Int. J.

Production Economics 140 (2012) 204211

Contents lists available at SciVerse ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Analysis of third party reverse logistics provider using interpretive

structural modeling
Kannan Govindan a,n, Murugesan Palaniappan b, Qinghua Zhu c, Devika Kannan d
a

Department of Business and Economics, University of Southern Denmark, 5230 Odense M, Denmark
PVP College of Engineering and Technology For Women, Dindugal 624708, India
c
School of Business Management, Dalian University of Technology, Dalian, China
d
Indian Institution of Industrial Engineering, Navi Mumbai, India
b

a r t i c l e i n f o

a b s t r a c t

Article history:
Received 26 October 2010
Accepted 30 January 2012
Available online 13 February 2012

Due to growing economic environment and the introduction of new technologies in marketing, another
topic of great interest to logistics today is the use of contract or third party services. In the complicated
business world, the company is involved in reuse, recycling, and remanufacturing functions using a
third party logistics provider which has an impact on the total performance of the rm. In the
development of the reverse logistics concept and practice, the selection of providers for the specic
function of reverse logistics support becomes more important. After scanning the surplus of literatures,
it was concluded that multiple dimensions and attributes must be used in the evaluation and selection
of 3PRLP.
The attributes play an important role in selecting a third party reverse logistics provider (3PRLP).
Interpretive structural modeling (ISM) methodology is adopted in this model, which can be used for
identifying and summarizing relationships among specic attributes for selecting the best third party
reverse logistics provider among the n 3PRLPs.
& 2012 Elsevier B.V. All rights reserved.

Keywords:
Supply chain management
Reverse logistics
Attributes
3PRLP
ISM

1. Introduction
The term supply chain represents the complete set of activities
involved in marketing, planning, purchasing, full manufacturing,
distribution, delivery process, and reverse logistics. Nowadays,
the supply chain plays a vital role in the value creation process.
Supply chain management recognizes the importance of, and
focuses effort on, achieving tight integration between the various
links of the chain. To be efcient, a supply chain must exploit
modern productivity techniques and approaches, for example JIT
purchasing, economic batch sizes, strategic inventory, reverse
logistics, third party logistics, etc.
Logistic management is termed as the detailed process of
planning, implementing, and controlling the efcient, cost effective
ow and storage of materials and products, and related information
within a supply chain to satisfy demand (CLM, 2004), and logistics is
recognized as the key enabler that allows a company to increase and
maintain its competitive advantage and ensures maximum customer satisfaction (Drucker, 1962).
Reverse logistics is the process of moving goods from their
typical nal destination to another point, for the purpose of

Corresponding author.
E-mail address: gov@sam.sdu.dk (K. Govindan).

0925-5273/$ - see front matter & 2012 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2012.01.043

capturing value otherwise unavailable, or for the proper disposal

of the products (Rogers and Tibben-Lembke, 2001; Dowlatshahi,
2000). Reverse logistics is practiced in many industries, and its
effective use can help a company to compete in all streams of
advantages. Many situations exist for the product to be placed in a
reverse ow, such as commercial returns, warranty returns, endof-use returns, reusable container returns, and others (Du and
Evans, 2008).
According to Andel (1997), effective reverse logistics is believed
to result in several direct benets, including improved customer
satisfaction, decreased resource investment levels, and reductions in
storage and distribution costs (Autry et al., 2000). Many manufacturers and retailers recognize the importance and consider the
outsourcing of reverse logistics (Du and Evans, 2008).
3PRLP selection and evaluation is one of the most critical
activities that commits signicant resources and impacts the total
performance of the rm. The attributes involved in the selection
and evaluation process may vary depending on the type of
product considered, and these attributes are often in conict with
one another. To enhance 3PRLP selection, the proposed 3PRLP
attributes are grouped into seven main attributes such as third
party logistics services (3PLS), reverse logistics functions (RLF),
organizational role (OR), user satisfaction (US), impact of use of
3PL (IU3PL), organizational performance criteria (OPC), IT Applications (IT), and 35 sub-attributes as shown in Table 1.

