ADDIS ABABA UNIVERSITY

SCHOOL OF COMMERCE
DEPARTMENT OF LOGISTICS AND SUPPLY CHAIN
MANAGEMENT

AN ASSESSMENT OF REVERSE LOGISTICS: THE CASE OF SUR

CONSTRUCTION PLC

A Thesis Submitted to Addis Ababa University School of Commerce, In

Partial Fulfillment of the Requirement for the Award of Master of Arts
Degree in Logistics and Supply Chain Management

By
Solomon G/hiwot

June, 2018

Addis Ababa, Ethiopia

1
 ADDIS ABABA UNIVERSITY

SCHOOL OF COMMERCE

DEPARTMENT OF LOGISTICS AND SUPPLY CHAIN

MANAGEMENT

AN ASSESSMENT OF REVERSE LOGISTICS: THE CASE OF SUR

CONSTRUCTION PLC

A Thesis Submitted to Addis Ababa University School of Commerce, In

Partial Fulfillment of the Requirement for the Award of Master of Arts
Degree in Logistics and Supply Chain Management

By
Solomon G/hiwot

Advisor

Busha Temesgen (PhD)

June, 2018

Addis Ababa, Ethiopia

2
 ADDIS ABABA UNIVERSITY

SCHOOL OF COMMERCE

DEPARTMENT OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT

AN ASSESSMENT OF REVERSE LOGISTICS

(THE CASE OF SUR CONSTRUCTION PLC)

By
Solomon G/hiwot

Approved by Board of Examiners and Advisor

__________________ _________________ _______________

Advisor Signature Date

___________________ ___________________ ________________

Examiner Signature Date

___________________ ___________________ _________________

Examiner Signature Date

3
 DECLARATION

I, Solomon G/hiwot, hereby declare that this study entitled ’An Assessment of Reverse
Logistics: The Case of Sur Construction PLC’’ is original work of my own. All information in
this document has been obtained and presented in accordance with academic rules of ethical
conduct.

Student Researcher

________________

Solomon G/hiwot

Date: May, 2017

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 LETTER OF CERTIFICATION
This is to certify that Solomon G/hiwot has carried out her research work on the topic entitled
„’An Assessment of Reverse Logistics: The Case of Sur Construction plc’ as a partial
fulfillment of the requirement of Master of Arts Degree in Logistics and Supply Chain
Management. This study fulfills requirements to obtain academic award of Master‟s Degree in
Logistics and Supply Chain Management.

_______________________________

Advisor: Busha Temesgen (PhD)

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 ACKNOWLEDGMENTS

I am grateful to God Almighty who renewed my strength. It is only by His strength, wisdom and
mercy that I was able to complete my studies. My heartfelt appreciations go to advisor Dr. Busha
Temesgen for his professional guidance and honest approach throughout the whole process and
bringing this research into final.
I would like to thank to Sur Construction PLC employees who helped me by filling the
questionnaires and providing interview. Finally, in a very special way I would like to thank my
family for their support, guidance, and motivation throughout my education.

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 Table of Contents

Declaration-----------------------------------------------------------------------------------------------------I

Letter of certification-----------------------------------------------------------------------------------------II

Acknowledgements-----------------------------------------------------------------------------------------III

Table of Contents -------------------------------------------------------------------------------------------IV

List of tables ---------------------------------------------------------------------------------------------- VII

Abbreviation and acronyms----------------------------------------------------------------------- ----- VIII

Abstract-------------------------------------------------------------------------------------------------------IX
CHAPTER ONE: INTRODUCTION
1.1 Background Of The Study----------------------------------------------------------------------------1
1.2 Statement Of Problem---------------------------------------------------------------------------------2
1.3 Research Questions--------------------------------------------------------------------------------- --3
1.4 Research Objectives ----------------------------------------------------------------------------------3
1.4.1 General Objective-------------------------------------------------------------------------3
1.4.2 Specific Objectives------------------------------------------------------------------------4
1.5 Significance Of The Study----------------------------------------------------------------------------4
1.6 Scope of The Study -----------------------------------------------------------------------------------5
1.7 Limitations Of The Study-----------------------------------------------------------------------------5
1.8 Organization Of The Study---------------------------------------------------------------------------6
CHAPTER TWO: LITERATURE REVIEW
2.1 Concepts and Definition of Reverse Logistics-----------------------------------------------------7
2.2 Reverse Logistic Processes---------------------------------------------------------------------------8
2.3 Reverse Logistics Activities -------------------------------------------------------------------------9
2.4 Drivers Of Reverse Logistics Practices -----------------------------------------------------------11
2.5 Challenges In Reverse Logistics--------------------------------------------------------------------13
2.6 Conceptual Framework -----------------------------------------------------------------------------18
2.7 Reverse Logistics and related findings------------------------------------------------------------19

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CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Description Of The Study Area----------------------------------------------------------------------21
3.2 Research Approach -----------------------------------------------------------------------------------21
3.3 Research Design ---------------------------------------------------------------------------------------22
3.4 Population and Sample---------------------------------------------------------------------------- ---22
3.5 Data Sources and Types ------------------------------------------------------------------------------24
3.6 Data Collection instruments--------------------------------------------------------------------------25
3.7 Validity and Reliability --------------------------------------------------------------------------------25
3.8 Data Analysis ------------------------------------------------------------------------------------ ------26
3.9 Ethical Consideration ---------------------------------------------------------------------------------27
CHAPTER FOUR: FINDINGS AND DISCUSSIONS
4.1 Introduction----------------------------------------------------------------------------------------------28
4.2 Demographic Characteristics of Employees in the Company-------------------------------------28
4.3 Extent of Returns, Control and RL Process----------------------------------------------------------31
4.3.1 Extent of Returns materials ---------------------------------------------------------------------31
4.3.2 Extent of Control for Used Material-----------------------------------------------------------32
4.3.3 Reverse Logistic Processes----------------------------------------------------------------------33
4.4 Reverse Logistics Activities---------------------------------------------------------------------------34
4.4.1 Remanufacturing ---------------------------------------------------------------------------------34
4.4.2 Reuse ----------------------------------------------------------------------------------------------35
4.4.3 Disposal -------------------------------------------------------------------------------------------36
4.5 Drivers of Reverse Logistics Activities--------------------------------------------------------------37
4.5.1 Economic Motive---------------------------------------------------------------------------------37
4.5.2 Enforcement of Legislation for Recovering or Disposal------------------------------------38
4.5.3 Social Responsibility ----------------------------------------------------------------------------39
4.6 Reverse Logistics and Its Challenges-----------------------------------------------------------------39
4.7 Mechanisms to Improve Reverse Logistics----------------------------------------------------------41

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CHAPTER FIVE: CONCLUSION AND RECOMMENDATION
5.1 Introduction---------------------------------------------------------------------------------------------43
5.2 Summary Findings----------------------------------------------------------------------------- --------43
5.3 Conclusion----------------------------------------------------------------------------------------------45
5.4 Recommendation--------------------------------------------------------------------------------------46
5.5 Suggestion area for further research -----------------------------------------------------------------47
References----------------------------------------------------------------------------------------------------48
Appendix-Questionnaires-----------------------------------------------------------------------------------56
Appendix -Interview check list----------------------------------------------------------------------------62

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 LIST OF TABLES Page

Table 3.1 Sample Size for entire study area and each stratum-----------------------------------------24
Table 3.2 Cronbach‟s Alpha-Reliability Test------------------------------------------------------------26
Table 4.1 Number and Percentage of employees in each department in the company-------------29
Table 4.2 Summary of (Number and Percentage) of respondents by Work Experience ----------29
Table 4.3 Summary of Respondents in the company by Educational Status------------------------30
Table 4.4 The Volume/Extent of return --------- --------------------------------------------------------31
Table 4.5 Extent of return control ------------------------------------------------------------------------32
Table 4.6 Reverse Logistic Processes --------------------------------------------------------------------33
Table 4.7 Extent of Remanufacturing --------------------------------------------------------------------34
Table 4.8 Extent of Reuse----------------------------------------------------------------------------------35
Table 4.9 Extent of implementing Disposal--------------------------------------------------------------36
Table 4.10 Extent of Economic Motives affecting RL-------------------------------------------------37
Table 4.11 Extent of Legislation to affect RL -----------------------------------------------------------38
Table 4.12 Extent of Social responsibility to affect practicing----------------------------------------39
Table 4.13 Extent of Challenges to implement RL -----------------------------------------------------40
Table 4.14 Extent of elements to improve RL-----------------------------------------------------------41

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 ABBREVIATION AND ACRONYMS

RL Reverse Logistics

CSCM Council of Supply Chain Management

LDAR Logistics Department Annual Report

CLSC Closed Loop Supply chain

RSCM Reverse Supply Chain Management

SPSS Statistical Package For Social Science Studies

ERP Enterprise Resource Planning

GSCM Green Supply Chain Management

SR Store Requisition

PR Purchase Requisition

GRV Goods Receiving Voucher

SIV Store Issue Vouchers

SRV Store Return Voucher

M Mean

SD Standard deviation

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 ABSTRACT
Reverse logistics is the management of the end life of product and has advantages like
improvement of competitiveness, regaining values, positive environmental impact and better
image for an organization. It is also a new field compared to conventional or forward logistics.
As a result utilization of reverse logistics in organization like Sur Construction PLC to lesser
compare to forward logistics. Some of the main problem of the company related to reverse
logistics was absence of recovery like remanufacturing, lack of official management or formal
return and controlling system for used materials and lack of proper disposal system in the
organization simply consider all returns as scrap and forward to bid of second hand market. As
result the thesis aim to assess reverse logistics in terms of its drivers, process, activities to
identify the opportunities and challenges in the organization and provide practical remedy to the
organization.
The study applied descriptive research design and a sample of 66 was used to represent
population of 200 and gathered both qualitative from stratified random sampling using
probability proportional allocation from each stratum and quantitative data a applied both
combination of convenience and purposive. Data was analyzed using Statistical Package for
Social Sciences and Microsoft-excel percentages, frequency tables, used to carry out those
descriptive statistical analyses.
The study found that the organization had the opportunity of massive used material generated
from spare parts, tyre and other packages and scraps organized informally without proper
documents and with mind setup of the second hand market and poor in recovering especially
remanufacturing and disposal like land filling and incineration. The main challenges to adopt
Reverse logistics in the company were top management commitment and management style,
weak linkage with local manufacturing and wrong perception to local product (judge as poor
quality). Finally, the researcher recommends to incorporate reverse logistics in the organization
structure, waste material (that couldn’t recover) apply proper disposal method like land filling
and incineration especially for those toxic materials like drained oil from thousands of
construction equipment’s, and for better recovery (remanufacturing) either the company has to
own its own remanufacturing workshop like recapping machine for tyre or form strong linkage
with local manufacturer in addition to adjustment of workers mindset up to local products.
Key Words: RL (Drivers, process and activities), Remanufacturing, Disposal

