Reverse logistics and informal valorisation at the Base of the Pyramid: A case study on sustainability synergies and trade-offs

Highlights

• Exploring supply chain issues in a BoP setting.

• Reverse logistics efforts potentially mitigate ecological issues.

• Informal valorisation potentially improves the livelihood of poor populations.

• Trade-offs in sustainability occur and are discussed.

• Enhancing BoP research through an otherwise rare example of a critical case.

Abstract

Despite a growing body of research on business with and for the Base of the Pyramid (BoP), ecological aspects of such businesses have not been considered adequately in the literature. We take a holistic view on the social and environmental consequences of a specific case of a BoP business. Water sold in plastic sachets in Africa is a typical BoP product with potentially negative ecological impact caused by littering. Reverse logistics activities could mitigate these consequences. At the same time, such activities provide opportunities for poor people to make a living from collecting waste. This in-depth single case study sheds light on the opportunities and disadvantages of informal valorisation in reverse logistics activities from both social and environmental perspectives. The case offers insights into the potential and actual trade-offs in BoP activities in different pillars of sustainability, which are otherwise rarely discussed in academic literature.

Introduction

Recent research on the so-called ‘Base of the Pyramid’ (BoP)—the bottom tier of the world income pyramid and thus those people living in extreme and moderate poverty—claims to see the poor not only as consumers but also as active parts of the value chain, thus potentially advancing social sustainability through development. A holistic understanding of ‘BoP 2.0’ (Simanis, Hart, & Duke, 2008), or ‘integrated BoP’ (Hahn, 2009), attempts to integrate the population at the BoP in earlier phases of the supply chain to address issues of economic well-being and social improvements for the poor population. However, apart from a few exceptions (e.g. Gold et al., 2013, Hart, 2011, Kandachar and Halme, 2008), the perspective of the ecological environment has been neglected in most BoP articles until now (Kolk, Rivera-Santos, & Rufin, 2014). Similarly, supply chain issues at the BoP are also rather absent from academic discussions (for recent exceptions, see, e.g. Gold et al., 2013, Hall and Matos, 2010, Sodhi and Tang, 2011).

The present paper aims at filling these voids by, first, exploring the reverse logistics (RL) value chain of portable drinking water distributed in so-called ‘water sachets’ (i.e. bagged water sold in small quantities of usually up to 500 ml to provide safe and affordable instant drinking water to the public) before, second, critically scrutinising the various sustainability-related outcomes of such a BoP project. To achieve this, we take a holistic and multidisciplinary view on the sustainability issues of a typical BoP supply chain; illuminate the ways of actively including the BoP population in the value chain and combine this with ecological aspects by considering RL as informal valorisation activities in detail. Most cases that aim to include the BoP usually focus on production or distribution aspects. The inclusion in this case, however, is in the reduction process of the product following the use phase. The concept of informal valorisation (IV), stemming from waste management research (Gunsilius et al., 2011, Scheinberg, 2011) emphasises the role of informal waste pickers who extract value from the end-of-life product. Against this background, we aim to explore the inherent complexity of sustainability by providing an in-depth examination of RL as part of the supply chain of a typical BoP product.

In early BoP research, the focus was often multinational enterprises (Kolk et al., 2014). In the present case, however, local industry associations, non-governmental organisations (NGOs) and politicians foster the BoP activities (see also Hahn & Gold, 2014), which helps to reduce the ecological impacts of the respective product by enabling reverse material flows through valorisation incentives for the BoP segment. However, while at first glance the valorisation opportunity involves considering the social dimension due to the inclusion of the BoP population, a thorough scrutinisation shows that successful poverty alleviation via this opportunity is not possible for systemic reasons that will be discussed throughout the paper. The case study offers a holistic and critical perspective of sustainability issues in BoP supply chains. We start by exploring the question of how the RL chain of water sachets is organised and then proceed by more specifically illuminating the question of potential sustainability trade-offs of IV at the BoP.

As such, we contribute to the growing BoP research stream by discussing the long-needed ecological perspective while integrating thoughts on social and economic aspects. In doing so, we follow Kolk et al.'s (2014) call for a better understanding of the trade-offs and tensions between the different sustainability dimensions, which again underlines the multidisciplinary approach of this study. Based on an abductive in-depth empirical case study, we provide a rare example of a critical case study in a field that has seen an abundance of best-practice examples which often lacked a critical perspective. From a conceptual perspective, we follow an interdisciplinary approach, introduce the idea of IV (and the broader issue of RL) to the BoP domain and thus advance our understanding of supply chains in developing countries. In this regard, we also provide a fresh lens on BoP ventures by extending the supply chain perspective to the end-of-life phases of specific BoP products.

To achieve these objectives, our paper is structured as follows: In Section 2, we introduce the RL and IV concepts, which serve as our conceptual lenses for analysing the present case study. Then, in Section 3, we describe the method used in our in-depth case study on the supply chains of water sachets in Ghana, especially in terms of data collection and analysis. In Section 4, we provide a detailed picture of the respective supply chain and illustrate our findings with a look at the actors involved before discussing our findings through the conceptual lenses of RL and IV. In Section 5, we illustrate potential influence from IV for BoP businesses. In this section, we also elaborate on the constraints and trade-offs of IV for sustainability at the BoP. Finally, we briefly conclude the paper.