Abstract
Despite the remanufacturing process having demonstrated economic, social, and environmental benefits, many original equipment manufacturers (OEMs) have not engaged in the remanufacturing process themselves, as they often outsource it to a third party. In practice, such outsourcing usually involves two different options/modes for OEMs with consideration of take-back operations: (1) owning the reverse channel and collecting cores directly (Model D) or (2) outsourcing these operations to a third-party remanufacturer (TPR) and collecting cores indirectly (Model I). However, this raises the important question of whether OEMs should also outsource their reverse channels to third-party remanufacturers when outsourcing remanufacturing. Furthermore, there needs to be an investigation of which method is more beneficial in terms of economic, social, and environmental outcomes. This paper uses modelling to investigate the costs and benefits of these options in terms of sustainability. We found that, compared to Model I, the OEM conducting take-back operations itself can achieve the overall better outcomes for all economic, social, and environmental situations.
Highlights
Business sustainability is the organizing principle for meeting human development goals while at the same time sustaining the ability of natural systems to provide the natural resources and ecosystem services upon which the economy and organization depend [1]
Rather than focusing on the outsourcing remanufacturing operations between original equipment manufacturers (OEMs) and the third-party remanufacturer (TPR), we provide an alternative and complementary approach to consider: when outsourcing remanufacturing, should OEMs outsource their reverse channels to TPRs?
Despite the fact that remanufacturing has been demonstrated to have economic, social, and environmental benefits, few OEMs engage in remanufacturing themselves as they instead outsource it to a TPR
Summary
Business sustainability is the organizing principle for meeting human development goals while at the same time sustaining the ability of natural systems to provide the natural resources and ecosystem services upon which the economy and organization depend [1]. Despite the fact that remanufacturing has been demonstrated to have economic, social, and environmental benefits, this process often creates an uneasy dilemma for OEMs. On the one hand, customers often perceive remanufactured products to be low-cost substitutes for new ones. Sun used pricing and license availability for its used products as a means of controlling the reverse channel, resulting in a lower availability of cores for collection by third-party remanufacturers (TPRs). From a managerial perspective, this paper shows how the strategies of owning or outsourcing take-back operations have strategic consequences in terms of economic, environmental, and social issues. We examined the differences in the environmental sustainability estimated by each model This involves investigating whether manufacturers should own or outsource their take-back operations and which approach is better for the environment.
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