management of reverse flows more often than the micro
defective products’ flows in enterprises.
manufacturing enterprises

Existing or planned hardware Existing or planned bar codes are less frequently considered in micro
and software solutions enterprises than in the small or medium-sized ones.
supporting the defective Existing or planned bar codes are less frequently considered in small
products’ flows management enterprises than in the medium-sized ones.
in manufacturing enterprises Existing or planned two-dimensional codes are less frequently considered

164
 in micro enterprises than in the small or medium-sized ones.
Existing or planned computerized returns tracking systems are less
frequently considered in micro enterprises than in the small or medium-
sized ones.
Existing or planned electronic data interchange (EDI) is less frequently
considered in micro enterprises than in the small or medium-sized ones.
Existing or planned RFID is less frequently considered in micro enterprises
than in the medium-sized ones.

Source: Own work.

The contents included in this and previous chapter of this monograph can be
of considerable application significance when the presented results are referred to the
enterprises’ practices, and the recommendations for managerial staff will be
formulated based on that. However, it is necessary to adopt an individual approach as
otherwise, the differentiated parameters of enterprises, as well as specificity of the
defective products’ flows will not allow indiscriminate adaptation of generally
developed conclusions, only some illustrative use of their values.

165
Conclusion
Management of contemporary enterprises in the present economic reality
undergoes continuous transformations. There is a need to consider the notions
of sustainable development, globalization processes, changes in the social attitudes
directed at ecologic preferences or dynamic development of markets in the
management of enterprises. Therefore, it is so crucial to seek, select and employ the
most innovative ways allowing the adjustment of the management of enterprises to
those changing conditions.
The production enterprises, as entities that are especially prone and sensitive
to changes in the economy, have recently developed the concept of reverse logistics,
the processes of which provide significant support to the defective products’ flows
management.
The presented monograph raises the issue of explication of the reverse logistics
of defective products in the manufacturing enterprises, which was carried out based on
the analysis of implementation and functioning of the reverse logistics processes in the
defective products’ flows management in Poland.
The studies performed as a part of the work proved that the defective products’
flows management in the manufacturing enterprises is employed through
implementation and utilization of the reverse logistic processes which allows
managing the returned products effectively. Apart from that, certain postulates and
statements may be drawn up:
1. Economic sustainability and market development generate the need
to implement and employ modern solution in the scope of the defective
products’ flows management in the manufacturing enterprises.
2. The reverse logistics processes, supported with adequate decisions regarding
the defective products’ flows management, improve operations of the
manufacturing enterprises;
3. For the enterprises, the proposed descriptive model of the reverse logistics
of defective products is a basis that can be adapted to their needs what was
proved by the verification carried out in the researched enterprises.
4. Both the intensity and quality of the reverse logistics processes, as well as the
level of results from management of those processes, implemented in the field
of the defective products’ flows, depend on the size of the manufacturing
enterprise what was proved by the performed statistical research.
The threads raised in the theoretical part were intended to outline the context
for implementation of the reverse logistics in the defective products’ flows
management in the manufacturing enterprises. The starting point for introduction of
the reverse logistics concept into the manufacturing enterprises’ operations was posed
by the assumptions of the sustainable development and their inclusion into the
management of enterprises. Hence, there was a conceptual background created for the
empirical studies that were carried out afterwards, related to implementation of the
reverse logistics processes in the filed of the defective products’ flows management in

