When should an Original Equipment Manufacturer (OEM) remanufacture?

Master's Thesis, 2015

75 Pages, Grade: 7,5


Table of Contents

1. Introduction

2. Literature Review
2.1. Theoretical Background
2.1.1. Reverse Logistics and Closed-Loop Supply Chains
2.1.2. Definitions Remanufacturing, Returns and OEM
2.1.3. Remanufacturing Benefits
2.1.4. Remanufacturing Issues
2.2. Characteristics Influencing the Remanufacturing Decision
2.2.1. Product Characteristics
2.2.2. Internal Characteristics
2.2.3. External Characteristics
2.3. Conceptual Framework and Relevance

3. Methodology
3.1. Research Approach
3.2. Survey Design
3.3. Data Collection and Sample Descriptives

4. Analysis
4.1. General Returns Management and Recovery Options
4.2. Remanufacturing and Influencing Factors (Hypothesis Testing)
4.3. Ranking and Summary of Influencing Characteristics
4.4. Insights from Practitioners (Cases and Interviews)
4.4.1. Industrial Production Case: Production and Quality Assurance Staff
4.4.2. Automotive Case: Remanufacturing Specialists

5. Discussion

6. Conclusion

7. Managerial Implications

8. Limitations & Future Research



Appendix A: Descriptive Analysis Outputs

Appendix B: Hypotheses Testing Inputs and Outputs

Appendix C: Interviews

Appendix D: Survey (English Version)

Appendix E: Survey (German Version)

List of Figures

List of Tables

1. Introduction

Companies usually do not consider returns to be a source of revenue and neglect the handling of returns through a well-managed reverse supply chain, even though it can contribute to more sustainable processes and innovation(Nidumolu, Prahalad, & Rangaswami, 2009). The main focus is on improving the forward supply chain e.g. through resource and waste reduction and more efficient processes for the purpose of conforming to customer requirements(Rogers & Tibben-Lembke, 1999). The reverse logistics, as defined by Rogers and Tibben-Lembke (1999), is the flow from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal and is currently omitted by most companies. However, as mentioned by Blackburn, Guide, Souza, and Van Wassenhove (2004) the importance for firms to generate value from returning products is increasing due to the need to become more resource efficient and to have a positive environmental impact. Hence, companies should utilize the hidden remaining value and prepare themselves for closing the loop through the integration of reverse supply chain activities. A reason is the increasing rate of product returns due to growing global competition, shorter product life cycles, stricter environmental legislation and more tolerant take-back policies (Guide Jr., Harrison, & Van Wassenhove, 2003). Summarized, major drivers to get involved in reverse logistics are economic gains, legislation and corporate citizenship, which means that companies either profit from it, are legally required to or are socially motivated to engage in it (de Brito & Dekker, 2004).

Challenges of closing the loop can be encountered in the three main processes as identified by Geyer and Jackson (2004). Namely, the first is the acquisition process, due to limited access to end-of-life products. Second is the recovery process, due to limited economic or technically feasibility of reprocessing. Third is the remarketing or integration process, with regard to limited market demand for secondary outputs. Consequently, to successfully engage in reverse supply chain activities, companies need to ensure the right volume and quality of acquired products, then the adequate and most value retaining reuse should be secured, and lastly the market must be assured for the reused materials and products (Geyer & Jackson, 2004). The gains attained through managing these three processes and successfully implementing a reverse supply chain can then be categorized into sourcing, environmental, customer and informational value (Koppius, Ozdemir, & van der Laan, 2011).

The crucial part of recovery processes incorporates options, which differ in the level of disassembly, e.g., product, component or material level, and the quality, thereby the value retained. Besides the direct recovery and repair, remanufacturing represents the recovery option with the highest value retained, as it will receive the warranty equal to that of a new product (Ijomah, McMahon, Hammond, & Newman, 2007). As it not a common term and practice yet, the specifications, benefits and barriers have to be identified beside a clear definition. In the US market the remanufactured production grew by 15% to at least $43bn and therewith supported 180,000 full-time jobs in over 70,000 remanufacturing companies(Perella, 2014). Hence, the remanufacturing relevance increases, which can as well be derived from the fact that it was put on the agenda of the G7 summit (ReMaTec, 2015). However, before a company starts designing its reverse supply chain and starts to invest in recovery facilities or third party contracts, the current situation needs to be assessed. Moreover, the strategic decision whether an original equipment manufacturer (OEM) should engage in reprocessing needs to be carefully considered. This is in particular important for products whose material and energy savings are more important in the use than in the production phase, which would refer to old refrigerators(Souza, 2013).