K. Govindan et al. / Int. J. Production Economics 140 (2012) 204211

205

Table 1
Attributes & sub-attributes (adopted from Kannan (2009)).
Attributes

Sub-attributes

Reference

Third Party Logistics Services

(3PLS)

Dowlatshahi (2000), Van and Zijm (1999), Kleinsorge et al.

Inventory Replenishment (3PLS1), Warehouse Management
(3PLS2), Shipment Consolidation (3PLS3), Carrier Selection (3PLS4), (1991), Gunasekaran et al. (2001), Davis and Gaither (1985),
Gupta and Bagchi (1987), Khoo and Mitsuru (2006), and Holguinand Direct Transportation Services (3PLS5)
Veras (2002)

Reverse Logistics Functions

(RLF)

Collection (RLF1), Packing (RLF2), Storage (RLF3), Sorting (RLF4),

Transitional Processing (RLF5), and Delivery (RLF6)

Organizational Role (OR)

Reclaim (OR1), Recycle (OR2), Remanufacture (OR3), Reuse (OR4), Meade and Sarkis (2002), Dowlatshahi (2000), Demir and Orhan
and Disposal (OR5)
(2003), and Schwartz (2000)

User Satisfaction (US)

Effective Communication (US1), Service Improvement (US2), Cost

Saving (US3), and Overall Working Relations (US4)

Mohr and Spekman (1994), Bensaou (1993), Monczka et al.

(1993), Gunipero (1990), Lynch (2000), Boyson et al. (1999),
Langley et al. (2002), and Andersson and Norrman (2002)

Impact of use of 3PL (IU3PL)

Customer Satisfaction (IU3PL1), Frequent Updating (IU3PL2),

Protability (IU3PL3), and Employee Morale (IU3PL4)

Razzaque and Sheng (1998), Hendrik et al. (2006), Lynch (2000),

Boyson et al. (1999), and Mohrman and Von Glinow (1990)

Organizational Performance
Criteria (OPC)

Quality (OPC1), Cost (OPC2), Time (OPC3), Flexibility (OPC4),

Customer Satisfaction (OPC5), and Service (OPC6)

Kim et al. (2004), Kwang et al. (2007), Andersson and Norrman

(2002), Lynch (2000), Boyson et al. (1999), Langley et al. (2002),
Stock et al. (1998), Kleindorfer and Partovi (1990), and Stank and
Daugherty (1997)

IT Applications (IT)

Warehouse Management (IT1), Order Management (IT2), Supply

chain planning (IT3), Shipment and Tracking (IT4), and Freight
Payment (IT5)

Dowlatshahi (2000), Van and Zijm (1999), Jing et al. (2006),

Scalle and Cotteleer (1999), Khoo and Mitsuru (2006), HolguinVeras (2002), and Jeffery and Ramanujam (2006)

Schwartz (2000), Dowlatshahi (2000), Jeffery and Ramanujam

(2006), Kaliampakos et al. (2002), Van Dijck (1990), and Stock
(1990)

Fig. 1. Operational life cycle of a product and reverse logistics location (adopted from Meade and Sarkis (2002)).

The proposed attributes which aid in evaluating 3PRLP are

interesting and become the objective of the building of a new
model using ISM. It can be used for identifying and summarizing
relationships among a specic variable that denes a problem or
an issue and provides us with a means by which order can be
imposed on the complexity of variables (Sage, 1977). The insight
from the model would help supply chain managers in strategic
planning to select the best 3PRLPs.
After the introduction, the remainder of this paper is organized
as follows. The literature review is given in Section 2. Section 3
describes the problem, and Section 4 presents a solution methodology. The application model (case study) is discussed in Section 5.
The result analysis and conclusion of the paper is presented in the
nal section.