166
the manufacturing enterprises. This part allowed for the implementation of the
research objectives (1, 2), which were to identify the new spheres of reverse logistics
in the manufacturing enterprises and to conceptualize the terms, as well as to
determined the scope and specificity of the defective products’ flows in the
manufacturing enterprises along with specification of the reverse logistics processes as
the basis for their implementation. The empirical part of this monograph was carried
out based on interpretation of the interviews carried out in selected manufacturing
enterprises along with the statistical analysis of the results from the survey studies
performed on the representative sample of Polish manufacturing enterprises. In this
part, based on the direct interviews, there was a descriptive model for the reverse
logistics processes described in the field of the defective products’ flows in the
manufacturing enterprises. Afterwards, the model was verified in the selected Polish
manufacturing enterprises. This allowed implementation of the research objective (3).
This is the part where the statistical analysis of the results from the survey
studies carried out in the Polish manufacturing enterprises, which suggest that those
enterprises are active in implementation of the reverse logistics processes in the
defective products’ flows management, but their scope in particular enterprises
is varied. Therefore, there were certain interdependencies identified between
description of the defective products’ flows in the manufacturing enterprises and
results of the reverse logistics in management of those flows what posed the research
objective (4).
At the end, there was the analysis of interdependencies between different
variables carried out, along with simulations for selected relationships of reverse
logistics processes in the defective products’ flows management in the Polish
manufacturing enterprises and the statistical tests for significance of differences in
evaluation of the main categories of returns and actions of the reverse logistics in the
scope of the defective products’ flows management among the groups
of manufacturing enterprises differentiated according to the number of employees.
This is the basis, which the research objective (5) was implemented on.
During implementation of the research, it was observed that:
 The Polish manufacturing enterprises experience some problems related to the
defective products’ flows management within the field of their operations.
 The Polish manufacturing enterprises adopt the reverse logistics processes
in the defective products’ flows management.
 The reverse logistics processes improve the defective products’ flows in the
manufacturing enterprises.
 There are some statistically significant interdependencies between the features
of the defective products’ flows and the results of the reverse logistics
in management of that flows.
 In manufacturing enterprises, a detailed analysis of the shape of the defective
products’ flows improves their efficiency and effectiveness.
 There are some statistically significant differences in evaluation of the main
returns categories and actions of the reverse logistics related to the defective

167
 products’ flows management in the groups of manufacturing enterprises
selected according to the number of their employees.
 Size of the manufacturing enterprise, determined according to the number
of employees, influences the implementation manners of the reverse logistics
processes in the defective products’ flows management in those enterprises.
 Size of the manufacturing enterprises, determined according to the number
of employees, influences the results of the reverse logistics in the defective
products’ flows management in those enterprises.

The presented conclusions clearly suggest the positive impact

of implementation of the reverse logistics processes in the defective products’ flows
management in the Polish manufacturing enterprises on their operation and
functioning on the market. Based on the research, it was also found out that there is an
increasing developmental trend related to introduction of new implementation
solutions intended to improve those processes in the enterprises.
The notion of the reverse logistics of the defective products in the
manufacturing enterprises may be assumed as one of the key conditions and
challenges for the contemporary logistics management. Solving problems resulting
from implementation of the reverse logistics processes in the field of the defective
products’ flows management in the manufacturing enterprises becomes its significant
task.
However, the deliberations undertaken in this monograph cannot be considered
exhaustive and complete, as the multitude and diversity of the issues related to the
reverse logistics of the defective products in management of the manufacturing
enterprises require further deep studies in this research field.

168
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 Tables

 [Link] objectives and benefits that are characteristic for each dimensions of the sustainable
development concept implemented in enterprises 13
 [Link] and functions of logistics management according to operational spheres
of the enterprise 24
 [Link] management areas in contemporary enterprises 30
 [Link] between the forward and reverse logistics 33
 [Link] and barriers for implementation of reverse logistics in enterprises 34
 [Link] for implementation of the reverse logistics in the business surroundings
and in the enterprises 35
 [Link] features for the forward and reverse flows in an enterprise 42
 [Link] processes of management of reverse flows in an enterprise in the strategic
and operational perspective 61
 [Link] sample’s structure 67
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for emergence
intensity of defective products in reverse flows of enterprises and the accompanying
variables category from the (2nd) group of action parameters in the scope of the defective
products’ flows management 122
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for emergence
intensity of defective products in reverse flows of enterprises and the accompanying
variables category from the (5th) group of the results of the defective products’ flow
management and (2nd) group of action parameters in the scope of the defective products’ flows
management 124
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for qualitative
conditions of defective products in reverse flows of enterprises and the accompanying
variables category from the (2nd) group of action parameters in the scope of the defective
products’ flows management and from the (4th) group of barriers for effective management of
defective products’ flows and ways of overcoming them 126
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for the most frequent return
period of defective products in reverse flows of enterprises and the accompanying
variables category from the (2nd) group of action parameters in the scope of the defective
products’ flows management and from the (4th) group of barriers for effective management of
defective products’ flows and ways of overcoming them 127
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for duration of an average
processing cycle of returns in the defective products’ flows of an enterprise
and the accompanying categories of variables from the (2nd) group of action parameters
related to the defective products’ flows management, from the (3rd) group of objective and
motives of the defective products returns policy, from the (4th) group of barriers
of effective management of the defective products’ flows and ways of overcoming them, and
from the (5th) group of effects of the defective products’ flows management 129
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for evaluation of the
enterprise’s policy regarding returns acceptance and the accompanying variables
category from the (2nd) group of action parameters in the scope of the defective
products’ flows management, from the (3rd) group of objectives and motives of the policy
of the defective products’ returns, and from the (4th) group of barriers for effective
management of defective products’ flows and ways of overcoming them 130