The purpose of this thesis is to examine existing literature and to bridge the gap between research and practice. A framework of certain characteristics will give guidance to the following research question:

When should an original equipment manufacturer (OEM) remanufacture ?

Furthermore, the framework will be tested through empirical data to gain managerial insights of potential barriers and benefits. The focus is on industrial manufacturing companies, due to their challenge of long-term profitability and dependency on market prices. Since this raises the importance for a well-managed reverse supply chain that involves the re-usage of returns. Therefore, the contribution to theory will be the identification and combination of the most relevant existing factors influencing the decision of remanufacturing for OEMs, and on the other side empirical testing will contribute to practice.

First, the literature review provides relevant theoretical background and definitions. Second, the identified characteristics will be described and hypotheses derived. Third, the methodology with the research design and conduct will be depicted. Fourth, the collected data will be analysed and results concerning the framework testing provided. Finally, limitations and managerial implications will be discussed.

2. Literature Review

The literature review provides a theoretical background as well as the hypotheses and the conceptual framework. Existing academic literature and relevant definitions present the basis for this research and the framework.

2.1. Theoretical Background

The theoretical background presents existing literature and definitions in order to set up a general understanding. A summary on the subject of reverse logistics, closed-loop supply chains, returns management, and remanufacturing is given. Motivations, activities and roles are described and related to key problems, which should be addressed in the decision making of remanufacturing processes. Furthermore, general possible benefits and issues of remanufacturing are described.

2.1.1. Reverse Logistics and Closed-Loop Supply Chains

The traditional forward and the reverse chain have the planning, implementation and control of raw materials, in-process inventory, finished goods and the related information in common. However, the traditional forward chain, as defined by Rogers and Tibben-Lembke (1999), is the process from the point of origin to the point of consumption for the purpose of conforming to customer needs. This divergent downstream structure, from few supply points to numerous demand points, results in uncertainty on the demand side (Fleischmann, Bloemhof-Ruwaard, Dekker, van der Laan, van Nunen, & van Wassenhove, 1997).

In contrast the reverse logistics encompasses the processes from the point of consumption to the origin in order to recapture value or for a proper disposal. This leads to a convergent upstream structure from numerous sources to few demand points, and consequently large uncertainties in timing, quality and volume (Rogers & Tibben-Lembke, 1999). The term reverse logistics is used interchangeably with reverse supply chains, which includes the additional activities and which results in a closed-loop supply chain, when combined with the forward chain. Guide Jr. and van Wassenhove (2009) define closed-loop supply chain management as ‘the design, control and operation of a system to maximize value creation over the entire life cycle of a product with dynamic recovery of value from different types and volumes of returns over time’.

De Brito and Dekker(2004) propose a content framework with basic dimensions of closed-loop supply chains to analyse relations between drivers, processes and stakeholders (Figure 1).

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Figure 1: CLSC Dimension Framework adapted from de Brito and Dekker (2004)

Return reasons and origins can vary from manufacturing (e.g. raw material surplus or quality control returns) to distribution (e.g. product recalls or stock adjustments) to customer returns (e.g. warranty or end-of-use returns). Drivers to receive returns, include economic gains, legislative requirements and the socially motivated corporate citizenship. Besides the return reasons, the product type and its characteristics ranging from composition, to deterioration to use-pattern, are crucial information to assess the recovery options. These reprocessing options occur at different levels, namely product (repair), module (refurbish), component (remanufacturing), selective part (retrieval), material (recycling) and energy (incineration), and have in this order a decreasing retained value. In addition, one has to analyse the processes that are crucial to each of the recovery options, which are the collection, inspection, selection, sorting, recovery and redistribution. Finally, the stakeholders, who are forward supply chain actors, specialized reverse chain players and opportunistic players, and their respective roles, which are managing, executing or accommodating, need to be assessed in order to manage the whole process efficiently.