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 CHAPTER ONE: INTRODUCTION

1.1. Background of the study

Reverse logistics (RL) starts with the products moving back in the supply chain (De Brito and
Dekker, 2004). Typical reverse logistics activities would be the processes a company uses to
collect used, damaged, unwanted (stock balancing returns), or outdated products, as well as
packaging and shipping materials from the end-user. Once a product has been returned to a
company, the firm has many recapturing value or proper disposal options from which to choose.
Some of these reverse logistics activities are: reuse, resell, recondition, refurbish, remanufacture,
repair, and recycle, cannibalization, return to supplier, sell via outlet, salvage, reclaim materials,
incineration, and landfill (Rogers and Tibben-Lembke, 1999). According to Kokkinaki (2001),
reverse logistics is necessary for the following reasons:
 Advancement of Competitiveness: efficient handling of returns leads to reduced costs,
increased profits and improved customer service.
 Regaining values: efficient reverse logistics can capture values from reusing products or
parts or recycling materials.
 Positive environmental impact: legislations acts, also called “producer responsibility
laws,” require manufacturers to develop a policy for the collection and reuse of products
at the end of their life cycle.
De Brito and Dekker (2004) also mentioned that companies carry on reverse logistics because of
economic benefits, legislation and corporate citizenship. Economic benefits are related with
decreasing the use of raw materials, decreasing waste materials, obtaining valuable spare parts
and other financial opportunities like second hand market. The legislation refers to any
jurisdiction indicating that a company should recover its products or take them back (Peters,
2009). Since the strict legislations about the environmental issues express the extended producer
responsibility, companies are entitled to recover their products or accept them back. Lastly, an
organization performs reverse logistics due to corporate citizenship, which refers to the set of
values or principles that an organization holds to be responsible with RL activities.
The motivations behind the implication (implementation) of RL activities lay on both being

1
legally obliged and trying to establish an image the consumers desires as an environmentally
responsible organization (De Brito and Dekker, 2004).
RL should not be viewed as a costly side-show to normal operations; rather it should be seen as
an opportunity to build competitive advantage (Genchev,2009). The consolidation of RL
functions under the organized structure of logistics center would provide a wide range of
opportunities and benefits for the organizations. Despite the interest in re-use, recycling and
general environmental concerns, many industries suffer from not having a well-organized RL
network that is connected to the traditional forward logistics (Ballou, 2007; Love et al., 2004).

1.2. Statement of problem

Sur Construction PLC has different departments which help to run its projects effectively &
efficiently. One such a department in the organization is, therefore, the logistic department.
According to the report of this department, LDAR (2016/17), among the various construction
inputs, the company purchased and provided to projects are worth of birr 51million for spare
parts, about birr 76 million for tyre and 26 million for oil and lubricants, etc.
(http://www.sur.com.et).

The byproduct obtained from such massive amount of material purchase of the organization,
like used & damaged spare parts & tyres, damaged spare part components, wastages, scraps, etc
at the end of product life revealed that the company considered all types of by-products as a
scrap and sold them without implementing proper reverse logistics process (recovering and
disposing). This has made the company to gain insignificant economic benefit yet. They also
affect the company‟s competitive advantages, and many more. Those facts are some of the
several reasons which motive the researcher to look on reveres logistics or the backward
movement and management of materials specifically in spare part, tyre and lubricants in the
organization.

As per the pilot findings obtained from pilot survey conducted on the organization from reveres
logistics concept perspective, the researcher identifies several gaps which the company, Sur
Construction PLC, need to bridges. The first is that the absence of recovering, particularly,
remanufacturing of spare parts namely bushing, rubbers, etc; recapping of tyre of heavy & light
duty trucks, etc. For instance, tyre is one of the major construction inputs which the company

2
purchases in record numbers every year. The company has a round 5,660 pieces annual
consumption and spends an amount which worth‟s about birr 42 million (LDAR, 2017). On top
of this problem, the company has also lack of official or formal return system for used
items/materials. Contrary to tight control system in material purchase, receiving, issuance and
transfer, the company has no tight and official way of returning or collecting mechanism for used
materials from ultimate users or consumers. As a result, at the end of project life, informally
various used components are always organized from user departments for direct sales (disposed)
without recovering decisions. The other problem identified as a gap is polluting the environment
at various project areas. Because of lack of proper disposal system in the organization, some of
its waste materials are creating a huge negative effect to the environment. Specially, replaced
service components like oil filter, fuel filters and burned oil drained from hundreds of light and
heavy construction equipments have always been found polluting lands/farms, and destroying the
environment in many areas the company engaged. These problems are, hence, calling for a
solution. This study uses the concept of reverse logistics as an approach to address these
aforementioned problems practiced in the organization.

1.3. Research questions

This study attempted to answer the following questions

1. How does RL look like in Sur Construction PLC in terms of RL drivers?

2. How does RL look like in Sur Construction PLC in terms of RL processes?
3. How does RL look like in Sur Construction PLC in terms of RL activities?
4. What possible challenges are there to implement RL in Sur Construction PLC?
5. What possible prospects are there to implement RL in Sur Construction PLC?
6. What mechanisms are there to implement RL in Sur Construction PLC?

1.4. Research objectives

1.4.1. General objectives

Generally the objective of the study is to assess the reverse logistics at Sur Construction PLC and
suggest practical remedy for identified problems from reveres logistics perspective.

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1.4.2. Specific objectives
The specific objectives are:-

1. To examine how reverse logistics looks like in Sur Construction PLC in terms of RL
drivers.

2. To examine how reverse logistics looks like in Sur Construction PLC in terms of RL
processes.

3. To examine how reverse logistics looks like in Sur Construction PLC in terms of RL
activities.

4. To investigate challenges in implementing reverse logistics in Sur Construction PLC

5. To investigate prospects in implementing reverse logistics in Sur Construction PLC

6. To investigate mechanisms that helps to adopt RL in Sur Construction PLC.

1.5. Significance of the study

Reverse logistics have been found playing an important role in almost any firm. Organization
like Sur Construction PLC, which deploys variety and mass inputs, demands the managements of
end-of-life products.

The study is believed to have number of significance.

(a). Principally, it will contribute to the efforts being made towards reducing material purchase
budget, reduce inventory stock out and enhance availability. On top this, it will create better
working green environment through daily practice of reverse logistics activities such as
waste collection, parts collection, inspection, selection, sorting, direct recovery,
reprocessing, redistribution, and disposal, refurbishing, recycle, reuse, etc. This is to say, it
serves as backbone to the organization operational and strategically activities.

(b). The study is the first of its kind to be carried out in Sur Construction PLC. Accordingly, it
could pave ways for further studies in the same sector as well as other business undertakings

4
 in a more equipped manner to use existing, abundant resources effectively & efficiently.
Hence, from this angle, the study can shed some light on the dynamic move of construction
industry sector in most region of Ethiopia,

(c). Moreover, the study could also serve as a source of secondary data for different researchers,
who are willing to conduct research in future in reverse logistics.

1.6. Scope of the study

According to Rogers and Tibben-Lembke (1999), RL is a wider concept and it covers activities,
namely reuse, resell, recondition, refurbish, remanufacture, repair, recycle and cannibalization,
etc. Despite its tremendous use, this study focuses on remanufacturing, reuse, disposal of return
materials mainly to spare parts, tyre, and lubricants in Sur Construction PLC.

Finally, this research geographically focuses in the organization head office ,located in Addis
Ababa; its branch office, located in Mekelle, a central location of ware house and workshops of
the organization; and one existing and giant project Soroka-Abrahjira asphalt road project.

1.7. Limitations of the study

The study is anticipated to have the following predicament as limitation:-
(a) Even though reverse logistics covers the flow of materials and information from point of
destination to origin, this paper emphasizes only on handful of various construction
inputs or materials, such as spare parts, tyre, and lubricants at organization level; and not
covered the whole construction inputs and the integration with other parties involve in
supply chain networks.
(b) Currently, the organization has about 10 existing and new projects. Following this, actual
performance of reverse logistic like identifying, collecting, sorting, return management,
reuse, wastage management has been done at project sites which are located too far from
Addis Abeba. Finance and time are, therefore, other challenges to limit the study to head
office worker at Addis Abeba, Mekelle branch and Soroka-Abrahjira asphalt road
projects.
(c) Though Sur Construction PLC is one of the biggest local construction companies and
covers varies of construction activities , it will be a challenge to use the finding of the

5
 study to generalize into the entire industry sector for different reasons, stated in (a) and
(b) above.

1.8. Organization of the study

In the first chapter, brief introduction about background, problems, significance and objectives of
the study was introduced and discussed. Following this, review of literature related to the
concept and practice of reveres logistics from different sources had been made in chapter two.
Subsequently, design of the study about data collection instrument and method of analysis was
stated in the third chapter. Chapter four showed the results and discussion of the survey. Finally,
following the result of the analysis, summaries and conclusions of the main findings of the study,
appropriate recommendations that were done by the company and other stakeholders, had been
done in the last chapter, chapter five.

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 CHAPTER TWO: LITERATURE REVIEW

2.2. Concepts and definition of reverse logistics

The common phenomenon of Logistics is that it moves downstream that is from supplier to
manufacturer, to distributor, to retailer and finally to the Customer / Consumer, this is called
Logistics or Forward Logistics. Reverse Logistics refers to the movement of goods upstream,
i.e. from the end point of usage to the initiation point in order to add more value or to dispose
it. Remanufacturing, Refurbishing and Recycling activities are also the part of Reverse
Logistics. Reverse Logistics gain more importance now-a-days because it reduces operational
cost by reusing products or services. Also by implementing efficient reverse logistics
strategies companies can gain more trust of their customers which result in more business and
hence it become an integral part of any business. Also company can gain both social and
economic benefits by implementing reverse logistics. Reverse Logistics gained importance in
companies because it reduces operating cost by reusing products or services.

Terms such as closed-loop supply chain management (CLSCM); reverse supply chain
management (RSCM); green logistics and green supply chain management (GSCM);
recycling; and returns management are sometimes serves as synonyms of reverse logistics.

RL is sometimes considered as a subset of Closed Loop Supply Chains (CLSC). CLSC is the
integration of both the Forward Supply Chain and Backward Logistics (Blumberg, 2005).

According to Rogers et al. (2002), returns management is part of supply chain management,
which includes reverse logistics. Returns management includes the informational support of
the entire returns process, including arrangements for transportation and physical handling
(Norek, 2002).

RL is also closely related to green logistics in terms of overlapping goals with regard to issues
of reuse, manufacturing and waste disposal (Pienaar, 2009). According to the Reverse Logistics
Executive Council (RLEC), green logistics attempts to measure and minimize the ecological
impact of logistics activities. Green logistics is thus a part of reverse logistic

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Reverse Logistics Definition:

RL has been defined as the process of planning, implementing, and controlling the efficient,
cost-effective flow of raw materials, in-process inventory, finished goods, and related
information from the point of consumption to the point of origin, for the purpose of recapturing
value or proper disposal (Rogers and Tibben-Lembke, 1999).