191
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for evaluation of the returns’
impact on reduction in the enterprise’s profitability and the accompanying variables category
from the (2nd) group of action parameters in the scope of the defective products’ flows
management, from the (3rd) group of objectives and motives of the policy of the defective
products’ returns, and from the (4th) group of barriers for effective management of defective
products’ flows and ways of overcoming them 132
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for evaluation of the impact
from the reverse flows management on implementation of the enterprise’s objectives and the
accompanying variables categories from the (2nd) group of action parameters in the scope of the
defective products’ flows management, from the (3rd) group of objectives and motives of the
policy of the defective products’ returns 133
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for motives of acceptance of
defective products returns by the enterprise and the accompanying variables category from the
(2nd) group of action parameters in the scope of the defective products’ flows management 134
 [Link] of the Yule’s correlation coefficient φ and statistics x2 for actions in the scope
of the defective products’ flows management, which are carried out independently by the
enterprise, and the accompanying variables categories from the (4th) group of barriers
for effective management of the defective products flows and ways of overcoming them 137
 [Link] Mann-Whitney U test values and mean evaluations for emergence intensity and quality
of particular categories of defective products returns in reverse flows of manufacturing
enterprises as variables in the assumed groups of the Polish manufacturing enterprises 157
 [Link] Mann-Whitney U test value and means evaluations for the return period, duration of the
returns processing cycle, restrictiveness of the returns policy, impact of the returns
to profitability and implementation of the enterprise’s objective as variables in particular
groups of the Polish manufacturing enterprises 158
 [Link] Mann-Whitney U test and mean evaluations for motives for acceptance of the defective
products returns as variables in particular groups of the Polish manufacturing enterprises 159
 [Link] Mann-Whitney U test and mean evaluations for actions related to the reverse flows
management as variables in particular groups of the Polish manufacturing enterprises 160
 [Link] Mann-Whitney U test and mean evaluations for barriers of effective management
of reverse flows as variables in particular groups of the Polish manufacturing enterprises 161
 [Link] Mann-Whitney U test and mean evaluations for the employed hardware and software
solutions supporting the reverse flows management as variables in particular groups
of the Polish manufacturing enterprises 162
 [Link] Mann-Whitney U test and mean evaluations for significance of development
of an enterprise’s competitive position as variables in particular groups of the Polish
manufacturing enterprises 163
 [Link] significance of differences in the research over variables in the scope of the defective
products’ flow management in particular groups of Polish manufacturing enterprises
and their interpretation 164

192
Figures

1.1. Social, economic and ecological needs in the sustainable development concept 10
1.2. Relationships of an enterprise with sustainable development 11
1.3. Logistics management diagram 21
1.4. Integration of logistics processes with an enterprise 22
1.5. Reverse and forwards logistics in an enterprise and its surroundings 32
2.1. Flows of products and materials in a manufacturing enterprise 38
2.2. Forward and reverse flows in an enterprise and its business surroundings 39
2.3. Directions for forward and reverse flows in logistics 39
[Link] flows of materials in an enterprise and its business surroundings along with basic
operations of reverse logistics 41
2.5. An open loop of reverse flows in an enterprise 43
2.6. A closed loop of reverse flows in an enterprise 44
2.7. Contents of the reverse flows of materials 46
2.8. The returns that depend on the product’s life cycle in the business surroundings
2.9. Basic classification of returns of defective products 49
2.10. Defective products’ flows and reverse logistics processes in the scope of their management 54
2.11. A pyramid with hierarchy of actions within the final disposal of defective products 57
3.1. Sample’s structure according to the size of enterprises 69
3.2. Sample’s structure according to the type of logistics activities 69
3.3. Categories of returns in defective products’ flows and intensity of their occurrence 71
3.4. Quality condition of the defective products in reverse flows 73
3.5. Categories of returns according to the place of their emergence. 75
3.6. Actions undertaken within reverse flows management 77
3.7. Average return period of defective products 78
3.8. Average duration of the returns processing cycle 79
3.9. Assessment of the returns policy 80
3.10. Evaluation of change in the returns policy within last 5 years 81
3.11. Motives for returns acceptance 82
3.12. Barriers for effective management of defective products’ flows 84
3.13. Aspects of the reverse flows management in development of a competitive position 85
3.14. Solutions supporting the reverse flows management 86
3.16. Impact of reverse flows management on the enterprise’s profitability 87
[Link] descriptive model of the reverse logistics processes in the scope of defective
products’ flows 94
4.2. General reverse logistics model of defective products in manufacturing enterprises 96
[Link] of reverse logistics model of defective products in the X enterprise
manufacturing household appliances 105
[Link] of reverse logistics model of defective products in the Y enterprise
manufacturing baby strollers 106