Overall, the described dimensions feature several potential influencing factors for decision making with regard to remanufacturing, which is the only fixed dimension of the aforementioned for this thesis.

2.1.2. Definitions Remanufacturing, Returns and OEM

There are different definitions of remanufacturing and original equipment manufacturers in place. As defined by Souza(2013) ‘remanufacturing is the process of restoring an used product, postconsumer use, to a common operating and aesthetic standard, which may involve upgrades to the original product’s functionality’. Thus, reprocessing might include repairs or replacements of worn out and obsolete components with reused, repaired or new parts. The main characteristic is however that the quality of these products equals the one of original manufactured products, which includes the same warranty as a new product. Sometimes reconditioning on component level (remanufacturing) and module level (refurbishing) cannot be easily distinguished, hence is used interchangeably, which will be the case for this thesis.

In general, returns can be described as products, which are returned or discarded, because they do not function anymore or are no longer needed. The sources of returns, however, are differentiated between manufacturing to distribution to customer returns as defined by de Brito and Dekker (2004). Manufacturing returns comprise raw materials surplus, products that failed quality control and production leftovers or by-products. Product recalls, B2B commercial returns (unsold goods), stock adjustments, and functional returns fall under distribution returns. At last, the returns every customer can be involved in are B2C commercial returns (reimbursement guarantees), warranty, service (repair), end-of-use, or end-of-life (EOL) returns. The possible recovery options per return category might be limited. However, theoretically, all returns are suitable for remanufacturing, except for returns that undergo some service procedures and afterwards are sent back to the customer.

The available definitions of original equipment manufacturers differ widely and even contradict each other. The first definition is that an Original Equipment Manufacturer (OEM) is a company whose products are used in another firm’s products (Investopedia, 2015). Hence, the OEM manufacturers a part or subsystem, which is then used for another company’s end product, thus serves as supply for the brand-owner. The second contradicting definition is that an OEM is the brand manufacturer that buys a product to incorporate it or re-brands it into a new product under its own brand (Souza, 2013). Due to the confusing nature and use of the definitions none of them were preferred and no specific distinction made between companies.

2.1.3. Remanufacturing Benefits

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Through closed-loop activities, in this case remanufacturing, the value chain can be facilitated and various values can be identified. Koppius et al. (2011) classify the derived benefits into four spheres of sourcing, environmental, customer and informational value as illustrated in Figure 2.

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Figure 2: CLSC Value Matrix adapted from Koppius, Ozdemir and van der Laan (2011)

Direct cost reductions or savings through the replacement of production or acquisition of new components by returns lead to a cheaper sourcing. Further, economic gains under the sourcing value include a market extension, as additional profits can be generated from a secondary lower-priced market (Bras & McIntosh, 1999). Aside from the direct financial benefits, companies may experience value creation and improvements in the long-term, which are expressed by the environmental, customer and informational value. Imposed legislation in certain industries already requires companies to comply, but these regulations will become stricter over time (ReMaTec, 2015). Through closed-loop practices firms can proactively strive to comply higher standards and herewith establish themselves as market leader and improve their green image. Due to existing components not only material and with it material waste and landfill amounts, but as well energy consumption during the (re)manufacturing process can be reduced. Further, customers will experience a higher service when well-organized returns and take-back schemes are in place. This in combination with the availability of recovered older versions, which is e.g. crucial for old vintage cars, enhances customer satisfaction and when repeated it leads to loyalty (Berry, Parasuraman, & Zeithaml, 1990). This is especially important as a company needs to maintain and protect its reputation by controlling the remanufacturing process of its products and preserving the aftermarket against competitors. Finally, by engaging in closed-loop activities, companies automatically gain new information, which cannot only be used for supply chain process optimization and but as well to improve the product design. Feedback on failures, reliability and duration of products can be incorporated into the design and might include post-life considerations in order to facilitate remanufacturing and an extension of the product lifecycle. Consequently, the forward chain not only improves the downstream process, but takes as well the design and benefits for the reverse chain into consideration.

