The purpose of this paper is to examine the changes in governance structures that evolved as reverse logistics systems were developed. The UK car crash repair sector was used as a case study.

The value‐chain governance framework proposed by Gereffi et al. was used to assess changes in governance systems as firms developed a reverse logistics flow and three transactional variables were used to determine how supply chains are governed and change. Both forward and reverse product flows for two supply chains were assessed to determine what changes in governance of the supply chain took place as reverse logistics operations developed.

The authors' analysis documents how relationships between the focal firm and other supply chain members altered as the new reverse logistic system developed. The modular governance structure that developed through increased supplier capability coupled with higher levels of knowledge and information codifications were shown to be important factors in the establishment of a reverse logistics system. Supplier capability, knowledge codification and transaction complexity were found to be moderating variables which can enrich the traditional models on buyer‐supplier relationships based on trust and ongoing commitment.

Reverse logistics continues to be a major issue for business. Our findings provide an insight into some of the governance and knowledge management developments as focal firms respond to growing pressures to re‐use materials and parts. In total, six factors were identified which can assist firms in assessing their current governance structures and the development of a pathway for implementation of reverse logistics.

Little research has been conducted into supply chain governance structures needed to manage the new reverse logistics systems for the re‐use, recycling and repair of products.