According to Arrieta (2015), RL is defined as the process of moving goods from the point of
usage or consumption for the purpose of recapturing value, or proper disposal; including
activities such as remanufacturing and refurbishing, processing of returned damaged products,
seasonal inventory, recalls (return implemented because of safety or quality reasons), recycling
programmers, hazardous material programmers, obsolete equipment disposition and asset
recovery

The Council of Supply Chain Management Professionals (CSCMP, 2010) defines RL as a

specialized segment of logistics focusing on the movement and management of products and
resources after the sale and after delivery to the customer.

Depending on the type of reverse process employed, products may not necessarily be returned to
their point of origin, but to a different point for recovery (De Brito and Dekker, 2003), at the
same time as various authors are of the view, the entire process of RL starts at the point of
consumption, However this could be misleading because RL could also start at retailers and
distributors (who are not consumers of the products).

2.3. Reverse logistic processes

Roberta P. & Pier Paolo Carrus (2012) stated in Reverse Logistics and the Role of Fourth
Party Logistics, the main reverse logistic processes are the following:

 Collection;
 Examination and processing;
 Re-processing or direct recovery; and
 Redistribution

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 Collection: is the first process that is, all those activities that are necessary for reclaiming
returned products, surplus or by-products and transporting them to a point of recovery where
they will be subjected to further examination and processing i.e. their quality is assessed and a
decision is made on the type of recovery ( Roberta P. & Pier Paolo Carrus, 2012).

Examination and processing (inspection/selection and sorting): where a decision must be

reached as to whether a product (or parts of it) will be re -used, remanufactured recycled or
disposed. Physical inspection is necessary for determining further processing for most
commercial products ( Roberta P. & Pier Paolo Carrus, 2012)..

Recovery: Once a product has been returned to a company, the firm has many disposal
options from which to choose. If the quality is “as-good-as-new,” products can be fed into the
market almost immediately through direct recovery. Direct recovery involves three options:
re-use; re-sale and re-distribution. Re-use refers to cases where returned products have such a
good quality that they can be re-used almost immediately in the same or an alternative market.
This happens for re-usable packages, containers and most leased or rented equipment. The
second option is the re-processing that includes the following recovery options repair (at
product level), refurbishing (at module level), remanufacturing (at component level), retrieval
(at part level), recycling, and incineration. (Roberta P. & Pier Paolo Carrus, 2012).

Re-distribution refers to logistics activities required to introduce a product into a market and
transfer it to customers (Roberta P. & Pier Paolo Carrus, 2012).

2.4. Reverse logistics activities

In reverse logistics all the activities that a company carries out to collect the used, damaged,
unwanted, or outdated products, as well as packaging and shipping materials from the end-user
or reseller can be considered as reverse logistics activities. Due to the diversity of products in
the reverse flow, there are various alternatives of reverse logistics activities namely as;
reutilization, repair, renovation, reprocessing, cannibalization or recycling (Thierry et al.,
1995).

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Direct reuse: In this reverse logistics process the physical and quality property of products is
unchangeable. Though, it is not always feasible some of the returned products may be reused
“as-is” condition for the same or different purpose without involving in production process
instead with slight cleaning and limited repair (de Brito& Dekker, 2003). Examples of such
products are the means of transportation; pallets, containers, packages or boxes. It is the best
possible option as it involves the least energy use and no wastage of material.

Repair: is defined as the process of returning a used product to its original working condition
through fixing or replacing broken parts. Transformation (repair) of the product can occur at
the user or in a repair shop; it involves limited disassembly, reassembly and limited effort.
Generally quality of repaired products perceived less quality those new products (Thierry et
al., 1995; Diaz; Alvarez; Gonzalez 2004).

Refurbishing: Refurbishing is similar to remanufacturing, however, it brings returned

products are brought up to specified quality level, less than the level of new “virgin” products.
The product is disassembled into modules and after those modules are inspected they are
fixed or replaced. Also upgrading the technology of the product can be associated with
refurbishing. After the process the quality of the product is improved substantially (Thierry et
al., 1995; Diaz; Alvarez; Gonzalez 2004).

Remanufacturing: Remanufacturing is more than refurbishing; it brings the quality of

returned used items up to the quality standards of the new similar items and provides products
at lower cost, and is an additional source of replacement parts (Bras & McIntosh,1999).
Remanufacturing involves the removal and replacement of all high wear-and-tear parts to
extend the life span of these products. It requires high level of disassembly, sorted, inspected
and classified as either good or defective. Defective subassemblies are repaired, machined, or
substituted with approved quality ones.

Cannibalization or Reclaim is unlike the previous options, where it uses a small proportion
or limited parts of the returned unit in the recovery process or in other reverse logistics
activities (i.e. repair, refurbish, remanufacture). Reclaim is the process of extracting parts
from returned products, testing them, and then the good ones are reused in new products the

10
 remaining subassemblies of the returned product are either recycled or disposed. There is no
strict quality standard for cannibalization it depends on the process where parts will be reused.
This practice is common in the automotive.

Recycling is the process of turning material back to its original configuration from used and
non-functioning products. In the previous processes the identity and functionality of returned
products are retained as much as possible. But recycling reuses the materials in production of
new parts, thus the identity of product is lost. The retrieved material can be used either in the
production of similar products or in different lower grade products. The success and
effectiveness of recycling programs depend on the willingness of customers, their
communities, and governmental legislations (Alter, 1993).

Incineration and land filling; Disposal with energy recovery makes use of the caloric value
in the disposed products and reduces its volume to reduce space consumed of the landfill.
Economic advantages can be gained from incineration, if the rising energy is reused. Direct
disposal in the landfill, is the last and most undesirable harmful option and can be seen as an
option, in case of providing no gain to the company even being involved in recovery process.

2.5. Drivers of reverse logistics practices

Commonly, organization performs reverse logistics practices mainly because of internal or external
factors.

Internal drivers

Internal drivers of RL practices relate to the factors that motivate the organization to have an
RL operation, by increasing revenue and profit through cost-saving initiatives (Hsu, Tan
&MohamadZailani 2016; Stoyanov 2012).

Economic drivers: Traditionally, organizations had an open-loop supply chain that focused
mainly on the forward flow of products and services; however, in today‟s organizations,
incorporating RL practices into a closed-loop supply chain may allow for cost saving and
revenue opportunities (Das & Dutta 2013).From an economical perspective, recover reused

11
products and treat them so they could enter the market again (depending on the recovery options
applied to the reuse product) is most of the times cheaper than creating a whole new product
(Fleischmann, 2000). Remanufacturing may have the advantage of shortening the lead-time,
where the demand of spare parts is supplied by remanufacturing returned parts instead of
initiating a resupply with a substantial lead-time (Minner, 2003). Different reasons why reverse
logistics economically recommended are to decreasing the use of raw materials, decreasing
waste materials, obtaining valuable spare parts and financial opportunities (second hand
market).

Competitive drivers: RL practices allow the organization to remain competitive by reducing

inventory levels through product recovery, thus reducing the organizations‟ inventory
carrying costs (Barcos et al. 2013).

Operational performance drivers: By effectively managing RL practices, organizations can

reduce transportation, waste disposal as well as inventory carrying costs (Dues, Tan & Lim
2013; Sobral, Sousa Jabbour&ChiappettaJabbour 2013).

Reducing bullwhip effect motives: In the traditional forward supply chain, the bullwhip
effect is the amplification of order variance in a supply chain from a downstream stage to an
upstream stage. Zhou et al. (2004) and Zhou & Disney (2006) are perhaps the only studies
that discussed the bullwhip effect in a reverse logistics context. The authors showed that the
returned products can reduce the bullwhip effect, experienced by absorbing demand
fluctuations in the forward chain, to the extent that reverse logistics is more cost efficient than
a traditional one, even if variable costs of recovery are higher than that of producing a new
product.

External drivers

External drivers of RL focus on the triple bottom line, and typically enable the organization to
enhance customer value perceptions (Diabat & Govindan 2011; Stoyanov 2012). The
following section discusses the possible external drivers for RL practices.

12
 Legislation: According to Thierry et al. (1995) underline the responsibility of governmental
action in supporting organizations towards reuse activities. It is stated that governments could
take legislative actions such as banning the disposal of certain products, and obliging
companies to take back their products at the end of their use. An example would be the
producer responsibility laws, which are a set of legislative acts in the European Union (EU)
by which companies are responsible for collecting and reusing their products (Guide and
Wassenhove, 2001).

Environmental drivers: Environmental management is a key strategic issue that has the
potential of impacting organizational performance (Dey, LaGuardia & Srinivasan 2011;
Diabat & Govindan 2011). Reuse, recovery and effective waste management may enable the
organization to improve their image, as customers are more sensitive towards environmental
issues and sustainability (Bernon et al., 2011; Zhu &Geng 2013).

Social responsibility and corporate citizenship drivers: Corporate Social Responsibility is

expected by customers (Chan et al., 2012). Corporate citizenships represent this set of values
that will push companies to be involved in reverse logistics (De Brito and Dekker, 2004). The
motivations behind the implication of RL activities lay on both being legally obliged and
trying to establish an image the consumers desires as an environmentally responsible
organization.

2.6. Challenges in reverse logistics

According to Min, Kim and Ha (2006) reverse logistics is by its very nature a complex
process and a specialized area of any supply chain. It does not matter what the product is, how
it is sold or who the customers are; every organization needs to focus on recovering the
maximum value from returns. However, the under mentioned problems to RL practices affect
its proper performance.

Financial barriers on Reverse logistics: Having adequate financial funds are essential to
carry out reverse logistics activities as the necessary technology, programmes, information
and education are significant in reverse logistics. However, setting up an advanced
technological and information systems is an expensive initiative for the businesses. The

13
information systems that are critical to track and trace product returns and recoveries are
critical to the success of RL operations, but require large amounts of capital and resources to
implement and maintain (Bernon et al. 2011).

An effective RL operation requires personnel to be trained; however, this training requires

financial support that the organization may not possess or want to dedicate to RL, thus
creating great difficulty in managing the RL practices (Sarkis, Zhu & Lai 2011). Education
and training are major requirements for success in an organization; therefore, the more well-
trained staff available, the greater the efficiency of the RL operation (Creutz & Larsson 2012).

Top managements posture and Management style on Reverse logistics: It is crucial for
management to fully support reverse logistics process, however, management lacked reversed
logistics policy, failed to support financial requirement of the reverse logistics process, lack of
commitment to environmental issues, negative corporate attitudes towards environmental
friendly activities, inadequate company culture and inconsistent top management support
represent some of the internal barriers that challenges RL implementation (Zilahy, 2004 and
Hillary, 2004). Additional, management may also not be committed to RL because they are
not aware of the resulting benefits that could ensue (Hazen et al., 2012).

Thus this indicates that top management‟s posture and management styles of businesses are
important to carry out activities concerning the environmental impacts, and allowing
appropriate resources including RL experts to the effective performance of RL practices
(Creutz& Larsson, 2012).