2.1.4. Remanufacturing Issues

Despite all benefits remanufacturing is still a neglected alternative (Bras & McIntosh, 1999), which is due to the high level of uncertainty from the supply side and complexity of processes. Guide Jr. (2000) identified seven technical and management issues which cannot be addressed by traditional planning or control tools of e.g. forecasting, logistics, scheduling and inventory control. The uncertainty of timing and quality of returns is a complicating characteristic that has an impact on all of these production and planning activities. Moreover, the demand for remanufactured products needs to be established and balanced with the uncertain flow of returns due to the lack of correlation between the two. This requires a well-managed and configured reverse logistics network. Further, the remanufacturing process itself has its difficulties in disassembling the products and the uncertainty of quality, hence the material recovered from returns. Finally, the variable processing times and stochastic routings need to be taken care of to solve as well difficulties of materials matching restrictions. More complicating factors and barriers will be described in the following paragraphs.

2.2. Characteristics Influencing the Remanufacturing Decision

In order that companies are able to make a decision, whether sufficient benefits can be derived and potential obstacles overcome to engage in remanufacturing, one must investigate a number of factors. In general, several authors have identified favourable remanufacturing characteristics of products. Parker (2003) identifies remanufacturable goods with three key parameters being intrinsic value, re-constructability and evolution rate. Sundin (2004) empirically found four similar properties to be most important, namely wear resistance and the ease of access, identification and handling. While some, like these two authors, believe a small number of characteristics to be important others suggest that there are more to be considered. Among these are for example Lund (1984) who identified 75 categories which include that the product is durable, standardized and consists of interchangeable parts, plus the cost to obtain cores should be low compared intrinsic value. Moreover, consumers should be informed about the availability of remanufactured products and adequate technology to disassembly and restore the product.

For the following section some influencing factors have been selected from literature and divided into three categories of product, internal and external characteristics. Hypotheses will be derived from this selection to be empirically proven and to build the main foundation for the analysis.

2.2.1. Product Characteristics

A product can have certain characteristics, which are more suitable for remanufacturing. These factors include degree of customization or standardization, level of modularity, residual value, and product life cycle, and have to be evaluated.

Standardization versus Customization

A highly standardized product design facilitates remanufacturing as used parts can be employed in several product types and the ease of disassembly is higher (Thierry, Salomon, Van Nunen, & Van Wassenhove, 1995). This is due to the fact that standardized parts do not require diverse specialised tools and suitable products can be chosen from a large pool of interchangeable parts(Lund, 1984). Additional benefits are shorter queues, higher machine and labour utilization, and more predictable flow times. As a consequence the remanufacturing process and the overall lead-time is shorter, which means that products could return quicker to the market, and that the processing time and costs are quite low. However, a company needs to weigh the processing time and especially labour costs for a new product against it. Even though remanufacturing of standardized products might be favourable, it might not be the case when compared to the original production. Simple repairs and a quick production of new goods might be preferable to remanufacturing as processing time could be longer and labour costs higher compared to the original production.

Au contraire a high degree of customization shows a higher dedication to customers’ needs and encourages remanufacturing use, as repairs and new production might be time and labour intensive. To elaborate, customization is the opposite of standardization (Medina & Duffy, 1998). By implication, it can be assumed, since standardization has a negative influence on remanufacturing that customization has a positive influence on the remanufacturing decision.

Hypothesis 1: (High) Customization is favourable for remanufacturing.

Level of Modularity

Ulrich and Tung (1991) define product modularity on the one side as ‘similarity between physical and functional architecture of the design’ and on the other as ‘minimization of incidental interactions between physical components’. This means standardized product modules can be easily separated and recombined due to the decoupling of all interfaces between components. Modularity especially makes the separate development, testing and disassembly of product components easier, ergo the remanufacturing process itself (Thierry et al., 1995). By implication, a standardized modular product design facilitates the retrieval of components for remanufacturing and reuse, and hereby reduces processing time and costs. Furthermore, it enables product upgrades particularly of key components, and increases the possible remanufacturing volumes, as more parts of one kind are suitable. Consequently, modularity reduces complexity and utilizes similarities so that more components can be cannibalized for remanufacturing (Östlin, Sundin, & Björkman, 2009).

Hypothesis 2: (High) Modularity is favourable for remanufacturing.