2. Literature review
Many business groups have recently dened logistics for the
private sector. All of these denitions of logistics focus on the
organization of services and supplies and the movement of goods
from one point to another. Aghazadeh (2003) states that logistics

is the process of strategically managing movement and storage of

material or products and related information from any point in
the manufacturing process through consumer fulllment.
Over the last decade, companies only considered the forward
supply chain for maximizing their benet, but did not realize the
responsibility for their products after the product life span, which is
called reverse logistics. In logistics, reverse logistics is not a new
industrial practice, but it has recently received growing attention as
more companies are using it as a strategic tool to increase prot, to
avoid any wastage, and even to benet the customer relationship.
Rogers and Tibben-Lembke (1999) dene reverse logistics
as the process of planning, implementing, and controlling the
efcient, cost effective ow of raw materials and related information from the point of consumption to the point of origin for the
purpose of recapturing value or proper disposal. It is concerned
with issues such as reclaiming, recycling, remanufacturing, reuse,
take back, and disposal needs to be available for adequate service
requirements.
A complete supply chain system includes both forward logistics
and reverse logistics as shown in Fig. 1. Traditionally, management is
concentrated on improving forward logistics operations to enhance a
rms competitiveness. Recently, forward logistics operations also

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K. Govindan et al. / Int. J. Production Economics 140 (2012) 204211

subsequently increase reverse logistics activities, and thus it plays an

important role in an organizations success. Minahan (1998) stated
that typically, reverse logistics activities constitute 34% of a
companys total logistics costs. Companies who purchase reverse
logistics assistance from third party providers could reduce up to 10%
of their companys annual logistics costs. Reverse logistics can be
particularly crucial for e-commerce as the rate of returns from online
purchases can be as much as 50% of goods shipped through normal
logistics channels (Caldwell, 1999).
As mentioned by Krumwiede and Sheu (2002) in their paper,
Meyer (1999) indicates that the process of reverse logistics is also
becoming increasingly complicated. Many companies are unable to
handle the complex networking necessary to have an efcient
reverse logistics process. These companies are therefore outsourcing
all or part of the reverse logistics process to third-party providers.
Outsourcing has provided many third-party providers with a unique
opportunity to enter the reverse logistics market, since they have
many of the necessary resources to facilitate reverse logistics.
In his research, Aghazadeh (2003) identies the most effective
ways of choosing a third party logistics provider. By understanding the reasons for outsourcing of logistics services, 3PRLP can
provide insight into the benets sought and can provide focused
services. Sahay and Mohan (2003) argue that the major reasons
cited for usage of 3PL services include cost reduction (27 per
cent), strategic reasons (26 per cent), process effectiveness (24 per
cent), and lack of internal capability (11 per cent).
Usage of third party logistics services is a strategic decision and
hence it is necessary to perceive and to quantify the impact it has on
business performance (Sahay and Mohan, 2003). The purpose of
engaging in third party relations is seldom cost reduction alone, but
a combination of service improvements and efcient operations
(Skjott-Larsen, 2000).
Meade and Sarkis (2002) have identied that three choices can
be made with respect to the development of reverse logistics
functions: do nothing, develop an internal reverse logistics function,
or nd a third party reverse logistics provider and partner with
them. In developing a theory of reverse logistics, six operational
factors were identied by Dowlatshahi (2000) for classication
purposes: Cost/Benet analysis, Transportation, Warehousing, Supply Management, Remanufacturing/Recycling, and Packaging.
Based on the above literature, this paper presents a relationship among the attributes of 3PRLP with the help of a case study
using ISM, and the results are validated with appropriate analysis.
3. Problem description
This paper describes a case study from a company in the tire
industry that aims to show how it may choose a third party reverse
logistics provider as a partner from n possible providers. The aim of