Costs related to reverse logistics. One of the biggest pressures on organizations with regard
to reverse logistics is the internal mandate to reduce costs (Pollock, 2010). Organizations do
not plan for products to „fail‟ and enter the reverse logistics stream. In a perfect world,
products are manufactured and sold to customers and do not become part of the reverse
logistics process. Therefore, initially, reverse logistics is not considered as a revenue-
generating process, which consequently results in very few resources being allocated to this
part of the supply chain (Rogers & Tibben-Lembke, 2001).However, some organizations have
seized the opportunity to generate income from their reverse logistics processes. The increase

14
 in costs for processing returns is higher compared with a forward sale and it could cost up to
three times more to process the reverse logistics of a new item than it would to process the
forward logistics to sell it (Norman, 2007).

Insufficient information systems: Insufficient investment in information technology and a

lack of information systems are major barriers to the successful management and
implementation of reverse logistics (Ravi & Shankar, 2004). Many enterprise resource
planning (ERP), customer relationship management (CRM) and warehouse management
systems (WMS) are not set up efficiently to take back products (Norman, 2007). Most
organizations live with labour-intensive, manual, inefficient, and often undisciplined reverse
logistics processes (Thrikutam & Kumar, 2004). Very few organizations have successfully
automated information systems in the return process, and the resources allocated to these
systems are also stretched to the limit and are unavailable for reverse logistics applications
(Rogers &Tibben-Lembke,1998).

Government support and policy: Government policy and financial support can play a major
role in an organization‟s RL practices, as the lack of enforceable environmental laws
established by the government reduces the incentive and motivation for organizations to
perform RL practices (Ganjali et al. 2014; Ho et al. 2012). A lack of tax policies and financial
support from government to subsidize RL has acted as a disincentive for organizations to invest
and or collaborate in RL practices, as the products brought back into the reverse chain create
high degrees of tax complexity and exposure (Abdulrahman et al. 2014). It is therefore
government policy that has the greatest external influence on an organization‟s RL practices
(Lai & Wong 2012).

Lack of functional integration: RL practices often face a challenge of functional

communication and cooperation (Abdulrahman et al. 2014). Internal integration builds on the
premise that various functions in the organization should work collaboratively as a single
entity, ensuring that mutually acceptable outcomes are achieved and contribute to the continued
success of the RL practices (Bernon et al. 2013). Differing views on the importance of RL are,
however, shared; resulting in poor functional integration, as well as higher product return rates
(Abdulrahman et al. 2014). If the functions that are involved in RL practices do not understand

15
the end goal of RL, competing goals and objectives will be set across departments (Badenhorst
2013a).

Cooperation of the Supply Chain Partners (Dealers, Distributors, and Retailers): Among
the supply chain partners, cooperation and trust are the utmost important elements that need to
be emphasized in SCM. Without the support of supply chain partners that the company is in
relation with, it‟s difficult to carry out reverse logistics activities. Company return policies can
facilitate the returns from customer to producer and lead to risk sharing between them (Ravi
and Shankar, 2005). Non-cooperation of supply chain partners to RL practices and
organizational policies are one of the main barriers to RL, and if removed, the chances of
effective RL practices will be much greater (Ho et al. 2012). Considerable time, money and
effort are spent on developing a complex product return system that relies on supply chain
collaboration and integration to perform effectively; however, poor integration between supply
chain partners can result in the return system being a key cost driver (Bernon et al. 2013).

Problems with Product Quality: Product quality plays a crucial role in reverse logistics
activities because when a product is recovered or reproduced, the quality cannot be the same as
a new product. The perception of poorer quality product acts as a barrier for the companies
because in the eyes of customer, it is expected that the same quality level must be offered after
processing the returned products. (Ravi and Shankar, 2004).

Lack of Awareness about Reverse Logistics: Researches of Post and Altman (1994), present
that there is a lack of awareness about reverse logistics activities in the firms. Even if they are
aware of the potential outcomes of reverse logistics activities, they are paying less attention
regarding to other operational activities within the company. Consequently, the possible
outcomes of reverse logistics activities are thought to be short-term and temporary

Uncertainties related to product returns: Returns come from different locations and in
different conditions, with different disposal options (Richardson, 2006). A great deal of
uncertainty surrounds product returns in terms of the kind of product, the quantities, when the
product returns will take place, where in the supply chain the return will take place, and what
the condition and quality of the returned products will be. The majority of product returns are

16
unplanned and therefore unpredictable (Mason, 2002). Product returns can therefore take on a
wide variety of forms and can come from various organizations in the supply chain. Return
processing is highly dynamic and inconsistent and is complex because it involves irregular
material flows (Hart, 2008).

Lack of accurate forecasting: The lack of accurate forecasting between supply chain
partners acts as a major barrier for RL because of the difficulties in planning for the quantities
and diversity of products that need to flow through the reverse chain (Sharma et al. 2011).
Product returns are the most common aspect of RL; however, they introduce uncertainty into
the organization, as the timing, disposition, condition, quality and quantity of the returns are
unknown (Badenhorst, 2013b).

Decisions that are accompanied by accurate information play an effective role in the
management and improvement of product flows, and enable a more efficient and profitable
RL operation (Govindan et al. 2015). Efficient information systems are capable of providing
the end-to-end visibility that is needed to reduce forecasting uncertainty (Rahman &
Subramanian 2012).

17
2.7. CONCEPTUAL FRAMEWORK

RL Output /Drivers
RL Process RL Activates
 Economic gain
 Collection  Decreasing the use of
raw materials
 Used Material  Decreasing the waste
 Remanufacturin
With Out  Sorting/Inspectin g materials/
Value g  Environmental
protection
 Recovering
 Reuse  Social responsibility
 New and used o Gaining potential
value by attracting
products with  Redistribution/Uti customers
value lization o social responsible
 Disposal organization
 Legislation
o National
o International

Input Process Output

Source: Conceptual framework derived from ---Utilizing the input-processes-output (IPO) model (M. Brito, R. Dekker ,2014)

18
Conceptually, to adopt RL organization initially should have return material from destination
that will be supposed for recovering and disposal. Similarly the conceptual frame work indicates
that those used materials without value, new materials with value and used materials products
with value that returned from the supply chain will be sorted and inspected properly and select
and forward to appropriate recovering actions like remanufacturing, reuse and dispose.
Outcomes obtained like economic benefit, social benefit and rules and regulation from
environment perspectives can be also act as driving forces to adopt this RL. In general
opportunities to implement RL like evaluating the volume of return, way of RL, benefit of RL
and obstacles and mechanism of solving those obstacles are the objective of the study.

2.8. Reverse Logistics researches and related findings

Internationally, a number of studies have been done especially in manufacturing industries; yet,
the construction industry has not kept pace in gaining the benefits of RL compared to the
manufacturing industry. One reason for this might be due to the insubstantial RL literature in the
construction field as opposed to the manufacturing context.
company increase the flow of returns of the product due to product recalls, warranty returns,
service returns, end-of-use returns, end-of-life returns, and so on (Ravi and Shankar, 2005). A
study done on the role of RL in the concept of logistics centers depicts that in general, on a
global scale the value of returns is estimated to be around $43 billion per year, representing an
average of 15%-20% of all goods sold (Genchev, 2009).
Research done on RL for the construction industry: lessons from the manufacturing context
confirm that, implementing RL practices in the construction field may result in reusing and
recycling up to 85% of the total weights of buildings. Even more, some studies have estimated
that the costs of construction activities that apply RL concepts would be reduced by 30%-50%
(M. Gorgolewski, 2008).
Further, in construction industries the calculations by Guy and McLendon verified that taking in
to account the revenues out of reusing and reselling the recovered items and the disposal costs,
overall costs of construction by implementing RL could be around 37% less than traditional
demolition and sending the whole items to landfills. (B. Guy and S. McLendon, 2002).
A study done by Nawari (2006) titled: “The Effect of Reverse Logistics of an Organization:
Competition, Cost and the Environment”, found that Gartner, estimation on improper handling of

19
return goods to be about 30-35% erode of potential profits. However, Vanderlande studies done
by Stek (2012) titled: “Using reverse logistics for failed spare parts: A new opportunity for
Vanderlande Industries”, found that reverse logistics management had led to 54% increase in
profits.
Regarding legislation, governments could take legislative actions such as banning the disposal of
certain products, and obliging companies to take back their products at the end of their use
(Thierry et al. 1995). However, a study done by Sirak Wondimu (2016), research made in
measuring performance of reverse logistics system in PET( Polyethylene terephthalate) bottles
recovery in East African Bottling Company in Ethiopia, the survey findings indicate that, no
government enforcing rules and policies for companies operating in any industry to recovery
post-consumer packages such as PET bottles.
A study done by Ilias P. Vlachos (2014) Reverse Food Logistics during the Product Life Cycle
indicates that remanufactured products incur 40-60% less costs than new products and save 85%
of the energy needed to start from scratch since remanufacturing expands the life cycle of the
product (Kumar and Putnam, 2008).

20
 CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Description of the Study Area

This study was conducted in SUR Construction P.L.C., whose headquarter is located in Addis
Ababa and branch office in Mekelle. It is the largest and Grade one (GC-1) leading local
construction company in Ethiopia which has been massively involved in the construction of all
kinds of Civil Engineering Construction works comprising but not limited to all types of Roads,
Universities, Commercial and Social buildings, Industrial buildings, Sport Centers, Air ports,
Hydropower, Irrigation and Dam Projects. The research targeted to study the assessment of
reverse logistics in Sur Construction PLC at head office Addis Abeba, Mekelle branch and
Soroka-Abrahjira asphalt road projects especially in the management and utilization of material
after once reached in the ultimate users in one of the major construction inputs know as
equipment which includes Tyre, spare parts and lubricants.

3.2 Research approach

Research Approaches are study techniques employed to undertake research process, and to solve
the given problem. Depending on the objective of the research, it is possible to use one of the three
research approaches, namely: Qualitative, Quantitative and Mixed-Research Approaches. This study,
however, adopted a Mixed-Research method as its general framework to guide the process of data
collection, make analyses and interpretation of the findings.

This approach ensures the triangulation and validation of information, obtained from all the
actors, during the course of data collection and analyzes different types of objectives put forward
in objective.
The mixed methods research design creates a wider picture by enhancing the depth and insight
given by numbers through inclusion of dialogue and narratives (O‟Leary, 2010).

21
3.3 Research design

Research design is a master plan which provides a methods and procedure for collecting and
analyzing the needed information (Bryman, 2008). Depending on the objective of the given
research, it is possible to have several research designs. The study applied descriptive research
design because it helps to assess and analyze the existing conditions and problems of the
company to the perceptive of reverse logistics practice. Further the research design adopted a
cross-sectional mixed research design; involving gathering both qualitative and quantitative data
from multiple sources of information, as its general framework to guide the process of data
collection, make analyses and interpretation of the findings.

3.4 Population and sample

3.4.1 Study Population

According Human resource departments of Sur Construction PLC, the company has a total of

142 management and senior permanent staffs working at various levels and departments in

different locations, of which 65 work at head office level; 37 work in Mekelle, and 40 work at

Soroka Abrhajira project.

