Enhancing sustainability in medical product supply chains: The role of remanufacturing and government subsidies

Abstract

This study explores the impact of government subsidies on the production dynamics within the medical product supply chain, particularly focusing on the remanufacturing of medical goods. Amidst the backdrop of the COVID-19 pandemic, which has underscored the critical shortages in medical supplies, our research delves into the adoption of remanufacturing practices by medical product manufacturers as a strategic response to these shortages and environmental concerns. We investigate how government subsidies influence the production volumes of original manufacturers and remanufacturers and examine the competitive interplay between newly manufactured and remanufactured medical products. Through the development of three production game models—Scenario B (manufacturers produce both new and refurbished products), Scenario N (separate production of new and refurbished products by manufacturers and remanufacturers, respectively), and Scenario C (similar to Scenario N but includes a certification fee paid by remanufacturers to original manufacturers)—we analyze the strategies that could mitigate supply deficiencies during medical crises. Our findings indicate that the certification strategy (Scenario C) not only yields the highest total production of medical products but also offers a viable solution to enhance the sustainability of the entire medical production system by alleviating supply chain disruptions. Furthermore, we discuss the managerial implications of our results, emphasizing the potential of a joint remanufacturing strategy to stabilize the supply chain and foster environmental conservation. Lastly, we highlight our study's limitations and suggest future research directions, particularly concerning the variability in product quality and the reliance on government subsidies. This research contributes to a nuanced understanding of green remanufacturing within the pharmaceutical supply chain, offering insights for manufacturers, remanufacturers, and policymakers aiming for sustainable industry practices.