The impact of third-party remanufacturing on the forward supply chain: a blessing or a curse?

It is widely agreed that the entry of third-party remanufacturers (TPRs) hurts original equipment manufacturers (OEMs) because remanufacturing cannibalises the new product sales. In this paper, motivated by the practice of mobile phone remanufacturing, we develop a game theoretical model to revisit the impact of third-party remanufacturing on a forward supply chain in which one OEM purchases critical components from one dominant supplier. The OEM may operate the remanufacturing business as cost-efficient as the TPR. Our analytical results show that regardless of the OEM’s remanufacturing capability, third-party remanufacturing could be beneficial to the OEM in that the supplier would lower the wholesale price as a response to the entry of the TPR; in addition, compared with the case without remanufacturing, third-party remanufacturing is always detrimental to the supplier, but the supplier should not always attempt to deter the entry of the TPR because third-party remanufacturing could be less detrimental than the OEM’s in-house remanufacturing. Under certain conditions, the two players in the forward supply chain both prefer third-party remanufacturing over in-house remanufacturing. The key intuition driving this finding is that third-party remanufacturing makes the OEM and the supplier allied; while in-house remanufacturing makes them against each other.     

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

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.     

Heuristics for solving disassemble-to-order problems with stochastic yields

Within the realm of reverse logistics, remanufacturing has become renowned as a popular option in many reverse logistics settings. In remanufacturing, firms take back products at the end of their use, disassemble them to obtain components, and reassemble these components into a “good as new” remanufactured product. As a process, remanufacturing requires parts as an input, parts which are gained mostly from recovered products. As the quality of the returned products are not known in advance, likewise the amount of good quality parts recovered from the returned product is subject to uncertainty. In this paper, we develop two heuristics of different sophistication which take into consideration that the yields of disassembly are stochastic. The methodology is further illustrated with a numerical example, and performance of the heuristics is examined through a performance study. The performance study indicates excellent performance for the more sophisticated heuristic, but also reveals under which conditions the more simple heuristic can be recommended for application.     

The effect of categorizing returned products in remanufacturing

An increasing number of companies have been implementing comprehensive recycling and remanufacturing programs. These endeavors typically involve the operation of joint manufacturing and remanufacturing systems. One of the major challenges in managing such hybrid systems is the stochastic nature of product returns. In particular, there is significant variability in the condition of the returns. This paper presents an approach for assessing the impact of quality-based categorization of returned products. Through extensive numerical studies on a continuous-time Markov chain model, we show that incorporation of returned product quality in the remanufacturing and disposal decisions can lead to significant cost savings. We find that these savings are amplified as the return quality decreases, and as the return rate increases. We also show that prioritizing higher quality returns in remanufacturing is, in general, a better strategy.     

需求和提前期不确定下的两级供应链系统研究

由一个部件提供商和一个装配商组成的两级组装供应链系统,部件提供商提供两种不同的部件给装配商进行装配;分析在单销售周期内,系统上同时存在部件的生产提前期和装配提前期的不确定,以及需求的不确定时,系统的特性.采用博弈论方法,装配商确定装配计划提前期,以及向部件提供商提交的订购量;而部件提供商确定部件生产计划提前期,以及部件批发价格.得出,首先,不确定提前期导致供应链系统订购量减小;其次,在分散控制的组装供应链系统中,系统的总生产、装配计划提前期,要大于集中控制系统中的,并且装配计划提前期与部件生产计划提前期无关;再者,过大的提前期不确定性对组装供应链系统的影响要比需求不确定对组装供应链的影响大.     