the company is to select the third party reverse logistics provider

that best satises the goal, the seven attributes that the company is
trying to satisfy, and also the 35 sub-attributes. In order to select the
3PRLP, the company should identify the attributes and sub-attributes and their interactions for the 3PRLP development.
The basic conceptual 3PRLP selection process is shown in
Fig. 2; it illustrates that the used products returned by the
customers are rst collected by the best 3PRLP identied among
several alternatives. Then the company buys the collected product from the selected (best) 3PRLP. After that, the collected
product will undergo various reverse logistics operations before it
is used in the production process.
After developing the conceptual model, the most important
step is identifying the attributes and sub-attributes related to the
study. These attributes and sub-attributes are identied with the
help of literature review and the input of experts from the
company. Table 1 shows the attributes and sub-attributes related
to this 3PRLP study. The table is adopted from the study done by
Kannan (2009) in his earlier work using AHP.
4. Solution methodology
ISM is primarily intended as a group learning process, but can
also be used individually. The ISM process transforms unclear,
poorly articulated mental models of systems into visible, welldened models useful for many purposes (Sage, 1977; Kannan
et al., 2010). In this process, a systematic application of some
elementary notions of graph theory is used in such a way that
theoretical, conceptual, and computational leverage are exploited
to explain the complex pattern of contextual relationships among
a set of variables (Kannan et al., 2010).
The following paragraph summarizes the application of ISM in
various elds. Ravi and Shankar (2005), with the help of ISM,
analyzed the interaction among the barriers of reverse logistics.
Ravi et al. (2005) also used ISM to determine the key reverse
logistics variables, which improve the productivity and performance of computer hardware supply chain. Kannan and Haq
(2007) applied the ISM methodology to nd the interaction
between attributes and sub-attributes of the vendor selection
problem. Saxena et al. (1992) applied the ISM methodology for
modeling the variables of energy conservation in the Indian
cement industry and identied the key variables using direct, as
well as indirect, interrelationships among the variables. Sharma
et al. (1995) used the ISM methodology to develop a hierarchy of
action required to achieve the future objective of waste management in India. ISM can only act as a tool for imposing order and
direction on the complexity of relationships among the variables
(Ravi et al., 2005). It does not give any weightage associated with
the variables. The various step-by-step procedures of ISM are

Third party 1
Direct Reuse

Customer

Third party 2

Retailer

Remanufacturing
Collection

Manufacturer

Warehouse

.
.
.
.
Third party n

Plant
Recycling

Repair

Land filling
Fig. 2. Selection of best third party.

Redistribution

Reuse

K. Govindan et al. / Int. J. Production Economics 140 (2012) 204211

Step 1: List of attributes related to

3PRLP development

Step 2: Establish contextual

relationship (Xij) between attributes
(i j)

Step 3: Develop a Structural SelfInteraction Matrix (SSIM)

5. Application of model to the case illustration

Literature review

The objective of this research study is to illustrate the interactions between the attributes for the 3PRLP development using ISM.
The model has been applied to a tire manufacturing company in the
southern part of India and the company planned to improve the
quality of the returned product. Instead of purchasing the used
product from the single 3PRLP, the company planned to purchase it
from the best 3PRLP out of n alternative 3PRLPs.

Expert opinion

Step 4: Develop
Reachability Matrix

5.1. Structural Self-Interaction Matrix (SSIM)

Step 5: Partition the

Reachability Matrix into
different levels
Develop the Reachability
Matrix in its conical form

Remove transitivity from the

digraph

Step 7: Replace attribute

nodes with relationship
statements

Step 6: Develop digraph

Yes

Step 8: Is
there any
conceptual
inconsistency?
No

ISM methodology suggests the use of expert opinions based on

various management techniques such as brainstorming, nominal
technique, etc. in developing the contextual relationship among
the variables (Charan et al., 2008). Thus, for identifying the
contextual relationship among the interactions for the third party
reverse logistics providers attributes, experts from the industry
and from academia were consulted for the above work.
Four symbols used to denote the direction of relationship
between the attributes are given below (i and j)
V
A
X
O

attribute i will help to alleviate attribute j;

attribute i will be alleviated by attribute j;
attributes i and j will help to achieve each other;
attributes i and j are unrelated.

Represent relationship statement into

model for the 3PRLP development
attributes

For example
IT will help to alleviate the 3PLS (V);
RLF will be alleviated by IT (A);
US and IU3PL will help each other to improve the product (X);
OPC and 3PLS of the product are unrelated (O).

Fig. 3. Flow diagram for preparing ISM (Kannan et al., 2009, 2010).

shown in Fig. 3. The main aim of this work is to nd the individual

interactions of the attributes for the 3PRLP development in the
tire industry.
ISM can be appropriately employed as a tool under such an
individual interaction state of affairs because the basis of the
relationship between the attributes and the overall structure can
be extracted for the system under consideration.
Step-by-step procedure in the ISM methodology: (adopted
from Kannan et al., 2010)
Step 1:
Step 2:

Step 3:

Step 4:

Step 5:
Step 6:

Step 7:
Step 8:

207

Attributes for the system under consideration are listed.

