An increasing rate of return, raw material prices and carbon emissions urge companies to look for sustainable solutions. The value of returned products can be recaptured through closed-loop supply chain activities and in particular through reconditioning, of which remanufacturing is one option that retains a high value. The definition must be clear, however, as the term is not yet common. This recovery type ensures that a restored product fulfils an equivalent or even superior function than the original product. Furthermore, it receives the same warranty as a new product and secures profits while minimizing the environmental impact.
When a company decides whether remanufacturing is a viable option, several factors have to be considered. Therefore, the aim of this thesis was to provide guidance for the remanufacturing decision, while bridging the gap between research and practice. An extensive literature review provided general remanufacturing benefits and issues, as well as a selection of the most important influencing characteristics. Subsequently, hypotheses were formulated per characteristic category, which were product, internal and external, and tested via surveys and statistically. The analysis yielded that a product should be highly modular, have a long product life cycle and a residual value. The internal processes require sufficient return quantities as a starting point, low processing costs compared to the original production and the processing time has to be weighed against other benefits. In addition, a market demand has to be established and the cannibalization effect should be taken into account. Finally, a positive perception of remanufactured products and sufficient market channels to commercialize them are favourable for remanufacturing. Using the survey means of the influencing characteristics a ranking was created, irrespective of the signs, but with regard to the strength. The top five are processing costs, residual value, customer perception, product life cycle and processing time. These rankings are slightly different depending on the industry. Lastly, interviews with experts further supplemented the analysis and a managerial framework was created to provide guidance for the remanufacturing decision process.
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
Research Objectives and Themes
The primary objective of this master's thesis is to provide structured guidance for the remanufacturing decision process within Original Equipment Manufacturers (OEMs). The study aims to bridge the existing gap between academic research and industrial practice by identifying and empirically testing the most relevant factors that influence a company's decision to adopt remanufacturing processes.
- Theoretical identification of factors influencing remanufacturing (product, internal, and external characteristics).
- Empirical hypothesis testing via industry surveys across multiple manufacturing sectors.
- Development of a managerial framework for evaluating remanufacturing feasibility.
- Comparative analysis of industry-specific barriers and drivers in the automotive and industrial production sectors.
- Assessment of current remanufacturing maturity, profitability, and saving potentials in large enterprises.
Excerpt from the Book
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.
Summary of Chapters
1. Introduction: Discusses the rising importance of reverse supply chains due to sustainability and economic factors and defines the research scope.
2. Literature Review: Synthesizes existing definitions and theoretical backgrounds of closed-loop supply chains and identifies core characteristics that influence remanufacturing decisions.
3. Methodology: Details the research approach, survey design, and data collection process conducted among 38 respondents from various industries.
4. Analysis: Presents the statistical evaluation of hypotheses and provides qualitative insights from industry experts in the industrial production and automotive sectors.
5. Discussion: Evaluates the empirical findings, contrasts them with the formulated hypotheses, and discusses implications for companies.
6. Conclusion: Summarizes the research outcomes and emphasizes the need for companies to adopt structured approaches for remanufacturing decisions.
7. Managerial Implications: Offers a practical framework for managers to assess remanufacturing feasibility based on product, internal, and external criteria.
8. Limitations & Future Research: Acknowledges constraints regarding sample size and industrial focus, suggesting directions for future academic inquiry.
Keywords
Remanufacturing, Original Equipment Manufacturer, Closed-Loop Supply Chain, Reverse Logistics, Product Life Cycle, Modularity, Cannibalization, Residual Value, Sustainability, Process Optimization, Managerial Framework, Industrial Manufacturing, Automotive Sector, Empirical Research, Returns Management.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis explores the strategic decision-making process for Original Equipment Manufacturers (OEMs) regarding whether and when to implement remanufacturing operations.
Which fields are covered in the research?
The study primarily focuses on supply chain management, specifically examining reverse logistics, closed-loop supply chains, and the technical and market-related factors influencing product recovery.
What is the primary research question?
The central question is: "When should an original equipment manufacturer (OEM) remanufacture?"
What research methodology was employed?
The author conducted a systemic literature review followed by an empirical online survey and expert interviews at the ReMaTec 2015 fair to validate the theoretical framework.
What aspects of remanufacturing are discussed in the main part?
The main part analyzes product, internal process, and external market characteristics, testing hypotheses on their positive or negative impact on the decision to remanufacture.
How is the work characterized by keywords?
Key terms include Remanufacturing, Reverse Logistics, Closed-Loop Supply Chain, Sustainability, and Managerial Framework.
How does the industrial production sector differ from the automotive sector regarding remanufacturing?
The study found that industrial production companies often prioritize process factors like predictability and costs, while automotive firms emphasize product features like modularity and the maintenance of a long-standing remanufacturing portfolio.
Why are processing costs considered a major influencing factor?
Statistical analysis showed that high processing costs are a significant barrier, as they must be weighed against the intrinsic residual value of the returned products to ensure overall profitability.
What role does the deposit system play in remanufacturing?
As identified in the automotive case study, a deposit system is essential for ensuring the steady return flow of used products, which serves as the "lifeblood" for remanufacturing activities.
What is the primary managerial recommendation?
Managers are advised to perform structured feasibility checks using the developed framework to ensure that factors like product life cycle, modularity, and customer perception are aligned before initiating remanufacturing.
- Quote paper
- Julia Berhard (Author), 2015, When should an Original Equipment Manufacturer (OEM) remanufacture?, Munich, GRIN Verlag, https://www.grin.com/document/310103
