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Knowledge sharing among supply chain members:
the benefits for circularity
Radoslav Škapa *
Department of Corporate Economics
Masaryk University
Lipová 41 a, 602 00 Brno, Czech Republic
E-mail: skapa@econ.muni.cz
* Corresponding author
Structured Abstract
Purpose – In the article, the circular economy is elaborated form the reverse flows
perspective, as these flows are the essence of the circular economy. The link between these
two areas is straightforward as both focus on transition from liner to circular business
environment: To make reverse logistics effective, companies need more than (just) the
refinement of reuse/repair/recycle activities, but a more thorough redesign of the production
system including product design and the whole business model redefinition is often
necessary.
In particular, the analysis uncovers managerial characteristics typical for companies that
include their first-tier supply chain members in their knowledge ecosystem.
Design/methodology/approach - The paper utilises the data collected in structured
interviews among representatives of companies operating of the Czech market. The
interviews covered multiple topics ranging from general management issues to circularity-
specific areas such as general business views and motivation, and diverse aspects of
management system For this exploratory research aim, the inferential statistics were
employed: besides frequencies, the Mann-Whitney tests and bivariate correlations were
calculated for scales and dichotomies variables.
Originality/value – The analysis revealed managerial attitudes and practices, which are
related to the intensity of knowledge sharing with the business partners; with the first-tier
supply chain members. In other words, based on the perceived level of knowledge diffusion
across a company, its customers, and suppliers, we identified typical features of
management systems in companies that put effort into boosting their knowledge ecosystem.
First, these companies are more integrated (internally and externally). The multiple
indicators suggest that companies boosting the knowledge diffusion in the supply chain
also take slightly different actions in tactical and operational level as expressed by planning
activities. The ambitions for circularity (as expressed by the motivation for reverse
logistics) are not so much solely focussed on marketing motives such as customers loyalty,
satisfaction, or image, but their aim is more shifted towards value creation (out of reverse
flows) and (environmental) legislation compliance. These companies often believe that
reverse flows are useful/necessary to deal with, which is not always the case in companies
in general.
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Finally, the statistic calculations identified that knowledge sharing has no apparent link to
company size, manufacturing/service affiliation, but it is more intensive in companies that
are closer to end customers, i.e. in downstream supply chain members.
Practical implications – The findings of exploratory nature provide insight into
relationships and mechanisms in companies that share their circular economy related
knowledge with their suppliers and direct customers. Based on perceived company
performance, it provides support for the economic rationality of knowledge sharing in the
area of reverse flows.
Keywords – circular economy, reverse flows, knowledge sharing in the supply chain,
empirical research, secondary data
Paper type – Academic Research Paper
1 Introduction
The transition from linear to circular economy is a complex task requiring a redefinition
of business models as well as theoretical concepts and frameworks. The area of logistics
belongs to the core of domains that are affected by the transition; however, the theoretical
interconnection between the circular economy and (much more elaborated concept of)
SCM has not been well developed (Homrich et al., 2017).
The paper put stress on one particular area in circularity - on reverse flows and their
logistics and management. As the concept of reverse logistics is older than the circular
economy initiative, it is natural that the circular economy is not among factors identified as
a driver for reverse logistics in the published research papers. Nevertheless, reverse
logistics is accepted as an essential tool, as an environmental initiative, that may close the
material loop in supply chains (Govindan and Bouzon, 2018) and in this way it is essential
for the circular economy.
In other words, the paper approaches the circular economy by focusing on reverse flows
specifically. Obviously, this is a less complex view; still, the coverage of related issues is
wide: besides product design issues aiming to maximize value creation over the product`s
lifecycle and its after use (Genovese et al., 2017), the problem of multiple parties
involvement and governance in establishing closed loop supply chain (Tseng et al., 2017),
are just examples. The papers aim is to identify such company's attributes that are related
to external knowledge sharing to answer the question of what is typical in companies
sharing knowledge with suppliers and customers.
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2 Data and methods
The paper utilizes the data, which was collected by the department the author is
affiliated and which was aimed at the understanding of managerial approaches of Czech
companies to improvement initiatives and processes. In this way, the presented analysis
belongs to the secondary data research, as it interprets a subset of variables relating to areas
specified below.
The original data were collected through personal, structured interviews with the
companies` representatives (top and middle management; operations specialists). As the
questions asked for the data that companies usually do not measure, collect, and reprocess,
the answers are the statements of informants. That was the only source of information – no
financial or any other quantitative data were used. The quick overview of sample structure
containing 166 companies is in Tab 1.
Tab 1. Sample structure
Company size: small
middle
large
69%
25%
6%
Industry: services / manufacturing 32 / 67%
ISO 9001/9004 certification 38 %
ISO 14001/ EMAS certification 18%
The questions in the original survey were adopted from papers of de Brito and Dekker,
(2003), Jack, Powers, and Skinner (2010), Mollenkopf and Closs (2005), Rogers and
Tibben-Lembke (1998).