Contextual relationship is established among
attributes with respect to which pairs of attributes
would be examined.
A Structural Self-Interaction Matrix (SSIM) is
developed for attributes, which indicates pairwise
relationships among attributes of the system under
consideration.
Reachability matrix is developed from the SSIM and
the matrix is checked for transitivity. Transitivity is
the basic assumption made in ISM; it states that if an
attribute A is related to B and B is related to C, then A
is necessarily related to C.
The reachability matrix obtained from Step 4 is
partitioned into different levels.
A digraph graph is drawn and the transitive links are
removed based on the relationship given in the above
reachability matrix.
The resultant digraph is converted into an ISM by
replacing attribute nodes with statements.
The ISM model developed in Step 7 is reviewed to
check for conceptual inconsistency and necessary
modications are made.

Based on this procedure, the values are as shown in Table 2.

5.2. Initial reachability matrix
The SSIM is transformed into a binary matrix, called the initial
reachability matrix. The rules for the substitution of 1 and 0 are
the following:

 If the (i, j) entry in the SSIM is V, then the (i, j) entry in the
reachability matrix becomes 1 and the (j, i) entry becomes 0.

 If the (i, j) entry in the SSIM is A, then the (i, j) entry in the
reachability matrix becomes 0 and the (j, i) entry becomes 1.

 If the (i, j) entry in the SSIM is X, then the (i, j) entry in the


reachability matrix becomes 1 and the (j, i) entry also

becomes 1.
If the (i, j) entry in the SSIM is 0, then the (i, j) entry in the
reachability matrix becomes 0 and the (j, i) entry also
becomes 0.

Table 2
Structural Self-Interaction Matrix (SSIM) for main attributes.
Factors

RLF

3PLS

IU3PL

US

OR

OPC

IT

IT
OPC
OR
US
IU3PL
3PLS
RLF

A
V
O
O
A
V
-

V
O
A
V
V

V
O
V
X

V
V
O

V
V

208

K. Govindan et al. / Int. J. Production Economics 140 (2012) 204211

Table 3 shows the initial reachability matrix for main attributes.

The initial reachability matrix for the main attributes is derived from
the SSIM by substituting the concerned binary values.
5.3. Final reachability matrix

Table 4 shows the nal reachability matrix for main attributes.

Table 5 shows the nal reachability matrix with driving power
and dependence for main attributes.

5.4. Level partitions

The nal reachability matrix for the attributes is obtained by

incorporating the transitivity. It is a basic assumption made
in ISM.
It states that
If Attribute 1 is related to 2, and
Attribute 2 is related to 3,
then criterion 1 is necessarily related to 3.

Table 3
Initial reachability matrix for main attributes.
Factors

IT

OPC

OR

US

IU3PL

3PLS

RLF

IT
OPC
OR
US
IU3PL
3PLS
RLF

1
0
0
0
0
0
1

1
1
0
0
0
0
0

1
1
1
0
0
1
0

1
1
0
1
1
0
1

1
0
1
1
1
0
1

1
0
0
1
1
1
0

0
1
0
0
0
1
1

The reachability and antecedent set for each attribute is

derived from the nal reachability matrix. The reachability set
for a particular variable consists of the variable itself and the
other variables which it may help to achieve. The antecedent set
for a particular attribute consists of itself and the other attributes
which may help in alleviating it. The intersection set for each
attribute is the intersection of corresponding reachability and
antecedent sets. If the reachability set and the intersection set are
the same, then that attribute is considered to be in level I and is
given in the top position in the ISM hierarchy (Kannan and Haq,
2007), meaning that this attribute would not help in alleviating
any other attribute above its own level. The rst iteration is
completed, classied to level 1, and discarded. The procedure is
repeated on the remaining attributes to determine the level II
attributes. These iterations are continued until the level of each
attribute has been determined and shown in Tables 68. The
identied levels aid in building the digraph and the nal model
of ISM.

5.5. ISM model

Table 4
Final reachability matrix for main attributes.