Horizontal cooperation and information sharing between suppliers in the manufacturer–supplier triad

In this paper, we analyse a collusion and information-sharing problem between two suppliers in a manufacturer–supplier triad. The manufacturer treats one supplier as a strategic supplier and the other as a backup. While the strategic supplier offers modules of good quality but longer lead times, the backup supplier offers modules with inferior quality but shorter lead times. If there are urgent orders, the manufacturer must turn to the backup supplier. However, it is difficult for the manufacturer to estimate whether the urgent supplier has put extra effort into their production. We formulate this problem by assuming that the urgent supplier has either low or high production costs. To take advantage of the competition between two suppliers, the manufacturer can design a contract menu that defines total payment and lead times, under which both suppliers may be worse off. Meanwhile, it is possible for the suppliers to tacitly form a coalition, and to even share the private cost information. We study this problem by formulating it as a three-stage game. Furthermore, we investigate the variation of profits for each part of the supply chain. We find that the manufacturer is worse off when suppliers cooperate or share private information. Both suppliers, however, can benefit from cooperation and information sharing.     

Supplier managed inventory in the OEM supply chain: the impact of relationship types on total costs and cost distribution

We investigate the impact of four variants of supplier managed inventory on total costs and cost distribution in a capital goods supply chain consisting of a parts supplier who delivers parts to an original equipment manufacturer’s assembly plant. The four supplier managed inventory variants differ in the components of inventory costs that the supplier has to carry. The performance of the supplier managed inventory relationships is benchmarked with the situation where the assembly plant manages the inventories. Interesting managerial insights follow from this comparison.     

Joint hybrid repair and remanufacturing systems and supply control

The control of a stochastic manufacturing system that executes capital asset repairs and remanufacturing in an integrated system is examined. The remanufacturing resources respond to planned returns of worn-out equipment at the end of their expected life and unplanned returns triggered by major equipment failures. Remanufacturing operations for planned demand can be executed at different rates and costs corresponding to different replacement and repair modes. The replacement components inventory is provided by an upstream supply with random lead times. The objective is to determine a control policy for both the supply and remanufacturing activities that minimises the average repair/replacement, acquisition and inventory/shortage total cost over an infinite horizon. We propose a suboptimal joint remanufacturing and supply control policy, composed of a multi-hedging point policy (MHPP) for the remanufacturing stage and an (s, Q) policy for the replacement parts supply. The MHPP is based on two inventory thresholds that trigger the use of predefined remanufacturing modes. Control policy parameters are obtained combining analytical modelling, simulation experiments and response surface methodology. The effects of the distribution, mean and variability of the lead time are tested and a sensitivity analysis of cost parameters is conducted to validate the proposed control policy. We also show that our policy leads to a significant cost reduction as compared to a combination of a hedging point policy (HPP) and an (s, Q) policy.     

Optimal policies in hybrid manufacturing/remanufacturing systems with random price-sensitive product returns

We study a production planning problem in which a manufacturer aims to meet a random market demand by manufacturing new product and remanufacturing returned product. The product returns are random and price-sensitive. To maximise his profit, the manufacturer needs to optimally decide on the acquisition price for the returned product as well as the quantities of the new product to be manufactured and the returned product to be remanufactured. We investigate two cases based on the relative lengths of the manufacturing and remanufacturing lead times. (1) In the case with a shorter manufacturing lead time, the manufacturer first decides his acquisition price for the returned product before the production starts, and then decides the quantities of manufacturing/remanufacturing after the product returns are realised. (2) In the case with a shorter remanufacturing lead time, the manufacturer first decides the manufacturing quantity and the acquisition price simultaneously, and then the remanufacturing quantity based on the quantity of manufactured and returned products. Each case is formulated as a two-stage stochastic optimisation problem, and the corresponding optimal polices of both are characterised and derived.     

Order timing strategies in a single-supplier,multi-retailer system

The timing of retailer order placement is an important factor in supply chain performance in systems with uncertain end-customer demands. Retailers often prefer short order lead times, which permits the resolution of demand uncertainty prior to order placement, and reduces the risks associated with excess inventory. Suppliers, in contrast, prefer long lead times, in order to match supply output with retailer demand. These conflicting preferences create tension between a supplier and retailers regarding order timing preferences. This paper considers order timing preferences within a strategic framework involving a supplier and one of its retailers in a multiple-retailer system. We identify and explore several mechanisms a supplier can use within this framework to induce early retailer order placement and improve expected cost performance.     