Residual Value

Ijomah et al. (2007) suggest that companies should take into consideration the business potential of recovery activities to exploit the residual value. Therefore, product design should strive for longevity and materials should be easily recovered after the end of life. Moreover, the residual or intrinsic product value left when returned must be weighted against the processing costs. A high added value of the product and/or its components compared to its market value and its original incurred costs favours remanufacturing. Thus, the remaining intrinsic value at the end of use or life of many and/or key components should be high.

Hypothesis 3: (High) Residual value is favourable for remanufacturing.

Product Life Cycle

Every product passes the four cycle phases of introduction, growth, maturity, up to its decline or removal from the market. However, this product life cycle can vary in its length and impacts the possibility of profitable remanufacturing with regard to suitable return volumes. Moreover, as the retrieval of suitable products and cannibalisation of components has the greatest potential late in the life cycle (Östlin et al., 2009), it can be assumed that a longer product life cycle is more favourable. In contrast, a high evolution speed of new variants combined with major product improvements or upgrades might make the current version and technology obsolete, and herewith the remanufacturing option (Parker, 2003). This implies that a relatively stable product technology over a period of time, which exceeds a single lifecycle, entails a stable remanufacturing process and decreases major variations. Eventually, a longer life cycle increases potential demand and sales for remanufactured products. Yet, one must consider that a point might be reached where a too long product life might have as consequence that components cannot be reused, because the returns have to be balanced with demand (Umeda, Kondoh, & Sugino, 2005).

Hypothesis 4: A long product life cycle is favourable for remanufacturing.

2.2.2. Internal Characteristics

Besides the suitability factors of the product, the return and remanufacturing processes must fulfil certain criteria. These so called internal characteristics describe on the one hand the flow of returns, namely return quantities, the uncertainty of these quantities, their timing and quality. On the other hand, the processing time and costs must be compared to the original manufacturing process.

Return Quantities

The availability of returns is crucial as they serve as supply for the remanufacturing process. Hence, in order to start engaging in remanufacturing activities one must have sufficient returns quantities from which suitable products can be derived. This return rate is however influenced by an easy access and low acquisition costs, which can significantly hamper the return quantity and overall remanufacturing costs (Galbreth & Blackburn, 2006). Thus, already some returns, suitable for remanufacturing, are a good starting point for companies. Nevertheless, some companies might choose to buy additional components and herewith artificially increase return quantities. The reason for that is to achieve economies of scale, render remanufacturing more profitable and to meet the demand of remanufactured products (Mutha & Pokharel, 2009).

Hypothesis 5:High return quantities are favourable for remanufacturing.

Predictability of Return Quantities, Timing and Quality

Beside the availability of quantities the predictability of the amounts, their timing and quality is important (Guide Jr., 2000). A high degree of uncertainty of these factors makes the forecasting and planning difficult, as it is unknown when and how many products will arrive. It might be the case that high return quantities peak during certain times or come in randomly over time leading to uncertain amounts and difficulties in balancing returns and demand. Hence, the timing and amount of returned cores, mainly caused by the uncertainty of the product’s life cycle and its rate of technological change, make the return process most uncertain. Apart from that the quality of returned products is important, because it determines the amount of products suitable and worth the remanufacturing engagement (Barquet, Rozenfeld, & Forcellini, 2013). Yet, knowing the major product return sources might give an indication concerning the product quality. Concluding, overall uncertainty in quantities, timing and quality make the whole process more complex and lead times difficult to predict.

Hypothesis 6: (High) Predictability of quantities is favourable for remanufacturing.

Hypothesis 7: (High) Predictability of the timing of returns is favourable for remanufacturing.

Hypothesis 8: (High) Predictability of quality of returns is favourable for remanufacturing.

Long and Variable Processing Time

The easier it is to identify, disassemble, reprocess and test a product the shorter is the processing time. Yet, products might require additional manual work or the process is in general labour intensive in comparison with the traditional production, implying a longer processing time. Furthermore, due to heterogeneous return qualities the working cycles are unknown and result in variable processing times. Beyond that longer processing times might comprise longer lead-times resulting in a decrease of sale chances and obsolescence of remanufactured products. Thus, especially combined with a short product life cycle long processing times should be prevented as products lose their value over time (Guide & Van Wassenhove, 2001).