Factors

IT

OPC

OR

US

IU3PL

3PLS

RLF

IT
OPC
OR
US
IU3PL
3PLS
RLF

1
1n
0
0
0
1n
1

1
1
0
0
0
0
1n

1
1
1
1n
1n
1
1n

1
1
1n
1
1
0
1

1
1n
1
1
1
1n
1

1
1n
1n
1
1
1
1n

1n
1
0
1n
1n
1
1

From the nal reachability matrix, the structural model is

generated. If the relationship exists between the attributes j and i,
an arrow pointing from i to j shows this. This resulting graph is
called a digraph. Removing the transitivity as described in the ISM
methodology, the digraph is nally converted into the ISM model
as shown in Fig. 4.

Table 7
Level partition-iteration 2 (main attributes).

Final reachability matrix values obtained by incorporating the transitivity.

Table 5
Final reachablity matrix with driving power and dependence for main attributes.
Factors

IT

OPC

OR

US

IU3PL

3PLS

RLF

Driving power

Rank

IT
OPC
OR
US
IU3PL
3PLS
RLF
Dependence
Rank

1
1
0
0
0
1
1
4
III

1
1
0
0
0
0
1
3
IV

1
1
1
1
1
1
1
7
I

1
1
1
1
1
0
1
6
I

1
1
1
1
1
1
1
7
I

1
1
1
1
1
1
1
7
I

1
1
0
1
1
1
1
6
II

7
7
4
5
5
5
7

I
I
IV
III
III
III
I

Factors

Reachability set

Antecedent set

Intersection set

Level

IT
OPC
US
RLF

IT,OPC,US,RLF
IT,OPC,US,RLF
US,RLF
IT,OPC,US,RLF

IT,OPC,RLF
IT,OPC,RLF
IT,OPC,US,RLF
IT,OPC,US,RLF

IT,OPC,RLF
IT,OPC,RLF
US,RLF
IT,OPC,US,RLF

II
II

Table 8
Level partition-iteration 3 (main attributes) factors.

IT
OPC

Reachability set

Antecedent set

Intersection set

Level

IT,OPC
IT,OPC

IT,OPC
IT,OPC

IT,OPC
IT,OPC

III
III

Table 6
Level partition-iteration 1 (main attributes).
Factors

Reachability set

Antecedent set

Intersection set

IT
OPC
OR
US
IU3PL
3PLS
RLF

IT,OPC,OR,US,IU3PL,3PLS,RLF
IT,OPC,OR,US,IU3PL,3PLS,RLF
OR,US,IU3PL,3PLS
OR,US,IU3PL,3PLS,RLF
OR,US,IU3PL,3PLS,RLF
IT,OR,IU3PL,3PLS,RLF
IT,OPC,OR,US,IU3PL,3PLS,RLF

IT,OPC,3PLS,RLF
IT,OPC,RLF
IT,OPC,OR,US,IU3PL,3PLS,RLF
IT,OPC,OR,US,IU3PL,RLF
IT,OPC,OR,US,IU3PL,3PLS,RLF
IT,OPC,OR,US,IU3PL,3PLS,RLF
IT,OPC,US,IU3PL,3PLS,RLF

IT,OPC,3PLS,RLF
IT,OPC,RLF
OR,US,IU3PL,3PLS
OR,US,IU3PL,RLF
OR,US,IU3PL,3PLS,RLF
IT,OR,IU3PL,3PLS,RLF
IT,OPC,US,IU3PL,3PLS,RLF

Level

I
I
I

K. Govindan et al. / Int. J. Production Economics 140 (2012) 204211

Organizational Role
(OR)

Impact of Use of Third

Party Logistics
(IU3PL)

209

Third Party Logistics

Services (3PLS)

User Satisfaction
(US)

Reverse Logistics
Function (RLF)

Information Technology
Applications (IT)

Organizational
Performance Criteria
(OPC)

DEPENDENCE

Fig. 4. ISM-based attribute model for third party reverse logistics provider selection.

II

III

Cluster

Cluster

I
Cluster

IV
Cluster

driver-dependence diagram shown in Fig. 6 provides some valuable

insights into the relative importance and the interdependencies
among the attributes as follows:

 An OPC is a very signicant attribute.

 From the ISM model, it is observed that IT Applications, IU3PL,

DRIVING POWER
Fig. 5. Driving power and dependence diagram.