193
[Link] of reverse logistics model of defective products in the Z enterprise
manufacturing furniture 107
[Link] of reverse logistics model of defective products in the Q enterprise
manufacturing male clothing 107
[Link] of reverse logistics model of defective products in the V enterprise
manufacturing automotive parts 109
[Link] of relationships between the motives for accepting the returned defective
products (0X axis) and evaluation of changes in profitability (0Y axis) in relation to returns
acceptance in the Polish manufacturing enterprises 139
[Link] of relationships between the emergence intensity of the returns accepted by the
enterprises carried out and independence of their acceptance of the returns (0X axis) as an
action related to management of reverse flows and duration of the average returns processing
time (0Y axis) in a manufacturing enterprise 145
[Link] of relationships between the emergence intensity of the returns accepted by the
enterprises carried out and independence of charity donation of the returns (0X axis) as an
action related to management of reverse flows and duration of the average returns processing
time (0Y axis) in a manufacturing enterprise 148
[Link] of relationships between the emergence intensity of the returns accepted by the
enterprises carried out and independence of repackage and sales of the returns as new
products(0X axis) as an action related to management of reverse flows and duration of the
average returns processing time (0Y axis) in a manufacturing enterprise 151
[Link] of relationships between the emergence intensity of the returns accepted by the
enterprises carried out and independence of repackage and sales of the returns as accepted (0X
axis) as an action related to management of reverse flows and duration of the average returns
processing time (0Y axis) in a manufacturing enterprise 153

194
 Attachment 1
SURVEY QUESTIONNAIRE FOR REPRESENTATIVES OF
MANUFACTURING COMPANIES

Dear Ladies and Gentlemen!

On behalf of PhD Marta Startostka Patyk from the Czestochowa University of Technology,
we would like to ask you to fill in the survey questionnaire performed within the project
financed by the National Centre of Science entitled Logistics management of defective
products in Polish manufacturing enterprises. Your enterprise has been selected for the
study in relation to a high probability of product returns emergence and potentially
considerable needs related to their management. Purpose of the studies is to identify the
practices adopted by the enterprises in relation to logistics operation of the returned products.
The questionnaire is completely anonymous, and the collected data will serve solely for the
collective statistical analysis. You will need about 5 minutes to fill in the survey questionnaire.

MAIN PART

Please check one

Question 1 Are there any product returns in the enterprise? answer

a) Yes 1

b) No (the end of survey) 2

Which categories of returned products are recorded in the

Question 2
enterprise?
MEDIUM INTENSITY MARGINAL
RETURNS NUMEROUS NOT PRESENT

Damaged products 1 2 3 4
Outdated products
1 2 3 4

Seasonal products 1 2 3 4
Products unsold in
retail 1 2 3 4

Products withdrawn
1 2 3 4
from sales
Products erroneously
1 2 3 4
taken as faulty
Product components 1 2 3 4
Waste- and by-
1 2 3 4
products
Packagings 1 2 3 4
Other (which?) 1 2 3 4

195
 Open question
Please estimate the percentage of returns according to the
Question 3
place of their emergence:
a) Manufacturer returns (e.g. surpluses of raw materials, returns after quality
…..%
control, manufacturing remains)
b) distribution returns (e.g. trade returns, surpluses in stock) …..%
c) marketing returns (e.g guarantee and post-guarantee products, products …..%
that came to an end of life)
d) Other (which?) …..%

