Abstract
PurposeThe study aims to propose a circular economy-based reverse logistics (CERL) that emphasises the mediation effect of reverse logistics (RL) on sustainable resource commitment and financial performance.Design/methodology/approachThe structural equation modelling (SEM) approach has been applied to analyse the data acquired through the survey method that included 113 vendors of automotive supplies of the 1st and 2nd levels.FindingsThe results confirm that CERL acts as an essential intervening entity between resources and financial performance. The findings of the study have provided research and development (R&D) opportunities for the industries to find alternative revenue streams and generate profit from resource investment whilst upholding environmental standards through reverse logistic practices.Practical implicationsReverse logistic practices are the key components of a circular business model and a sustainable supply chain. The manufacturing companies need to explore critical enablers that can contribute to business productivity and financial growth.Originality/valueThe study has validated a CERL model that portrays the circular economy's resilient relationship with RL practices.
Highlights
The automotive industry is one of the leading contributors to industrial waste, affecting environmental and financial efficiency (Fernando et al, 2018)
Hypothesis H1a suggests that sustainable resource commitment will have a positive and significant impact on circular economy-based reverse logistics (CERL)-product return
H1b expected that sustainable resource commitment has a positive and significant effect on the CERL-product recovery
Summary
The automotive industry is one of the leading contributors to industrial waste, affecting environmental and financial efficiency (Fernando et al, 2018). The rising demand for automotive products has led to the rapid accumulation of vehicle waste and issues with recycling that eventually created environmental violations (Saraiva et al, 2020). RL, a sustainable business practice, is needed to assist a company in enhancing material utilisation and reducing cost (Chan et al, 2020). It helps establish practices with lowerenvironmental impact (CRR, 2015). The firms need to have sufficient capacity to respond to the demand for returnable products and avoid waste and pollution generation (de Campos et al, 2020)
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