5.6. MICMAC analysis (adopted from Kannan and Haq (2007))

The objective of the MICMAC analysis is to analyze the driving
power and the dependence power of the attributes. Based on the
study, the attributes are classied into four clusters autonomous,
dependent, linkage, and driver/independent and are shown in Fig. 5.





 The rst cluster consists of the autonomous attributes which
have weak driving power and weak dependence.

 The second cluster consists of the dependent attributes which

have weak driving power and strong dependence.

US, OR, RLF, 3PLS, and OPC are at the bottom level of the
hierarchy implying higher driving power. Therefore, rms should
focus on these factors.
There are no autonomous attributes seen in the driver-dependence diagram (shown in Fig. 6). The absence of these attributes
brings light to the fact that all of the attributes considered do
inuence the third party reverse logistics in the tire supply chain.
It is also observed that there are no dependent factors.
The management should place high priority on tackling the
attributes which have a high driving power and thus possessing the capability to inuence other attributes, which are
shown at the bottom level of the ISM (shown in Fig. 6).
To select these attributes, a comprehensive strategic plan for
selection of 3PRLP should to be initiated to achieve success.
Despite the fact that the ISM model developed in this work is
for the attributes prominently seen in the tire manufacturing
company, some generalization of the results is still possible.

 The third cluster consists of the linkage attributes which have

strong driving power and strong dependence.

 The fourth cluster consists of the driver/independent attri-

7. Conclusion

butes which have strong driving power and weak dependence.

From Fig. 5, we observe that an attribute with a very strong
driving power called the key variable falls into the cluster of
independent or linkage attributes. The driving power and dependence
of each of these attributes are calculated from Table 5, and subsequently the diagram is constructed as shown in Fig. 6. From Table 5 it
is observed that the OPC attribute has a driving power of 7 and a
dependence of 3. Therefore, as shown in Fig. 6, it is positioned at a
place corresponding to a driving power of 7 and a dependency of 3.

6. Result and analysis

The attributes hindering the selection of 3PRLP considerably
challenges both the managers and policymakers in industries. Some
of the major attributes have been highlighted here and put into an
ISM model to analyze the interaction between the attributes. These
attributes are used for the success in the selection of 3PRLP. The

A growing number of companies have begun to realize the

importance of implementing integrated supply chain management
since they are under pressure for lling customers orders on time as
well as for efciently taking back returned products from customers
after the sale. 3PRLPs are playing an increasing role in supporting
such integrated supply chain management using sophisticated
information systems and dedicated equipment. Thus, the objective
of this work is to analyze the interaction among the attributes and
level attributes using Interpretive Structural Model (ISM).
A major contribution of this work lies in the development of
linkages among various attributes of a third party reverse logistics
provider through a single systemic framework. The utility of the
proposed ISM methodology in imposing order and direction on
the complexity of relationships among elements of a system assumes
tremendous value to the decision makers.
In this work, using the ISM methodology, a model to analyze
the relationship among the attributes of 3PRL in the tire manufacturing industry is developed. However, this model has not been

K. Govindan et al. / Int. J. Production Economics 140 (2012) 204211

DEPENDENCE

210

7
6
5
4
3
2
1

OR

IU3PL,3PLS
US

RLF
IT
OPC

DRIVING POWER
Fig. 6. Driving power and dependence diagram for main attributes.

statistically validated. Structural Equation Modeling (SEM), also

referred to as the linear structural relationship approach, has the
capability of testing the validity of such hypothetical models
(Kannan et al., 2010). Thus, this approach can be applied in future
research to test the validity of this model. When comparing ISM
and SEM, it is worth mentioning that although SEM has the
capability of statistically testing an already developed theoretical
model, it cannot develop an initial model for testing. ISM, on the
other hand, has the capability to develop an initial model through
managerial techniques such as brainstorming, nominal group
techniques, etc. In this sense, ISM is a supportive analytic tool
for the situation discussed.

Acknowledgments
The rst author is supported by a Grant from Forsknings- og
Innovationsstyrelsen for The International Network programme
(1681448) and the third author is supported by a Grant from National
Science Fund for Distinguished Young Scholars (71025002) and
National Key Basic Research Program of China (973 Program,
2011CB013406).
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