The target population for this research is all company‟s management and senior staff members
under the department of Maintenance, Equipment administration, logistics, finance and
Construction who involve directly or indirectly in reverse logistics practices at head office,
branch office in Mekelle and Soroka Abrhajira project.

3.4.2 Sample

Due to the nature of construction industry, majority of the employees works at different projects

which are found too far from Addis Ababa, the headquarter. It is, hence, time consuming and

costly to directly study all employees working in the organization. This, hence, calls for taking a

22
representative sample to study the underline issues in the company. The representative sample

for this study, hence, encompasses part of management and senior staff members under the

department of Maintenance, Equipment administration, logistics, finance and Construction taken

from head office, branch office in Mekelle and Soroka Abrhajira project.

3.4.3 Sampling Technique

(a). Quantitative Study: The sample design planned to make use of for interviews of

quantitative study (distributing survey questionnaire) is stratified random sampling, in which

case each site, Addis Ababa, Mekelle and Soroka-Abrhajira project, is taken as stratum. Long list

of the employee prepared from company profiles and used as a sample frame. Sample of

employees drawn using probability proportional allocation from each stratum. The rationale for

choosing this technique is its simplicity and it also gives assurance that the population is evenly

sampled.

Sampling Size

The sample size determination formula adopted for this study is a simplified formula provided by
Solvin‟s formula (Unan, 2012), which is employed to determine the required sample size., at
degree of variability or level of precision for sampling error,  =9%) for a population of size N,
given as follows. The formula is:
N
n
1  N 2 
Where:
n = sample size
N = population size
 = the level of precision

23
Given the population of N  142 and level of precision for sampling error,  =9%, the sample
size that must be drawn from the population of this study can be calculated as:

N 142
n   66
 
1 N  2

1  142 0.09 2 
Table 3.1. Sample Size for entire study area and each stratum

S.No Project Site Project Site Number of Employee Total Sample Size
(stratum)
1 Head Office Addis Ababa 65 30=66/142*65

2 Mekelle Branch Mekelle 37 17=66/142*37

3 Sorok-Abrahajira Project 40 19=66/142*40

Total 142 66

(b). Qualitative Study: There are four broad techniques often used to select a sample for a
qualitative study: purposive sampling technique, quota sampling technique, judgment sampling
technique and convenient sampling technique. The study, therefore, used a combination of
convenience and purposive

3.5 Data sources and types

Data of both qualitative and quantitative nature were collected from primary and secondary
sources to address the study objectives.
Primary data: the primary data is a fresh data, which researcher collects by means of one or
more of the instruments, namely structural questionnaire (interview schedule), key informal
interview, etc directly from the employees in the organization to study the RL practices,
challenges and opportunities, etc in this regard.
Secondary data: the secondary data is, however, obtained using document analysis method,
mainly from company documents, such as approved minutes, proposal, agreement documents,
and annual progress reports, public records, published/unpublished manuscript, websites, books,
journals, articles, previous studies and manuals of Sur Construction PLC.

24
3.6 Data collection instruments
Structured Questionnaires: Structured questionnaire was designed to gather mainly
quantitative data pertaining to employees‟ demographics & socio-economic characteristics, asset
holdings practices, resource management & RL practices, etc. The data collection tools were pre-
tested before use in the actual field data collection exercise. The pre-testing exercise facilitates
fine-tuning of the tools by removing inconsistencies, repetitions and redundancies. One of the
key aspects that were emphasized during the pre-test exercise is testing the feasibility of
generating the expected study results.
Key informant interview: interviews and discussion were made with Logistics and
Maintenance department head, at head office. The key informant interview and discussion
assisted to complement the survey questionnaire results.

3.7 Validity and reliability

The researcher exerted maximum effort to avoid researcher‟s bias and respondents answer
without clearly understanding the questions by developing clear instruction on the questions, and
preliminary question testing and repeatedly reframing the questions. In addition, the researcher
tried to contact closely the respondents for any unclear issues using contact persons, telephone
and electronic mail. At the end test of reliability Cronbach‟s alpha was conducted as a measure
of internal scale consistency using SPSS (Statistical package for social science studies).

Cronbach's alpha reliability testing:

Cronbach's Alpha is designed as a measure of internal consistency of items in the questionnaire.
It varies between zero and one. The closer alpha is to one, the greater the internal consistency of
the items in the questionnaire. Total number of questions or items in the questionnaire is 53
including 44 testing variables or LIKERT scale variables and the rest items related to
demographic variables. Hence, total “N” of items in the below Cronbach‟s Alpha test is 42.
To test the reliability (internal consistency) for multi-questions of the research
instrument/questionnaires Cronbach‟s alpha was computed and from the reliability statistics table
(See Table 3.2) the obtained Cronbach's Alpha value of 0.792, 0.801, . . ., and 0.839 for Type of
Returns/Disposal in the company, ways of return the company practices, . . ., and improve RL

25
practices respectively in which all is > 0.700. Based on Cronbach's Alpha values it can be
concluded that this research instrument has high level of reliability (internal consistency).

Table 3.2.:Cronbach's Alpha-Reliability Test

Question Type Cronbach's Alpha N of Items
Volume/Extent of return 0.792 4
Extent of return control 0.801 2
Reverse Logistics Process 0.787 5
Remanufacturing 0.844 4
Reuse 0.771 3
Disposal Exercise 0.728 3
Economic motives 0.830 3
Legislation 0.867 3
Social Responsibility 0.882 2
Challenges of Reverse Logistics 0.921 8
Improve RL practice 0.839 5

3.8 Data Analysis Method

Data Analysis for Quantitative Study (Analysis of Survey questionnaires): Various statistical
quantities of mainly univariate analysis are intended to instrument to address these objectives set
in this baseline study. The univariate analysis is predominantly made use of simply to
characterize and summarize data that was collected, using descriptive statistics, namely tables,
measures of central tendency/variation (mean, standard deviation), percentages, frequency tables,
etc. SPSS statistical package used to carry out those descriptive statistical analyses.
Data Analysis for Qualitative Study (Analysis of Key informant interview): There are many
different types of qualitative data analysis methods though the choice of the methods will depend
on researcher‟s research topic, researcher‟s personal preferences and the time, equipment and
finances available to researcher. As to this study was concerned, the qualitative data obtained
from key informant interviews Logistics and Maintenance department heads was audio and

26
translated in to English. Then, the responses were categorized under relevant themes and features
that are characteristics of the majority of the respondents and eventually analyzed by content
analysis.

3.9 Ethical consideration

According to Leedy & Ormrod (2010), when taking a research four thing such as protection from
harm, informed consent, right to privacy, and honesty should be considered. Accordingly the
data of the research collected though interview and questionnaires organized freely without
challenging respondent to any physical and psychological harm. Data collected from respondents
with ethical manner, smooth communication and up on their willingness and consent basis. Up
on the demand of the respondent Separate places and independency maintained so as to assure
and respect privacy and confidentiality of respondents, as the same time during the data
collection proper explanation about the purpose of the study, benefit of the study, the chance to
ask any thing about the study and chance to feel free to refuse to reply any question informed in
advance to participants. Finally the researcher organized response of the participants and
analyzes and reports the findings in complete and honest fashion.

27
 CHAPTER FOUR

DATA ANALYSIS, RESULTS AND INTERPRETATION

4.1. Introduction
In the previous chapter, details were provided regarding the research design, instruments used,
population, sample size, sampling method, profile of organization, data collection procedure, etc.
In this chapter, the statistical analysis of data, result of the study and discussion of findings have
been presented.
Data collected from the employees in the company, after cleaning and checking for completeness
of the filled in questionnaire formats, were coded and entered in to SPSS Statistical Software for
analysis. The descriptive data analyses were performed to address the objectives set in the study.
The descriptive data analysis was predominantly used simply to calculate mainly descriptive
statistics and thereby characterize the variables in the study. To this end, frequencies,
percentages, means and standard deviations have been computed and discussed in-depth below.
Based on the calculated sample size, total 66 questionnaires distributed 62 were returned from
which 3 were not correctly filled and rejected. Therefore, 59 were effectively used for analysis
that shows response rate of 89%. The questionnaire comprised of seven sections and data
generated will be presented as follows: The first section, Section 4.1., comprises of respondents‟
demographic data such as respondent‟s department, their years of experience, and educational
level. The second section, Section 4.2., comprises of data describing about the extent of return,
extent of control and RL processes. In the third section, Section 4.3., data obtained from the
analysis of RL activities will be examined. Following this section, reverse logistic strategic
importance and its drivers will be analyzed and discussed in Section 4.4 and Section 4.5
respectively. Then, Challenges of RL will be discussed in Section 4.5. Finally, analysis of data
on mechanisms to improve reverse logistics will be explored in Section 4.6.

4.2 Demographic characteristics of employees in the company

4.2.1 Department Distribution
Employees in the company participating in this study were summarized as outlined in the Table
4.1 below. The result shows that the vast majority of the employees, i.e., 21(35.60%)

28
respondents, involved in the study were from Logistics Department, and this was followed by
employees from maintenance & equipment administration (Production) department, which
account 17(28.81%). The remaining respondents (35.59%) were from Construction and Finance
department of the company. The study was, therefore, taking into account representative number
of respondents from each department in company participated to examine and address the
research objectives stated in the study.
Table4.1: Number and Percentage of employees in each department in the company
Employees‟ Departments in the Employees in the Employees in
Company Department Percentage
Construction 12 20.34

Production (EAD & MMD) 17 28.81

Finance 9 15.25

Logistics 21 35.59

Total 59 100.00

Source: Own Survey, 2018

4.2.2 Work Experience Distribution

The findings shown in Table 4.2 reveal that the majority or 74.58% of the respondents had
worked for more than five years; 18.64% of the respondents had a work experience of one to five
years and the rest were worked blow one year. This show that most of the respondents stayed in
the company for long period (above five years) and this indicates that respondents were seniors
matured enough in their assignment to give appropriate feedback about their organization
activities.
Table 4.2 Summary of (Number and Percentage) of respondents by Work Experience
Respondents Work Frequency Percentage
Experience
Below one year 4 6.78

1-5 years 11 18.64

5 and above 44 74.58

Total 59 100.00

Source: Own Survey, 2018

29
4.2.3 Respondents’ Level of Education
Knowledge of the respondent‟s level of education is important to relate it with implementation
and practice of RL activities in the organization. Table 4.3 below summarizes the educational
status of respondents in the organization. According to this result, the educational level of most
respondents (89.83%) working in the company was BA/B.Sc holders. The result in the table also
shows that there were a handful of respondents working in the company at diploma and master
levels. As majority taskforce of the employees in the organization was qualified once, having
BA/B.Sc and above, the organization can, therefore, use this, its employees educational level, as
an opportunity to introduce the concepts and practices of RL like conventional logistics.