Methodologically, the paper explores diverse aspects of the company’s management
system using statistical tools: the most variables are measured on ordinal level (seven-point
scales). Therefore the analytical part relays on Spearman rank correlations and Chi-square
tests in a lesser extent. The calculations were done in SPSS v24 and MS Excel 2016.
The main variable, which measured the cooperation of companies with its business
partners, was then related to variables reflecting the motivation, barriers, and internal
processes. Its distribution is apparent from Fig 1. This variable has no relationship to
companies size or companies industry affiliation (measure on manufacturing/service level
only).
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Figure 1: Distribution of Knowledge management 1st-tier integration
3 Findings
The general view on the strategic role of reverse flows is apparent from Tab 2. The
mean values (calculated on positively designed scale 1 - 7) give evidence about a slightly
above-average role of reverse flows in terms of usefulness, if we accept 3.5 as cut point.
The data about innovativeness in the sphere of reverse flows is more impressive: the mean
value of 5.03 and 4.4 suggest that companies are intensively trying to optimize/innovate
the reverse flow management.
For companies sharing the knowledge with business partners, the above approaches are
even more intensive as suggested by significant correlation with the Role of reverse
logistics (first line in Tab 2) and Changes in approach to reverse logistics in the last 5 years
(the effectiveness of reverse logistics would fit here too if we accept the 1-sided
significance).
Tab 2. The general perception of reverse flows
Variables related to knowledge sharing Spearman rho mean
Role of reverse logistics (useless vs. very necessary) 0.227** 3.982
The effectiveness of reverse logistics (causing high
losses vs important competitive advantage) 0.131 3.920
Management approach to reverse logistics
(conservative vs. innovative) 0.106 5.036
Change in approach to reverse logistics in the last five
years (no vs substantial change) 0.237** 4.406
Note: ** Correlation is significant at the 0.01 level (2-tailed); * Correlation is
significant at the 0.05 level (2-tailed).
0,0
5,0
10,0
15,0
20,0
25,0
30,0
1,0 2,0 3,0 4,0 5,0 6,0 7,0
Knowledge management 1
st
-tier integration
(positive scale)
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Building on the previous research, we proposed ten business drivers/motives, which
might be relevant for companies then thinking about reverse flows. The list of them in Tab
3 is sorted in decreasing way indicating that in general, the main motivation is related to
marketing issues and societal aspects such as fulfilling the legislation requirements and
conduction of CSR are weaker factors. Speaking about companies sharing the knowledge
with the partners, we see some specific relations: in terms of correlation coefficient (and
significance), the knowledge sharing is the most closely related to different drivers; it is
value retrieval, legislation, and CSR (with some distance). Value retrieval (and CSR to a
certain extent, depending on the interpretation of CSR and its real practice), can be
interpreted as more circular thinking.
Tab 3. Overview of motivation for reverse flows
Drivers for reverse flows management Rho Mean
Customers’ satisfaction 0.245** 5.94
Customers’ loyalty 0.244** 5.765
Image 0.211** 5.337
Differentiation from competitors 0.186* 4.789
Cost reduction 0.285** 4.735
Productivity increase 0.193* 4.582
Differentiation from competitors 0.276** 4.277
Value retrieval 0.386** 4.021
Legislation 0.365** 3.909
Corporate social responsibility 0.292** 3.581
Note: ** Correlation is significant at the 0.01 level (2-tailed); * Correlation is
significant at the 0.05 level (2-tailed).
Further analysis focused on sources of innovation for companies – both product and
process innovations. The internal companies’ resources (R and D departments, marketing,
quality departments etc.) are the main innovation sources as expressed using several scale
questions. One interpretation of the specifics in companies sharing the knowledge is that
slightly more attention is also given for fewer importance sources like unaccepted warranty
returns, unsold product quantities, unsystematic complaint collection. In this way the
approach of these companies is more diversified – they probably try to learn from any
available data, not just relying on internal professionals.
Finally, the internal management system was tested for a relationship to external
knowledge sharing. In the case of dichotomous variables, the Mann-Whitney test was
applied.
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Tab 4. Sources of innovation for companies
Innovations sources Rho mean
internal corporate resources 0.062 4.64
customers 0.152 4.22
competitors 0.167* 3.52
suppliers 0.181* 2.87
returned warranty product - accepted 0.147 3.40
returned warranty product - unaccepted/refused 0.202** 2.29
customers complaint collected systematically 0.151 3.69
customer complaints collected by employees unsystematically 0.205** 3.51
other unsystematic resources, (e.g.) customer online reviews 0.098 2.76
quantities of unsold products 0.272** 2.96
waste 0.188* 2.32
Note: ** Correlation is significant at the 0.01 level (2-tailed); * Correlation is
significant at the 0.05 level (2-tailed).
One block of question on reverse flow planning is summarized in Tab 5 – each line
shows the presence of the topic (reverse flows) in a particular planning level (the column
“yes”). The most typical level dealing with reverse flows is the operational, followed by
strategic plans. The relationship to knowledge sharing was found in tactical and operational
plans.