Question 4 What is the average quality condition of the returns when compared to the
original product quality?
VERY GOOD
RETURNS TERRIBLE POOR SATISFACTORY GOOD PERFECT

Damaged products 1 2 3 4 5 6

Outdated products
1 2 3 4 5 6

Seasonal products 1 2 3 4 5 6

Products unsold in
retail 1 2 3 4 5 6

Products withdrawn
1 2 3 4 5 6
from sales
Products erroneously
1 2 3 4 5 6
taken as faulty
Product components 1 2 3 4 5 6

Waste- and by-

1 2 3 4 5 6
products
Packagings 1 2 3 4 5 6

Other (which?) 1 2 3 4 5 6

What is the most frequent return period for the product? Please check one
Question 5 [Calculated from the moment of handing to distribution) answer

a) Up to 1 week 1

b) From 1 week to 1 month 2

c) From 1 to 3 months 3

d) From 3 to 6 months 4

d) From 6 to 12 months 5

f) From 12 to 18 months 6

g) From 18 months to 2 years 7

h) From 2 to 3 years 8

i) From 3 to 5 years 9

j) More than 5 years 10

196
 Please check one
Question 6 How long does the average returns processing cycle take? answer

a) Less than 1 day 1

b) From 1 to 2 days 2

c) From 2 days to 1 week 3

d) From 1 to 2 weeks 4

e) From 2 weeks to 1 month 5

f) From 1 to 2 months 6

g) From 2 to 6 months 7

h) More than 6 months 8

Please evaluate the returns acceptance policy in your enterprises at the

Question 7
scale from 1 to 6

VERY RESTRICTIVE VERY LIBERAL

1 2 3 4 5 6

How did the returns acceptance policy in your enterprise Please check one
Question 8 change within last 5 years? answer

a) It didn’t change (please move to Question 9) 1

b) It changed 2

Question 8a
How much did the returns acceptance policy in your enterprise change?

TO MORE RESTRICTIVE TO MORE LIBERAL

1 2 3 4 5 6

Question 9 What are the motives for the returns acceptance by your enterprise?
Please evaluate the significance of the below-mentioned motisf.

MOTIVES NON-SIGNIFICANT SIGNIFICANT VERY IMPORTANT

Improvement in customer
1 2 3
service quality
Getting rid of unnecessary
1 2 3
products from the market
Compliance with
legal and environmental 1 2 3
provisions
Recovery of materials and
components 1 2 3

Development of an
environmentally-friendly 1 2 3
company reputation

197
Prevention of
displacement of new
products by 1 2 3
products from the
secondary market
Reduction in the loss of
value on unsold or 1 2 3
defective products

Other [which?) 1 2 3

Please check one

Question 10 Do the returns reduce your enterprise’s profitability? answer

a) Yes, significantly 1
b) Yes, slightly 2
c) No, they don’t 3

Which actions out of those mentioned below, related to the returns

Question 11 management, are carried out independently by the enterprise and
which are outsourced?
ACTIONS INDEPENDENTLY OUTSOURCED NOT UNDERTAKEN

Returns acceptance 1 2 3
Charity donation 1 2 3
Repackage and sales as new
1 2 3

Sales in the same form as the

1 2 3
product was accepted
Remanufacture (repair, 1 2 3
cleaning, etc.)

Production from recovered

1 2 3
components or raw materials
Sales 1 2 3
Recovery of components 1 2 3
Recycling (recovery of
1 2 3
materials)
Scrapping 1 2 3
Other (which?) 1 2 3

You can check

What are the barriers for effective management of returns multiple answers
Question 12
in your enterprise?
a) Company’s policy 0 “not selected”/
1 “selected”
b) Aspects of competitiveness 0 “not selected”/
1 “selected”
c) Financial resources 0 “not selected”/
1 “selected”
d) Non-significance 0 “not selected”/
1 “selected”
e) Lack of adequate organizational solutions 0 “not selected”/
1 “selected”

198
 f) Legal circumstances 0 “not selected”/
1 “selected”
g) No attention from the managerial staff 0 “not selected”/
1 “selected”
h) Incompetent personnel 0 “not selected”/
1 “selected”
i) Other (which?) 0 “not selected”/
1 “selected”