Table 4.3: Summary of Respondents in the company by Educational Status

Qualification Frequency Percentage

Certificate 0 0
Diploma 2 3.39
BA/B.Sc 53 89.83
MA/M.Sc 4 6.78
Total 59 100.00
Source: Own Survey, 2018

Likert scale data analysis and presentation and standard definition

The researcher were intended to indicate extent of returns materials, extent of return materials
control, RL process, RL activities (remanufacturing, reuse and disposal), drivers of RL
(economic, enforcement of legislation and social responsibility), challenges and mechanisms to
improve reverse logistics in Sur construction PLC using aspects in a five point Likert scale that is
1 was given to “no at all extent”, 2 to “small extent”, , 3 to „moderate extent‟, 4 to „great extent‟
and 5 to „very great extent‟.
The scores of „no extent have been taken to represent a variable which had a mean score of 0 to
1.5, the scores of „small extent have been taken to represent a variable with a mean score of 1.5
to 2.5, the score of moderate extent have been taken to represent a variable which had a mean

30
score of 2.5 to 3.5, the score of great extent have been taken to represent a variable which had a
mean score of 3.5 to 4.5 and the score of very great extent have been taken to represent a
variable which had a mean score of above 4.5. (Derived from: Oxford,R L and Burry
Stocks,1995)

4.3. Extent of returns, control and RL process

4.3.1 Extent of Return Materials

Reverse logistics is the term commonly used to describe end of life product management. This means
that reverse logistics is mainly concerned with return or take-back products and materials from the
point of consumption to the forward supply chain for the purpose of recycling, reuse, remanufacture,
repair, refurbishing or safe disposal (Carter and Ellram, 1998).
Thus, the table below depicts the type and extent of volume of end of life products or byproducts
of Sur Construction PLC. Accordingly, respondents were asked to reflect their view on the extent
to which the organization had generated its returns from inputs like Spare parts, tyre, lubricants,
packages and others using five point Likert Scale, “1=Not at all”, “2=Small Extent”,
“3=Moderate Extent”, “4=Great Extent” and “5=Very Great Extent”. The response data obtained
from the questionnaires were summarized in the table 4.4

Table 4.4: The Volume/Extent of return by type (n=59)

Responses
Extent of return by type NA SE ME GE VGE Mean SD
Replaced spare parts or
component 0 8 11 25 15 3.80 0.39
Drained lubricants/Oil/ 39 13 6 1 0 1.47 1.62
Used Tyres 0 6 20 21 12 3.66 0.41
Packages & Metal Scrap
Materials 3 11 27 9 9 3.17 0.46
Note: NA=Not at all; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent

Source: Own Survey, 2018

31
 The data result in Table 4.4 above illustrates majority of the respondents have expressed their
agreement that great extent of returns or byproducts were obtained from replaced spare parts or
components (M=3.80), used tyre (M= 3.66) obtained from thousands of heavy duty trucks and
light duty construction equipment‟s, and moderate extent (M=3.17) from scrape metals & drum
packages mainly from different lubricants and asphalt bitumen& metal scraps. Thus, the finding
seems similar with the response obtained from the key informant interviewees of logistics and
maintenance department heads of Sur Construction PLC regarding the type and volume of used
byproducts, which they describes that, though there was no any or small extent (M=1.47)
practice to return used oil from machinery and trucks, the company faces with large volume of
end-of-life products (used products) that need the attention of RL.

4.3.2 Extent of Control for Used Material

The secondary data of Sur Construction PLC as well as the interview with logistic manager
indicates that, the company has used a number of formal documents like store requisition (SR),
purchase requisition (PR), goods receiving voucher (GRV), store issue vouchers (SIV), store
return voucher (SRV) etc used for the purpose material management in the forward logistics.
Taking this in to account respondents were requested questions stated in table 4.5 for used
materials and their feedback was presented in the table below :

Table 4.5 Extent of return control (n=59)

Responses
Extent of control NA SE ME GE VGE Mean SD
Used material return with
proper documents
29 25 5 0 0 1.59 1.22
Used material issued with
proper documents
24 30 5 0 0 1.67 1.18
Note: NA=Not at all ; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent
Source: Own Survey, 2018

The data showed in the table 4.5, majority of the respondents were (M=1.59) had the opinion that
used materials /Second hand materials/ had been returned without appropriate used material
return documents and similarly small extent” or mean value of (M=1.67) confirm that return of
used materials had been issued without proper documents.

32
However, the interview with logistic manager as well as the secondary date disclosed that the
company had second hand return and issuance voucher designed for this purpose, and some time
the company also use dispatch vouchers, the problem was the implementation in properly utilize
these documents.
Thus, one can summarize that against forward logistics weak control or less attention was given
for used or second hand material during return and issuance processes.

4.3.3 Reverse Logistic Processes

According to Roberta P. & Pier Paolo Carrus (2012), the main reverse logistic processes are first
there is collection, next there is the combined inspection/ selection/ sorting process, thirdly there
is recovery, and finally there is redistribution.
Thus, having this understanding, the respondents were given a group of questions stated in table
4.8 to achieve the objective for rating of these questions its scale of usage degree that aims to
study the current exercise of Sur Construction PLC related to reverse logistics process.

Table 4.6: Reverse Logistic Processes (n=59)

RL Processes Responses
NA SE ME GE VGE Mean SD
Collection/Organizing 2 7 11 30 9 3.63 0.63
Sorting/Inspection-for sales 5 10 16 26 2 3.17 0.68
Sorting/inspection-for recovering 34 14 2 4 5 1.85 1.11
Recovering -Remanufacturing 41 9 6 2 1 1.52 1.24
Recovering -Reuse 4 3 16 25 11 3.61 0.63
Redistribution/Utilization 2 8 20 16 13 3.51 0.63
Note: NA=Not at all ; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent
Source: Own Survey, 2018

The data in table 4.6 explained that the practice of collection, reuse activities and
redistribution/Utilization was exercised to great extent by the firms to the mean value of
(M=3.63), (M=3.61) and (M=3.51) respectively. similarly, sorting/Inspection with mind setup of
sale was performed in moderate extent (M=3.17), However, according to the respondent
recovering related to remanufacturing activities were performed to no extent or mean value of

33
(M=1.52) and Sorting/inspection-for recovering indicated small extent (M=1.85) .Thus, the
finding shows that, the organization is strong in collection, reuse, sorting/Inspection-for sales and
utilization of recover product and weak in remanufacturing.

4.4. Reverse logistics activities

4.4.1. Remanufacturing

Remanufacturing is, therefore, one of the RL activities which provide the advantage to bring
returned used items up to the quality standards of new and similar items, and provide products
at lower cost, and an additional source of replacement parts (Bras & McIntosh,1999).Taking
this advantage into consideration, those sampled respondents from the organization were also
asked to indicate about the elements of reverse logistics activities in general and the condition
of remanufacturing activities in particular in the company. Their response was measured and
depicted in the table below.

Table 4.7: Reverse Logistics Activities: Extent of Remanufacturing (n=59)

Responses
Extent of Remanufacturing
NA SE ME GE VGE Mean SD

Setting up remanufacturing workshop 40 12 5 2 0 1.47 1.27

Setting up organization network with
3 30 19 6 1 2.52 0.85
local manufacturing
positive perception to local
remanufactured products in terms of 8 26 18 6 1 2.42 0.89
quality
Setting up storage for used materials 0 2 20 24 13 3.81 0.63
Note: NA=Not at all ; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent
Source: Own Survey, 2018

Table 4.7 illustrated that the extent of remanufacturing elements. Accordingly the setting up
storage for used materials in the table showed that with mean value of (M=3.81) of the
respondents were of the opinion that the organization had perform to great extent to
warehouse storage for used parts (second hand store). In contrary, responses from the other

34
 questions indicate that for instance mean value (M=1.47) disclosed that the organization had
no remanufacturing workshop, mean value (M=2.52) revealed that small extent the
organization network with local manufacturing and mean value (M=2.42) indicates that small
extent positive perception to local remanufactured products in terms of quality. On top of this,
the interview result with maintenance departments assure that, the company has well equipped
truck and machinery workshops (Garage) centrally located at Mekelle and at each projects
suitable for repair. Thus, the finding shows us the organization lacks own manufacturing
workshop at the same time the linkage and utilization of local manufacturer and the
perception of workforce (Mechanics) towards local products ( judge as poor quality) needs
improvement.

4.4.2 Reuse

Depending on the physical condition of returned components, returned products may be reused
“as-is” condition for the same or different purpose without involving in production process
instead with slight cleaning and limited repair (de Brito& Dekker, 2003).
In the case, one can save time, money, energy and reduce wastage by utilize functional
components from failed major components like engines, pumps, transmissions and others. This is
also highly applicable in construction industry like Sur Construction PLC due to the availability
of large in number and varieties of fleet size.

Table 4.8: Reverse Logistics Activities: Extent of Reuse (n=59)

Extent of Reuse Responses
NA SE ME GE VGE Mean SD

Set quality standard for use 45 9 2 2 1 1.39 1.31

Inspecting and sorting for reuse 0 4 23 19 13 3.69 0.63
Capacity availability for reuse 0 0 24 21 14 3.83 0.63
Note: NA=Not at all ; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent
Source: Own Survey, 2018

Table 4.8 presented the majority of the respondents were (M= 3.69) had the opinion that the
organization had perform to “great extent” in practicing inspecting & sorting products for reuse,

35
(M= 3.83) of the respondents also indicated that the organization had a great extent capacity for
reuse. However, in relation to set quality standards for reuse, almost all the respondents‟ opinion
(M=1.39) were that the organization had perform nothing in this regard. Thus, the finding seems
to specify that the company exercise the reuse activity of RL without setting quality standard for
reuse.

4.4.3 Disposal

Disposal with energy recovery makes use of the caloric value in the disposed products and
reduces its volume to reduce space consumed of the landfill. Economic advantages can be
gained from incineration, if the rising energy is reused. Direct disposal in the landfill is the
last and most undesirable harmful option and can be seen as an option, in case of caloric
providing no gain to the company even being involved in recovery process. Thus, in this
regard the main attributes for disposal are land filling, incineration and direct sale /second
hand market.

Accordingly, respondents were asked to put their views on the extent the organization has
implemented disposal of products. The findings obtained were summarized as shown in the
Table 4.9, given below.

Table 4.9: Reverse Logistics Activities: Extent of implementing Disposal (n=59)

Extent of implementing Disposal Responses
for used & waste materials NA SE ME GE VGE Mean SD

Land filling practice 18 28 13 0 0 1.92 1.08

Incineration practice 19 32 6 2 0 1.85 1.11
Direct Sales/Second Hand Market 2 1 13 27 16 3.92 0.64
Note: NA=Not at all ; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent
Source: Own Survey, 2018

Table 4.9 reveals that (M= 3.92) or the majority of the respondents were of the opinion that
the organization had perform to “great extent” in using direct sales /second hand market/ to
dispose used materials and packages. However, only small extent (M=1.92) respondents
explained that the company used land fill to dispose material and respondents‟ with mean

36
 value of (M=1.85) were that the organization had perform to small extent using incineration
activates as one of the disposal method. This finding seems consistent with the result obtained
from the key informant interview of the manager of logistics department in the company.
Thus, this implies that, second hand market or selling is one the disposal method and source
of income of the company, however, the company is poor in incineration and land filling
especially for those toxic and environments pollute material like burned oil drain from
thousands of construction equipment.

