Forecasting Product Returns for Remanufacturing Operations

Driven by legislative pressures, an increasing number of manufacturing companies have been implementing comprehensive recycling and remanufacturing programs. The accurate forecasting of product returns is important for procurement decisions, production planning, and inventory and disposal management in such remanufacturing operations. In this study, we consider a manufacturer that also acts as a remanufacturer, and develop a generalized forecasting approach to determine the distribution of the returns of used products, as well as integrate it with an inventory model to enable production planning and control. We compare our forecasting approach to previous models and show that our approach is more consistent with continuous time, provides accurate estimates when the return lags are exponential in nature, and results in fewer units being held in inventory on average. The analysis revealed that these gains in accuracy resulted in the most cost savings when demand volumes for remanufactured products were high compared to the volume of returned products. Such situations require the frequent acquisition of cores to meet demand. The results show that significant cost savings can be achieved by using the proposed approach for sourcing product returns.     

Does the Entry of Third‐Party Remanufacturers Always Hurt Original Equipment Manufacturers?

Researchers and managers broadly agree that the entry of third‐party remanufacturers (TPRs) hurts original equipment manufacturers (OEMs) because of the cannibalization problem. Thus, OEMs should always try to deter the entry of TPRs. In this article, we present a contrasting view: Competing OEMs without remanufacturing capacities sometimes benefit from the entry of TPRs. The key feature of our model is that there exists a group of newness‐conscious consumers in the market who do not buy the remanufactured product regardless of the price, whereas a group of functionality‐oriented consumers (FOCs) may buy a remanufactured one at a low price. In a steady‐state‐period setting, we investigate how the number of TPRs affects the OEMs’ profits. We find that, from the perspective of two competing OEMs: (i) The entry of one or many TPRs may lead to a higher profit; (ii) The entry of many TPRs may be better than the entry of one TPR; and (iii) The impact of the entry of one or many TPRs may be reversed as FOCs’ willingness‐to‐pay for the remanufactured product increases.     

基于再制造的闭环供应链研究现状及发展

由于工业发展、环境恶化及资源短缺等因素,再制造闭环供应链越来越成为一个热点研究领域。本文从网络设计、回收渠道、定价与协调及库存管理四个方面,综述了再制造闭环供应链领域的研究现状。最后总结了其发展特点,并提出了关于再制造闭环供应链未来可能发展方向。     

Factors influencing a firm’s decision to conduct remanufacturing: evidence from the Thai automotive parts industry

This paper aims to investigate the key factors influencing the decision-making process of firms in conducting remanufacturing activities, using the Thai automotive parts as a case study. Our results show that on average, business feasibility is the most influential determinant driving the decision-making of firms, followed by areas of the firm’s strategic factors, and policy factors. In terms of individual factors, product maturity is ranked first as the most important factor for a firm to engage in remanufacturing activities, followed by financial aspects, availability of skilled workers and technical aspects. Policies related to trade, intellectual property rights and the environment are identified as the least crucial factors in affecting the decisions of firms. Characteristics of firms and products matter in ranking the factors influencing a firm’s decision to conduct remanufacturing.     

Developing a remanufacturing supply chain management system: a case of a successful truck engine remanufacturer in China

Abstract

With the yearly increase in end-of-life products, remanufacturing has been recognised as an effective approach to alleviate resource scarcity in China. However, uncertainties exist through a whole remanufacturing supply chain management (RSCM) system, especially for the supply of used products and the demand of remanufactured products. Such uncertainties bring big challenges for a remanufacturer to manage its supply chains. SINOTRUCK Jinan Fuqiang Power Co., Ltd. (JFP), the only one member of Production Engine Remanufacturers Association (PERA) in Asia, has produced remanufactured engines and parts for more than two decades. This paper describes the JFP and its RSCM system. After summarising experiences of JFP’s remanufacturing practices, the paper analyses challenges and then introduces possible solutions. The results show that JFP should make efforts in three areas which are (1) continuous technology development, (2) improvement of the RSCM system and (3) advertising and the continuous technology development is the core competitive factor for JFP.     

Models to explore remanufacturing as a competitive strategy under duopoly

Remanufacturing is a product recovery option that upgrades the quality of returns to “as-good-as-new” conditions. Remanufactured products cost less, and are sold with the same or better warranty as for new products. In this paper, we consider a duopoly environment with two manufacturers in direct competition selling their respective new products on the primary market. Specifically, we address the question: In case one manufacturer decides to remanufacture and sell remanufactured products on the price-sensitive secondary market, will it get a competitive advantage over the other manufacturer? We develop theoretical models for a single period and two periods, and show that under the stated assumptions, remanufacturing is almost always more profitable than when there is no remanufacturing. Although remanufacturing may cannibalize new product sales, the combined profitability and market share of the (re)manufacturer on account of new and remanufactured product sales improve over new product sales only. For the competitor, we get mixed results. In some situations, its profitability improves; in some others, it worsens. We also conduct sensitivity analyses with respect to the substitution parameters, price-sensitivity of the secondary market, rate of return of used products (cores), relative market shares of the manufacturers, and relative sizes of the primary and secondary markets. We conclude the paper with managerial implications and directions for future research.     

Take‐Back Legislation: Consequences for Remanufacturing and Environment

In the last two decades, many countries have enacted product take‐back legislation that holds manufacturers responsible for the collection and environmentally sound treatment of end‐of‐use products. In an industry regulated by such legislation, we consider a manufacturer that also sells remanufactured products under its brand name. Using a stylized model, we consider three levels of legislation: no take‐back legislation, legislation with collection targets, and legislation with collection and reuse targets. We characterize the optimal solution for the manufacturer and analyze how various levels of legislation affect manufacturing, remanufacturing, and collection decisions. First, we explore whether legislation with only collection targets causes an increase in remanufacturing levels, which is argued to be an environmentally friendlier option for end‐of‐use treatment than other options such as recycling. While increased remanufacturing alone is usually perceived as a favorable environmental outcome, if one considers the overall environmental impact of new and remanufactured products, this might not be the case. To study this issue, we model the environmental impact of the product following a life cycle analysis–based approach. We characterize the conditions under which increased remanufacturing due to take‐back legislation causes an increase in total environmental impact. Finally, we model the impact of legislation on consumer surplus and manufacturer profits and identify when total welfare goes down because of legislation.