Hypothesis 9: A long processing time is unfavourable for remanufacturing.

High Processing Costs

The additional remanufacturing steps of identification, disassembly, reprocessing and testing of remanufactured products should be weighted against the benefits and the original production costs. Engaging in remanufacturing activities might require new special technology and/or be high labour intensive due to manual handling (Sundin, 2004). Combined with unknown working cycles and variable processing times it makes it hard to weight the costs compared to the remaining intrinsic value.

Hypothesis 10: High processing costs are unfavourable for remanufacturing.

2.2.3. External Characteristics

The third identified group comprises the external or market characteristics of remanufactured or refurbished goods. After remanufacturing the right amount of products at a decent cost a sufficient market demand and respective channels must be established. Likewise it is important to investigate the cannibalization degree and customer perception of the remanufactured products.


When customers refrain from buying the original product and buy the remanufactured version instead the market share of new products is cannibalized (Prahinski & Kocabasoglu, 2006). Despite contradicting opinions and research whether these concerns are a valid concern to play a role in the remanufacturing decision, they are not impossible to counter. Since a remanufactured product usually has the same functionality as a new product, a company must choose the right pricing strategy for the identified market segments to counter cannibalization effects. Accordingly, a customer group who is indifferent or perceive the remanufactured version more valuable due to environmental attributes should not be priced lower than the original product (Atasu, Sarvay, & Van Wassenhove, 2008). Consequently, the company can yield higher profits due to lower (re-) manufacturing costs. Whereas customers who prioritize functionality might be targeted with a lower price in order to gain new customers. However, as soon as the remanufactured products and new products are differentiable to customers it becomes a concern. Companies charge a different price than for the new version, which can lead to reduced sales (Atasu, Guide Jr., & Van Wassenhove, 2010). At last, companies have to estimate the degree of cannibalization, while taking the supply constraint for remanufacturing products. Then they should come to the conclusion that it is low or non-existing with the right pricing strategy.

Hypothesis 11: Cannibalization is unfavourable for remanufacturing.

Market Demand & Channels

To ensure a sufficient market demand the customers must be informed about the availability of remanufactured products. Remanufactured products, having a lower price but the same performance and warranty as a new product, might expand the market by customers, who initially could not afford the new version. However, customers prioritizing a green image of a product are another target segment from which demand can be derived (Atasu et al., 2010). Thus, depending on the product type and a possible market extension it is important to forecast a sufficient market demand of these two major customer segments. Moreover, adequate channels to commercialize the remanufactured products need to be established and not confused with the ones for the original products (Prahinski & Kocabasoglu, 2006). Certainly, the market demand is as well influenced by the cannibalization degree and the customers’ perceptions. Concluding, sufficient market demand and adequate channels for the sales of remanufactured products need to be ensured to engage in remanufacturing and sell the products.

Hypothesis 12: Sufficient market demand is favourable for remanufacturing.

Hypothesis 13: Sufficient market channels are favourable for remanufacturing.

Customer Perception

Besides the price and a different shopping experience, the customers are concerned with performance, reliability and quality of the remanufactured product (Barquet et al., 2013). Especially, customers concerned with safety issues might prefer paying a higher price for a new product and neglect the environmental value. Still, perception of remanufactured products are mixed and there are some customers who will not buy them irrespective of price or brand (Guide Jr. & Li, 2010). Hence, a company should not only guarantee the performance, reliability and quality, but as well educate their customers about their remanufactured products. This is important to avoid a negative response towards these products, which could dilute the perceived value and overall perception of the original brand (Agrawal, Atasu, & van Ittersum, 2015).

Hypothesis 14: Negative customer perception is unfavourable for remanufacturing.

2.3. Conceptual Framework and Relevance

As previously described, different factors have been identified through extensive literature reviews and grouped into product, internal and external characteristics. It is assumed that these three categories encompass all factors important to derive a remanufacturing decision. The selection of the separate characteristics was made based on their mention frequency and have been subjectively chosen based on their perceived importance. Some of the dimensions were derived from workshops in companies whereas others were only discussed and not empirically proven. Consequently, the aim of this thesis is to bridge the gap between research and practice, and provide empirical data to gain managerial insights.