4.5. Drivers of reverse logistics activities

4.5.1. Economic Motive
Organization performs reverse logistics mainly because of the profit, obligatory forces or social
pressure. According to this classification, the drivers are named as economics, legislation and
corporate citizenship (de brito and dekker, 2004). Some of the main attributes related to
economics are decreasing the cost of new raw material, increasing in profitability & enhancing
stock availability, increasing in customer satisfaction & loyalty.

Table 4.10: Reverse Logistics Activities: Extent of Economic Motives affecting RL (n=59)
Extent of Economic motives to affect RL Responses
NA SE ME GE VGE Mean SD

Decreasing the cost of new raw

0 0 10 25 24 4.24 0.69
material,
Increasing in Profitability &enhance
0 0 15 21 23 4.14 0.67
stock availability
Increase in customer satisfaction and
0 0 28 17 14 3.76 0.63
loyalty
Note: NA=Not at all ; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent
Source: Own Survey, 2018

Thus, respondents were asked to mark each question as stated in table 4.10 and the data that
almost all of the respondents were of the opinion that the organization had perform to “great
extent” with mean value to all economic element like decreasing the cost of new raw material
(M=4.24), increasing in profitability & enhancing stock availability (M=4.14), and increasing in

37
 customer satisfaction, loyalty (M=3.76). Besides to this, the data obtained from interview with
logistic and maintenance manager explained that as business organizations the economic aspect
will take lion's share to increase interests in reverse logistics compare to social responsibility and
legislation. Thus, the finding result indicates that economic benefit is the major element or
deriving force to implement RL in Sur Construction PLC.

4.5.2. Enforcement of Legislation for recovering or disposal

The legislation driver refers to any jurisdiction indicating that a company should recover its
products or take them back (Peters 2009). For instance, producer responsibility laws, in the
European Union (EU), state companies are responsible for collecting and reusing their products
(Guide and Wassenhove, 2001).With this way of thinking, respondents were asked to indicate
the intensity of legislation in their company to implement RL and the results are presented below
in table 4.11.
Table 4.11: Reverse Logistics Activities: Extent of Legislation to affect RL (n=59)

Extent of Legislation to affect RL Responses

NA SE ME GE VGE Mean SD

Company manual or policy enforce

7 9 28 11 4 2.93 0.73
Government rule and regulation
13 29 11 5 1 2.18 0.96
Professional ethics
9 11 23 13 3 2.83 0.76

Note: NA=Not at all ; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent
Source: Own Survey, 2018

From the data in table 4.11, the respondents were of the opinion that the government rule and
regulations had contribute to small extent to enforce the company to recover/dispose its products
with mean value of (M=2.18). On the other hand, the respondent revel that the company manual
and policy with mean value of (M=2.93) and Professional ethics with mean value of (M=2.83)
had contribute to moderate extent to manage materials to reuse or disposal after once the material
reaches end of its life.

Thus, implies RL (recovery or dispose) was the issue and the responsibility of the companies and
professionals and government value was small in this case.

38
4.5.3. Social Responsibility
Results presented in table 4.12 show that, the extent of elements of social responsibility in
relation to RL implementation, as a result, respondents with mean value of (M=3.08) or
moderate extent were reveal that values or principles that an organization holds to be responsible
with RL (Social responsible) and equally (M=3.01) or moderate extent of respondent indicated
that establish image an environmentally responsible organization. Further, the secondary data
(company report) specified that the company participate in many social responsible activities like
material and financial support to support clubs, women associations‟ etc. Therefore, from this
result, one can conclude that, though, the company contributes a lot in social activates, the
respondents view revealed that the vision of the company not yet internalized to great extent
level in the angle of RL.

Table 4.12 Extent of Social responsibility to affect practicing RL (n=59)

Extent of Social responsibility to Responses
affect practicing RL NA SE ME GE VGE Mean SD

Values and principles that an

organization holds to be responsible 3 14 25 9 8 3.08 0.69
with RL
Establish image an environmentally
3 14 27 9 6 3.01 0.71
responsible organization.

Note: NA=Not at all ; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent
Source: Own Survey, 2018

4.6 Reverse logistics and its challenges

According to Min, Kim and Ha (2006) reverse logistics is by its very nature a complex
process and a specialized area of any supply chain. It does not matter what the product is, how
it is sold or who the customers are; every organization needs to focus on recovering the
maximum value from returns. However, this is not free of cost. It has problems which make

39
 difficult to implement RL for a company. So, what follows are some of the challenges
affecting the implementing RL for a company. Accordingly, the perception about challenges
to implement RL for the company was measured from the sampled respondents and the result
obtained is depicted in the table below

Table 4.13 Reverse Logistics Challenges: Extent of Challenges to implement RL (n=59)

Extent of Challenges to implement RL Responses
NA SE ME GE VGE Mean SD

Financial Barriers 3 28 9 11 8 2.88 0.74

High cost with reverse logistics 4 21 13 12 9 2.79 0.77
Return dynamics and forecasting complexity 7 3 35 8 6 2.96 0.72
Lack of expertise in reverse logistics 7 21 12 12 7 2.85 0.75
Top management commitment and style 2 9 11 20 17 3.69 0.63
Lack of functional/Departmental integration 4 5 37 7 6 3.10 0.69
Perception of product problem with quality 2 8 13 25 11 3.59 0.63
Poor communication and cooperation with
supply chain partners such as local 3 7 11 25 13 3.64 0.63
manufacturer

Note: NA=Not at all ; SE=Small Extent; ME=Moderate Extent; GE=Great Extent; VGE=Very Great Extent

Source: Own Survey, 2018

From the results of the above table 4.13, the majority of the respondents have expressed their
agreement that the great extent of challenges which the organization faced to implement RL were
top management commitment and management style to reverse logistics with mean value of
(M=3.69), poor communication and cooperation with local manufacturer had also a mean value
of (M=3.64), and respondent revealed that wrong perception to product quality manufactured
locally mean value of (M=3.59). However, respondent mentioned that internally lack of
integration among departments , return dynamics and forecasting complexity ,financial barriers ,
Lack of expertise in reverse logistics and high cost related to reverse logistics had moderate
extent or had mean value of (M=3.10) ,(M=2.96), (M=2.88), (M=2.85) and (M=2.79)
respectively. This implies that, the main challenge to implement RL in the company was
prioritized as top management commitment and management style, poor communication and
40
 cooperation with supply chain partners such as local manufacturer and perception of product
problems with quality respectively.

4.7. Mechanisms to improve reverse logistics

This section has questions related to mechanisms to improve reverse logistics considering in
inputs like Spare parts, tyre and lubricants. Accordingly, respondents were asked to reflect their
opinion from five options [1] Not at all up to [5] Very great extent and their responses were
summarized in the table stated below

Table 4.14. Reverse Logistics Improvement: Extent of elements to improve RL (n=59)

Responses
Extent of RL to improve Mean SD
NA SE ME GE VGE
Top management commitment to reverse
1 5 9 23 19 3.95 0.64
logistics
formation and engagement supply chain
partners as strategic partners in reverse logistics 1 4 10 27 17 3.93 0.64
(specially to local manufacturer)
Adopt appropriate technologies for reverse
6 15 21 9 8 2.97 0.65
logistics to perform
Conduct formal training in RL and attitude
2 9 13 27 8 3.50 0.63
change to local remanufacture products.
Outsourcing reverses logistics activities 7 23 12 8 9 2.81 0.81

Data in table 4.14 suggested by respondents indicates that, the a great extent methods that
supports to improve reverse logistics in this specific company is the top management
commitment to reverse logistics have a portion of (M=3.95) and formation and engagement
supply chain partners as strategic partners in reverse logistics (specially to local manufacturer
(M=3.93) and conduct formal training and attitude change to local products (M=3.50). however ,
moderate extent to the degree of adopt appropriate technologies for reverse logistics to perform
had a mean value of (M= 2.97) and outsourcing reverses logistics activities had a mean value of
(M=2.81). Additionally, from the result of interview questions, the logistic manager as well as
the maintenance manager highlighting that to adopt the RL in Sur Construction PLC with

41
existing central workshop (Garage) at Mekelle for both for machineries and trucks, what is
valuable to the company instead of formation new manufacturing workshop, it would be better to
polish or improve the negative the attitude or perception of employees to products manufactured
by local companies , second strength the week network or relationship with local potential
manufacture and last but not least, the attention of top management to consider RL as
conventional logistics is very vital.

From these findings, one can summarize that the main focus or game-changer to implement RL
in Sur construction PLC is the role and attention of top management, formation and
engagement supply chain partners as strategic partners in reverse logistics (specially to local
manufacturer) and avoid negative mindset of works to local products is critical.

42
 CHAPTER FIVE

SUMMARY FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS

5.1 Introduction

RL is relatively a new science compare to conventional or forward logistics and in general

research on reverse logistics is fundamental and provide economic significance and realize
environmental protection and make organization to be social responsible in their daily activities.
Sur Construction PLC is one of the largest and Grade one (GC-1) local construction company in
Ethiopia which has been massively involved in the construction of all kinds of Civil Engineering
Construction works and equipped with massive fleet size of heavy and light duty equipment‟s
and research like RL in this industry is very essential because it enhance competitive advantage
of the company by decreasing the cost of new raw material, increase business profitability &
enhance stock availability , increase in customer satisfaction, loyalty and make organization to
develop green image etc.

5.2 Summary of findings

Findings on the extent of returns, control and RL process

Thus, the finding obtained from questionnaire‟s and the key informant interviewees of logistics
and maintenance department heads of Sur Construction PLC regarding extent of return for used
materials, the company faces with large volume of end-of-life products (used products) that
generated from replaced spare parts, used tyres and packages and metal, however, there was no
any or small extent practice (M=1.47) to return used oil from machinery and trucks, Further, the
findings result depict that, the company perform activates like informal collection for used
materials, sorting/inspection, from angle of second hand market and reuse , however, weak
control or weak in utilizing official document for used materials during used return and issuance
and weak in recovering specifically remanufacturing (M=1.52).

43
Findings on RL activities

regarding logistics activates particularly remanufacturing, reuse and disposal the date explained
that the organization lacks own manufacturing workshop (M=1.47), weak bond and utilization
of local manufacturer (M=2.42), the perception of workforce (mechanics) towards local
products ( judge as poor quality) needs improvement, and poor in incineration and land filling
especially for those toxic and environments pollute material, however the company gain
economic advantage and means of disposal by commercialized used or end of life products in
second hand market and exercise the reuse activity of RL without setting quality standard for
reuse (M=1.39).

Findings on the drivers of reverse logistics activities

Literature and practice suggest that RL activities will soon be an obligation and not just an
option activity, accordingly, the finding data shows that the economic benefit such as
decreasing the cost of new raw material, increasing in Profitability & enhance stock availability
and increase in customer satisfaction and loyalty can be the great extent force to implement
reverse logistics, however, government role to enforce or to subsidize to recover or disposal
activities are small extent of (M=2.18). Likewise, the company contributes a lot in social
activates, however, the respondents view revealed that the vision of the company not yet
internalized to great extent level to recovery or proper disposal used materials from social
responsibility angle.