Question 13 Are hardware and software solutions supporting the returns

management installed or planned in your enterprise?
NEITHER INSTALLED NOR
SOLUTIONS INSTALLED PLANNED
PLANNED

Bar codes 1 2 3

2D codes 1 2 3

Computerized returns
1 2 3
tracking system
Electronic Data Interchange
1 2 3
(EDI)
Radio Frequency
1 2 3
Identification (RFID)
Other (which?) 1 2 3

Question 14 Please evaluate the significance of particular aspects of your enterprises in

relation to development of the competitive position.
COMPLETELY VERY
ASPECTS NON- IMPORTANT
SIGNIFICANT
Costs reduction 1 2 3 4 5 6

Price 1 2 3 4 5 6

Quality 1 2 3 4 5 6

Returns policy 1 2 3 4 5 6

Delivery time 1 2 3 4 5 6

Diversity of products
1 2 3 4 5 6

Question 15 How does the management of product returns influence implementation of

your enterprise’s objectives?

NEGATIVE POSITIVE

1 2 3 4 5 6

199
 GENERAL INFORMATION ABOUT THE ENTERPRISE

Question 16 What is the type of major activity of the company? [PCA No.)

14.13 Manufacture of other outerware 1

14.19 Manufacture of other wearing apparel and accessories 2

18.11 Printing of newspapers 3

18.12 Other printing 4

26.2 Manufacture of computers and peripheral equipment 5

26.3 Manufacture of (tele)communication equipment

Manufacture of consumer electronics 6
26.4
26.7 Manufacture of optical instruments and photographic equipment
Manufacture of unrecorded magnetic and optical media 7
26.8
27.2 Manufacture of batteries and accumulators 8

27.5 Manufacture of other electrical equipment Manufacture

of other domestic appliances 9
27.9
28.0 Manufacture of machinery and devices, not elsewhere classified 10

29.3 Manufacture of spare parts and accessories for motor vehicles 11

30.9 Manufacture of transport equipment, not elsewhere classified 12

31.0 Manufacture of furniture 13

32.2 Manufacture of musical instruments 14

32.3 Manufacture of sports goods 15

32.4 Manufacture of games and toys 16

Other (which?) 17

What is the current number of employees in your Please check one

Question 17 answer
enterprise?
a) Up to 9 1

persons
b) 10-49 2

persons
c) 50-24 3

persons
d) 250+ persons 4

You can check

Which positions of the distribution channel are occupied multiple answers
Question 18
by your enterprise? Please check all occupied positions.
a) Manufacturer/producer 0 “not selected”/
1 “selected”
b) Wholesaler 0 “not selected”/
1 “selected”
c) Retailer 0 “not selected”/
1 “selected”
d) Service provider (what services?) 0 “not selected”/
1 “selected”

200
 e) Transportation 0 “not selected”/
1 “selected”
f) Warehousing 0 “not selected”/
1 “selected”
g) Other (which?) 0 “not selected”/
1 “selected”

FINAL PART

Please check one

Question 19 Are you interested in receiving a copy from the survey? answer

a) YES 1

b) NO 2

Would you like to take part in the in-depth interview Please check one
answer
Question 20 related to environmental impact in implementation of
actions that are the subject of this survey questionnaire?
a) YES 1

b) NO 2

CONFIDENTIAL PART

First and last name of the respondent

Name of the company
Name of the Department
Position
Address
Place
Postal code
Province
Phone number
E-mail address

Thank you for your participation in the survey!

201
Dr. Marta Starostka-Patyk is an assistant professor at the Faculty
of Management, Czestochowa University of Technology in Poland.
Her scientific interests include the problems of logistics management
and supply chain management. Specifically, her interests focus
on reverse logistics and environmental aspects of logistics.
Dr. Starostka-Patyk has been an author of several dozen highly
regarded scientific publications. She has participated in research
projects funded by the National Science Centre and the European
Union and has contributed in many international projects.
At present, Dr. Starostka-Patyk, in a keen cooperation with several
foreign research centres, inter alia, from Spain, France, Romania,
Slovakia, Tunisia and Morocco, coordinates the joint research in the
field of logistics and its processes management, participates
in internships and delivers invited lectures.
Per aspera ad astra

Wydawnictwo Naukowe Sophia

ul. Mickiewicza 29
40-085 Katowice