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Assessing the economic and environmental impact of remanufacturing: a decision support tool for OEM suppliers

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  • Patricia van Loon
  • Luk N. Van Wassenhove

Abstract

The circular economy is often presented as a solution for companies to increase the sustainability of their business. In many situations where suppliers produce subassemblies or modules for OEMs in a B2B context, dependency on their clients limits their options for profitable closed-loop supply chains. In this paper, we develop a simple tool suppliers can use to quickly assess whether remanufacturing is economic and environmentally attractive compared to producing new components. We derive optimal acquisition and reuse quantities that minimise total costs. Based on our analysis with a supplier in the automotive industry, we find that used core prices and remanufacturing yield rates have a large impact while an optimised design for remanufacturing can only marginally improve the situation. The tool is applicable to a wide variety of suppliers and industries that remanufacture their modules or subassemblies, or are exploring the option to engage in remanufacturing operations.

Suggested Citation

  • Patricia van Loon & Luk N. Van Wassenhove, 2018. "Assessing the economic and environmental impact of remanufacturing: a decision support tool for OEM suppliers," International Journal of Production Research, Taylor & Francis Journals, vol. 56(4), pages 1662-1674, February.
    • Handle: RePEc:taf:tprsxx:v:56:y:2018:i:4:p:1662-1674
    DOI: 10.1080/00207543.2017.1367107
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    Citations

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    Cited by:

    1. Sung Hoon Chung & Robert D. Weaver & Hyun Woo Jeon, 2020. "Sustainable Management of Remanufacturing in Dynamic Supply Chains," Networks and Spatial Economics, Springer, vol. 20(3), pages 703-731, September.
    2. Georgios Lanaras-Mamounis & Anastasios Kipritsis & Thomas A. Tsalis & Konstantinos Ι. Vatalis & Ioannis E. Nikolaou, 2022. "A Framework for Assessing the Contribution of Firms to Circular Economy: a Triple-Level Approach," Circular Economy and Sustainability,, Springer.
    3. Prosman, Ernst Johannes & Cagliano, Raffaella, 2022. "A contingency perspective on manufacturing configurations for the circular economy: Insights from successful start-ups," International Journal of Production Economics, Elsevier, vol. 249(C).
    4. Hsieh, Chung-Chi & Lathifah, Artya, 2022. "Ordering and waste reuse decisions in a make-to-order system under demand uncertainty," European Journal of Operational Research, Elsevier, vol. 303(3), pages 1290-1303.
    5. Fang, Chang & Fan, Shuyi & Chi, Mingxiang & Wang, Weizhong, 2023. "The optimal remanufacturing strategy, returned quality choice and independent remanufacturers’ advantage for tackling extreme weather," International Journal of Production Economics, Elsevier, vol. 259(C).
    6. Cui, Yongfeng & Liu, Wei & Rani, Pratibha & Alrasheedi, Melfi, 2021. "Internet of Things (IoT) adoption barriers for the circular economy using Pythagorean fuzzy SWARA-CoCoSo decision-making approach in the manufacturing sector," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    7. Patricia van Loon & Luk N. Van Wassenhove & Ales Mihelic, 2022. "Designing a circular business strategy: 7 years of evolution at a large washing machine manufacturer," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1030-1041, March.
    8. Gunasekara, Lahiru & Robb, David J. & Zhang, Abraham, 2023. "Used product acquisition, sorting and disposition for circular supply chains: Literature review and research directions," International Journal of Production Economics, Elsevier, vol. 260(C).
    9. Monrudee Theeraworawit & Suparak Suriyankietkaew & Philip Hallinger, 2022. "Sustainable Supply Chain Management in a Circular Economy: A Bibliometric Review," Sustainability, MDPI, vol. 14(15), pages 1-21, July.
    10. Johan Vogt Duberg & Jelena Kurilova‐Palisaitiene & Erik Sundin, 2023. "5‐step approach for initiating remanufacturing (5AFIR)," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4360-4370, November.
    11. Danni Zhang & Regina Frei & Gary Wills & Enrico Gerding & Steffen Bayer & Prince Kwame Senyo, 2023. "Strategies and practices to reduce the ecological impact of product returns: An environmental sustainability framework for multichannel retail," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4636-4661, November.
    12. Md. Abdul Moktadir & Anil Kumar & Syed Mithun Ali & Sanjoy Kumar Paul & Razia Sultana & Jafar Rezaei, 2020. "Critical success factors for a circular economy: Implications for business strategy and the environment," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3611-3635, December.
    13. Dwivedi, Ashish & Moktadir, Md. Abdul & Chiappetta Jabbour, Charbel José & de Carvalho, Daniel Estima, 2022. "Integrating the circular economy and industry 4.0 for sustainable development: Implications for responsible footwear production in a big data-driven world," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    14. Simonetto, Marco & Sgarbossa, Fabio & Battini, Daria & Govindan, Kannan, 2022. "Closed loop supply chains 4.0: From risks to benefits through advanced technologies. A literature review and research agenda," International Journal of Production Economics, Elsevier, vol. 253(C).
    15. Ipek Kazancoglu & Yigit Kazancoglu & Emel Yarimoglu & Aysun Kahraman, 2020. "A conceptual framework for barriers of circular supply chains for sustainability in the textile industry," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(5), pages 1477-1492, September.
    16. Li Bai & F. Javier Sendra Garcia & Arunodaya Raj Mishra, 2022. "RETRACTED ARTICLE: Adoption of the sustainable circular supply chain under disruptions risk in manufacturing industry using an integrated fuzzy decision-making approach," Operations Management Research, Springer, vol. 15(3), pages 743-759, December.
    17. Elzbieta Pawlik & Winifred Ijomah & Jonathan Corney & Daryl Powell, 2021. "Exploring the Application of Lean Best Practices in Remanufacturing: Empirical Insights into the Benefits and Barriers," Sustainability, MDPI, vol. 14(1), pages 1-21, December.
    18. Yafeng Han & Tetiana Shevchenko & Bernard Yannou & Meisam Ranjbari & Zahra Shams Esfandabadi & Michael Saidani & Ghada Bouillass & Kseniia Bliumska-Danko & Guohou Li, 2023. "Exploring How Digital Technologies Enable a Circular Economy of Products," Sustainability, MDPI, vol. 15(3), pages 1-20, January.
    19. Sara Alonso-Muñoz & Rocío González-Sánchez & Cristina Siligardi & Fernando E. García-Muiña, 2021. "New Circular Networks in Resilient Supply Chains: An External Capital Perspective," Sustainability, MDPI, vol. 13(11), pages 1-18, May.
    20. Luttiely Santos Oliveira & Ricardo Luiz Machado, 2021. "Application of optimization methods in the closed-loop supply chain: a literature review," Journal of Combinatorial Optimization, Springer, vol. 41(2), pages 357-400, February.
    21. Manavalan Ethirajan & Thanigai Arasu M & Jayakrishna Kandasamy & Vimal K.E.K & Simon Peter Nadeem & Anil Kumar, 2021. "Analysing the risks of adopting circular economy initiatives in manufacturing supply chains," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 204-236, January.
    22. Chowdhury, Soumyadeb & Dey, Prasanta Kumar & Rodríguez-Espíndola, Oscar & Parkes, Geoff & Tuyet, Nguyen Thi Anh & Long, Dang Duc & Ha, Tran Phuong, 2022. "Impact of Organisational Factors on the Circular Economy Practices and Sustainable Performance of Small and Medium-sized Enterprises in Vietnam," Journal of Business Research, Elsevier, vol. 147(C), pages 362-378.
    23. Nancy Bocken & Lars Strupeit & Katherine Whalen & Julia Nußholz, 2019. "A Review and Evaluation of Circular Business Model Innovation Tools," Sustainability, MDPI, vol. 11(8), pages 1-25, April.
    24. Wang, Yuan & Modi, Sachin B. & Schoenherr, Tobias, 2021. "Leveraging sustainable design practices through supplier involvement in new product development: The role of the suppliers' environmental management capability," International Journal of Production Economics, Elsevier, vol. 232(C).

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