Findings on RL and its challenges

The main challenge to implement RL in the company was prioritized as top management
commitment and management style (M=3.69), poor communication and cooperation with
supply chain partners such as Local manufacturer (M=3.64) and perception of product
Problems with Quality respectively (M=3.59).

44
Findings on mechanisms to improve RL
From these findings, one can summarize that the main focus or game-changer to implement RL
in Sur Construction PLC is the role and attention of top management, avoid negative mindset of
works to local products and comprehensive plan RL with conventional logistics is critical.

5.3 Conclusion

Thus, from the finding result research made on Sur Construction PLC we can conclude that the
under mentioned points:-

From the finding one can conclude that the volume of replaced spare parts, used tyres , packages
and metal ,excellent in collection/organizing/ of used components , setting up second hand store,
sorting and inspecting with mindset up of disposal by selling, reuse or utilize from second hand
store as spare, has been a good opportunities to the organization to adopt full RL operation.

Researcher can conclude that sales of return material in second hand market was the current
exercise of the company related to RL to generate income and mean of disposal for used
materials, however, the company is poor in alternative means of disposal like incineration and
landfilling especially for used materials that have zero value, no remanufacturing activities and
no standard for reuse activities.

From the finding the researcher can concluded that Sur Construction PLC can be driven to RL to
gain economic benefits such as decrease the cost of new input material like spare parts, enhance
stock availability of materials, enhance profitability, increase customer satisfaction, gain
economic benefit from used material selling (Second hand market) and enhance profit margin of
the organization. Regarding social responsibility, the secondary data ( Company report) revealed
that the organization participate and contribute considerable amount of finance and materials to
different group of society like in to Sport clubs, women association etc. However, the
organization not well done specifically to the RL that is prevention the environment from
contamination from burned oil and waste like fuel and oil filters generated from thousand of

45
thousand equipment‟s specifically in projects. Moreover, government contribution in recovery
and disposal was small extent, company manual or policy and professional ethics as legislation
issue was reflected in the moderate extent. Therefore, from this the researcher can conclude that
the company will have future assignment to improvement social responsibility and to incorporate
as policy in the company manual (legislation) the issue of management of end of life materials.

Depending on the nature and various condition of the organization the challenge to implement
RL may vary one from the other, among the main challenges mentioned in the questioner
respondents revealed that top management commitment and management style, poor
communication and cooperation with supply chain partners such as local manufacturer and
perception of product Problems with Quality respectively are the main challenges of the
company to adopt RL.

5.4 Recommendation

From the findings result and conclusions the researcher recommends the under mentioned points
that will be serve as game changer in the organization to implement RL:-
As clearly indicated in the finding and conclusion, the top management commitment and
management posture problem of the organization would be solved, like conventional or forward
logistics, consider the significant contribution of RL in the competitive advantage of the
company and the management of Sur Construction PLC should incorporate RL in the
organizational structure either in level of department, division and service depending on job
evaluation with appropriate staff, clear job description, and job specification.

RL process like collection/organizing, sorting/inspection (with mind set up of sale) and gaining
economic advantage from sales of used materials are one and encouraging step to implement RL
in the organization, however, the researcher propose to the organization the sorting and
inspection step of RL Process should be followed with recovering step and actions to get more
benefit instead of direct disposal by sales, likewise, those used material that cannot be recover
and zero value or wastage, the company properly dispose either though incineration or land
filling and in order to establish image of environmental responsible organizations.

46
Last but not certainly the least, the remarkable recommendation related to RL adoption
specifically in remanufacturing is that, since the company is one of the largest local construction
company relatively with capacity of thousands of light and heavy duty construction equipment, it
is advisable that, primarily the company to possess central remanufacturing work shop for spare
parts and recapping machine for tyre at company level or to form strong bond with local
manufacture, besides, perform fundamental attitude change of workforce feeling local products
as poor quality and enhance utilization and enjoy benefits obtained from RL like reduce purchase
budget, purchase cost saving, enhance availability, shorter delivery time etc ,

5.5 Suggestion areas for further research

This research can be used as initial point for future researchers in the area of RL Specifically in
construction industries, additional, some of the suggested researches to be conducted for future
are:-

 Drain oil and recycling activities in construction equipment.

 Waste and disposal management in construction industries.

47
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 APPENDIX -A

Questionnaires

This questionnaire is designed to conduct a research on the topic “An Assessment on Reverse
logistics practices: the case of Sur Construction PLC‟‟ as a partial fulfillment for MA degree in
logistics and supply chain management. For the successful accomplishment of the study, your
response have key role by being used as valuable input for the study. The information that you
provide is strictly confidential and will be used only for academic purpose. Thus, you are kindly
requested to genuinely fill the questionnaire

QUESTIONNAIRE FOR SUR CONSTRUCTION PLC

Part 1: Personal information

1. What is your department in the organization _____________________________

2. Year of experience in the organization _____________________________

Below one year 1-5 years

5 and above

3. Level Of Education

Certificate BA/BSc

Diploma MA/MSc

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Part 2 A: Extent of returns, control and RL process.

4. Indicate the extent to which your organization has generated for the understated
mentioned returns from inputs like Spare parts, tyre , lubricants ,packages and others.
There are five options to answer here. 1 stands for “Not at all”, 2 for “Small extent”, 3
for “Moderate extent”, 4 for “Great extent” and 5 for “Very great extent”. Please put
check mark “” on the box provided that reflect your idea

Volume/Extent of return by type 1 2 3 4 5

Replaced spare parts or components
Drained lubricants/Oil/ from
machineries/Trucks
Used Tyres
Packages (Drums ,containers,) & metal
scraps materials

Others please specify..........................................................................................

................................................................................................................................

5. Indicate the extent to which your organization has implemented way of returning and
controlling used material considering inputs like Spare parts, tyre and lubricants. There
are five options to answer here.1 stands for “Not at all”, 2 for “Small extent”, 3 for
“Moderate extent”, 4 for “Great extent” and 5 for “Very great extent”. Please put
check mark “” on the box provided that reflect your idea

Extent of Control system 1 2 3 4 5

Used materials return with proper
documents

Used materials issued with proper

documents

Others please specify..........................................................................................

................................................................................................................................

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 6. Indicate the extent to which your organization has implemented the following reverse
logistics Process considering inputs like Spare parts, tyre and lubricants. There are five
options to answer here.1 stands for “Not at all”, 2 for “Small extent”, 3 for “Moderate
extent”, 4 for “Great extent” and 5 for “Very great extent”. Please put check mark
“” on the box provided that reflect your idea

Reverse logistics Process 1 2 3 4 5

Collections/organizing
Inspection & Sorting for sales purpose
Recovering (Remanufacture)

Recovering (Reuse)
Redistribution/Utilization for recovered
products.

Others please specify..........................................................................................

..............................................................................................................................

Section B: reverse logistics activities

7. Indicate the extent to which your organization has implemented for the understated
mentioned Reverse logistics activates considering inputs like Spare parts, tyre and
lubricants. There are five options to answer here. 1 stands for “Not at all”, 2 for “Small
extent”, 3 for “Moderate extent” , 4for “Great extent” and 5 for“Very great extent”.
Please put check mark “” on the box provided that reflect your idea

Remanufacturing 1 2 3 4 5
Set up remanufacturing workshops
Set up warehouses for storage of used
parts
the organization has network linkage with
Local Manufacture
Positive perception to local manufacturing
products in terms of quality.

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 Reuse
Set quality standards for reuse
Inspecting and sorting for reuse
Capacity availability for re use
Disposal exercise for used or waste
materials
Land filling for waste
Incineration for waste
Direct sales /Second hand market/ for
used

Others please specify..........................................................................................

................................................................................................................................

Others please specify..........................................................................................

................................................................................................................................

SECTION C: Drivers of reverse logistics activities

8. Indicate the extent to which your organization level of practicing the reverse logistics has
affected the following performance indicators. Considering inputs like Spare parts, tyre
and lubricants. There are five options to answer [1] Not at all [2] Small extent [3]
Moderate extent [4] Great extent [5] Very great extent. Please put check mark “” on
the box provided that reflect your idea.

59
 Economic/Competitiveness 1 2 3 4 5
Decreasing the cost of new raw material,
Increase in Profitability &enhance stock availability
Increase in Customer satisfaction, loyalty
Legislation
Role of government rule and regulations
Company manual and policy

Professional ethics
Social responsibility
Values or principles that an organization holds to be
responsible with RL (Social responsible)
Establish image an environmentally responsible
organization.

Others please specify..........................................................................................

................................................................................................................................

SECTION D: Challenges reverse logistics

9. This section has questions related to challenges that are faced in practicing reverse
logistics considering inputs like Spare parts, tyre and lubricants. There are five options to
answer [1] Not at all [2] Small extent [3] Moderate extent [4] Great extent [5] Very great
extent. Please put check mark “” on the box provided that reflect your idea

60
 Challenges reverse logistics 1 2 3 4 5
Financial barriers on Reverse logistics
High cost related to reverse logistics
Return dynamics and forecasting complexity
Lack of expertise in reverse logistics
Top management commitment and management style
Lack of functional integration
Perception of product Problems with Quality
Poor communication and cooperation with supply chain
partners such as Local manufacturer

Others please specify..........................................................................................

................................................................................................................................

SECTION E: Mechanisms to improve reverse logistics

10. This section has questions related to mechanisms to improve reverse logistics considering
inputs like Spare parts, tyre and lubricants. There are five options to answer [1] Not at all
[2] Small extent [3] Moderate extent [4] Great extent [5] Very great extent. Please put
check mark “” on the box provided that reflect your idea
Improve reverse logistics practices 1 2 3 4 5
Top management commitment to reverse logistics
formation and engagement supply chain partners as strategic
partners in reverse logistics (specially to local manufacturer)
Adopt appropriate technologies for RL to perform
Conduct formal training in RL and attitude change to loacal
remanufacture products
Outsourcing reverses logistics activities
Others please specify..........................................................................................

................................................................................................................................

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 APPENDIX –B

Interview check list

Checklist for Key Informant Interview for logistics and maintenance department heads, etc in the
companies:

1. What kind of RL organization structure, system and policy/manual/ your company have?

2. What activates are performed in relation to recovery (reuse, manufacturing) especially

related to e tyre, spare parts and lubricants and who is responsible departments?

3. How much is its significant of return materials for used tyre and spare ?

4. How do you manage return and issuance of used materials?

5. What is your organization principle to environment protection and how does it manage
wastages created from replaced components parts, tyres and burned lubricants?

6. What is your attitude towards local manufacturing? Are you willing to pay for local
manufacturing products? Do you have remanufacturing work shop for spare, tyre etc?

7. What drivers to implement RL in your organization (economical, legislation and social

responsibility)?

8. What are the challenges to implement RL in your organization?

9. What do you suggest to the company to improve RL Practices?

62