Tab 5. Reverse flows planning
Level of planning Mann-
Whitney U
P-value “yes” in %
Corporate strategy plan 2923.5 0.265 54.9
Functional/departmental strategy plans 2667 0.102 41.7
Tactical plans 2388 0.003 50.9
Operational plans 1928 0.001 68.3
No plan – presence of ad hoc decisions 2517 0.063 41.9
There is no relationship to ICT support for reverse flow, ISO 9001/14001 certification
and the existence of a specialized department for reverse flows (Tab 6).
Tab 6. Diverse management system aspects
Other management system aspects Mann-
Whitney U
Sig. “yes” in
%
ICT support for reverse flow 2753 0.075 47.6
ISO 9001 certification 3018 0.574 62.0
ISO 1004 certification 2045 0.945 81.3
Specialized department for reverse
flows
2201 0.841 78.7
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The cross-functional integration (relating to the process management approach) was
divided into five aspects – internal one, the integration for reverse flows processes,
integration for customers/suppliers and end-customers, which is relevant if the company is
not final product produced, or/and if there are some intermediaries in the distribution.
As it might be expected, all the above integration areas have significant relationships to
knowledge sharing, out of which the internal integration is the strongest (both corporate-
wide and reverse flows specific). The last line in table 6 suggests that knowledge sharing
is more intensive in companies that are closer to its final customers.
Tab 6. Measures of integration
Management system features Rho mean
Corporate-wide integration across functions 0.340** 4.2
Cross-functional integration of reverse flows activities 0.291** 3.93
Integration with customers in the area of reverse flows 0.162* 3.91
Integration with suppliers in the area of reverse flows 0.227** 3.54
Direct (directness) relation to end-customers 0.169* 5.51
Note: ** Correlation is significant at the 0.01 level (2-tailed); * Correlation is
significant at the 0.05 level (2-tailed).
4 Conclusions
The intensity in knowledge sharing with business partners belongs to those attributes
that distinguish the companies in terms of their general strategic orientation (their view on
reverse flows in particular) and operational settings. As it was documented by many
relationships (identified statistically), the knowledge sharing is linked with circularity – the
different view on and the approach to reverse flows is documented by specific motivation
and more intense tactical and operational planning. The difference was also found in the
innovation sources – compared to whole research sample, the companies with intensive
knowledge sharing learn more from diverse sources – in relation to circularity, the reverse
flow (refused warranty products) as a source for innovation process is of relevance. The
link to integration was confirmed too, even though, this finding was expected. To the
contrary, no links were documented in the data in terms of ISO certification.
The study faces several limitations that need to be considered when assessing the
validity of the findings. First, the research sample is rather small. There is also a risk of
data distortion as a single informant approach was chosen (for a practical reason). As
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explained in the beginning, the most questions related to the non-monitored facts, so the
data were personal perceptions only; the interpersonal view, in this case, would be more
relevant here.
References
Brito, D. and Dekker, R. (2003) A Framework for Reverse Logistics (SSRN Scholarly Paper No. ID
423654), Rochester, NY: Social Science Research Network, available at:
http://papers.ssrn.com/abstract=423654 (accessed 19 April 2015).
Genovese, A.Acquaye, A.A., Figueroa, A. and Koh S.C.L (2017) “Sustainable supply chain
management and the transition towards a circular economy: Evidence and some applications”,
Omega, New Research Frontiers in Sustainability, Vol. 66, pp. 344-57.
Govindan, K,and Bouzon, M. (2018) “From a literature review to a multi-perspective framework for
reverse logistics barriers and drivers”, Journal of Cleaner Production, Vol. 187 , pp. 318-37.
Homrich, A.S., Galvão, G., Abadia, L.G. and Carvalho, M.M. (2017) “The circular economy
umbrella: Trends and gaps on integrating pathways”, Journal of Cleaner Production, Vol 175,
pp. 525-43.
Jack, E. P., Powers, T.L. and Skinner, L. (2010) “Reverse Logistics Capabilities: Antecedents and
Cost Savings”, International Journal of Physical Distribution & Logistics Management, Vol 40,
No. 3, pp. 228-46.
Mollenkopf, D. A., and Closs, D.J. (2005) “The Hidden Value in reverse logistics”, Supply Chain
Management Review, Vol. 9, No. 5, pp. 34-36.
Rogers, D.S. and Tibben-Lembke, R.S., (1999) Going Backwards: Reverse Logistics Trends and
Practices, Reverse Logistics Executive Council, Reno, Nev.
Tseng, M.-L., Tan, R. R., Chiu, A.S.F., Chien, C-F., and Kuo, T. C., (2017) “Circular economy meets
industry 4.0: Can big data drive industrial symbiosis?”, Resources, Conservation and Recycling,
Vol. 131, pp. 146–47.
Acknowledgement
This publication is based on the work conducted within the Resource-Efficient Circular
Product-Service-Systems, the European Union’s Horizon 2020 research and innovation
programme under grant agreement No 776577-2.
Authors’ Bibliographical Notes
Radoslav Škapa has been focusing on empirical research on reverse logistics for 15 years.
In his research activities and teaching, he further deals with supply chain management and
operations management. His articles were published in a couple of international journals.