The conceptual framework, provided in Figure 3 includes however only linear relationships between the factors and the remanufacturing decision. These different dimensions will be evaluated with regard to a positive or negative influence on the remanufacturing decision. The outcome of the framework will provide guidance to companies that consider remanufacturing, by stating the extent of the positive or negative influence. Moreover, the extent of the influence will be measured so that a ranking of the factors by importance can be made.

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Figure 3: Conceptual Framework

3. Methodology

A systemic literature review of academic papers was conducted to identify and evaluate the existing academic studies and to build a knowledge basis. Through summarizing the existing research possible factors leading to a remanufacturing decision plus its issues were identified and incorporated in the conceptual framework. Hence, this provision of quantitative and qualitative dimensions helped to determine the relevant conceptual content for the framework and possible means to empirically test the framework (Meredith, 1993).

3.1. Research Approach

After the identification of the relevant factors through the extensive literature review hypotheses were formulated. To empirically test these hypotheses a survey was designed to collect the data and reach respondents. The aim of this online survey was to ask directly to which extent the different factors influence the remanufacturing decision positively or negatively. Further, the current involvement, processes and experience in the remanufacturing field were investigated in order to better evaluate the derived results. In a next step a descriptive and extensive analysis via Excel were conducted. The results were then compared to the formulated hypotheses and tested by t-tests in SPSS in order to confirm them. Following this, a short analysis for the specific industries was performed. Moreover, the extent of the positive or negative influence was measured so that a ranking of the factors by importance can be made. As final step interviews were conducted with several companies and remanufacturing organizations at the remanufacturing fair ‘ReMaTec 2015’ in Amsterdam (ReMaTec, 2015). These interviews gave more insights about the advancement of remanufacturing in the industry and relevant factors and supplemented the analysis.

3.2. Survey Design

In order to gather qualitative and quantitative data an online survey was designed and conducted via the website ‘qualtrics.com’ through a shared link. A short introduction included information on the study and an incentive to fill in the survey was given. The incentive was that 3€ per filled in survey will be donated to the foundation ‘Fundacion Arco Iris’ (Stiftung Regenbogen) after the completion of the study. Before the three major survey parts started definitions of the terms ‘returns’ and ‘remanufacturing’ were given. In the first part general company data was collected, namely industry (Q1), employee number (Q2), function (Q3a) and position (Q3b). The second part consisted of questions around the returns in general, which covered whether the respondent concerned himself already with several recovery options (Q4), to which extent the company is involved in them (Q6b) and their respective relevance (Q4). Further, questions about the measurement (Q5) and formal processes (Q6) were asked to determine the current status. An additional, non-obligatory question asked the respondent to shortly describe the return process and possible reasons not to be involved in certain return activities (Q6c). In the third part the respondent characterized its product (Q7a), return processes (Q7b) and market of recovered returns (Q7c), and decided how these affect the decision to remanufacture (Q8). These factors were taken from the conceptual framework and measured with a 5-point Likert scale with a neutral and partially a ‘not applicable’ option in question 7. For question 8 the aforementioned factors had to be evaluated whether they affect the decision to remanufacture positively (1 to 10), negatively (-1 to -10) or not at all (0), with the respective extent and importance of the factors ranging from -1 to 10. Finally, the profitability, savings so far and savings potential of remanufacturing for the company were evaluated on a scale from low (0) to high (10). Important to note is that the respondent was able make remarks on every question through provided comment fields. For the complete survey in English and German refer to Appendix D and E.


Excerpt out of 75 pages


When should an Original Equipment Manufacturer (OEM) remanufacture?
Erasmus University Rotterdam  (Rotterdam School of Management)
Supply Chain Management
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ISBN (Book)
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Comment of Thesis Coach: The topic is interesting, well grounded in the literature. The student made a good job in collecting data, with a survey of several companies and also a number of interviews. 7,5 corresponds ~1,7 (German grading system)
when, original, equipment, manufacturer
Quote paper
Julia Berhard (Author), 2015, When should an Original Equipment Manufacturer (OEM) remanufacture?, Munich, GRIN Verlag, https://www.grin.com/document/310103


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