Joint decisions for R/M integrated supply chain using system dynamics methodology

In the remanufacturing/manufacturing (R/M) integrated supply chain, the decisions of the manufacturer, the wholesaler, the retailer, the parts producer, the raw materials supplier, the collector, and the disassembly centre are interactional. In this paper, a system dynamics model is proposed to examine the long-term behaviour of the R/M integrated supply chain with reuse, remanufacturing, and recycling. The optimal decision sets of the remanufacturing ratio and the setup period of remanufacturing (r) are given, the joint decisions of all members of R/M integrated supply chain under optimal r are presented by the simulation results, and the impacts of optimal r on the joint decisions are analysed.     

信息系统协同、信息共享对运营绩效的作用机理

构建了制造商与供应商之间信息系统协同、信息共享对企业运营绩效作用机理的理论模型.以广东省珠三角地区272家制造企业为调查对象,利用结构方程模型对制造商与供应商间的信息系统协同对信息共享与企业运营绩效作用机理进行实证研究.研究结果发现制造商与供应商间的信息系统协同对企业运营绩效的直接影响并不显著,但可以以信息共享为中介而...     

Two-stage make-to-order remanufacturing with service-level constraints

We consider a firm that meets demand for an order with remanufactured products, new products or a mix of both. There are constraints on the service level. We use a stylized two-stage GI/G/ 1 queuing network model to study the problem. The first stage is unique to each product, whereas remanufactured and new products share the second stage. The objective was to find the optimal, long run production mix that maximizes profit subject to a service-level constraint that restricts the average order lead-time. There is yield in the remanufacturing process, where yield is the per cent of returned used products that result in a good part after remanufacturing. In the analytic model, we make the simplifying assumption that the producer always gets enough return of used products to meet its remanufacturing needs in the production mix. However, we relax this assumption in a simulation. We find that the optimal solution is generally non-trivial, i.e. the firm generally uses a mix of remanufactured and new products to meet demand. When the new product is less profitable than the remanufactured product, then it is optimal to remanufacture 100%, provided that there is enough supply of used products. When the new product is more profitable, however, the proportion of remanufacturing increases as service level increases. We use simulation to test the robustness of the analytic model by including complexities such as stochastic product returns and stochastic production yield.     

Optimal acquisition decision in a remanufacturing system with partial random yield information

When making decisions to acquire used products or components (cores), a remanufacturer faces limited information on the quality or proportional yield of cores during the recovery process. In this paper, we propose and analyse a robust optimisation model for studying the remanufacturing decision problem with partial random yield information, that is, when the quality information of cores is partly unknown in a remanufacturing system. Regarding the impacts of unknown yield information, we only require the support and mean of the proportional yield rather than the true distributions. The closed-form solutions of acquisition quantities are derived based on the minimax regret approach. In addition, to validate the effectiveness of the analytical results, particularly the acquisition of yield information, numerical experiments are designed and implemented using (1) the support and mean of the proportional yield based on the manufacturer’s knowledge and (2) a sampling inspection to evaluate the performance of the robust optimisation approach, the benchmark, and the naïve approach. We observe that the minimax regret approach slightly underperforms compared to the benchmark but performs much better than the naïve approach. As an acceptable choice, this approach is less complicated and extremely easy to implement to meet the needs of practical situations based on its robust closed-form solutions.     

Developing environmental and social performance: the role of suppliers’ sustainability and buyer–supplier trust

We explore how environmental and social performance of manufacturing firms can be improved as sustainable supply chain management (SSCM) develops and evolves within a firm from internal to external practices. Importantly, this study considers how key suppliers’ sustainability performance and buyer–supplier trust mediate and moderate such a development. A conceptual framework is developed which relies on resource-based theories and emerging empirical evidence. Then, partial least square methodology is applied on survey data from a sample of Italian manufacturing firms. Results show that manufacturing firms’ sustainability performance improves as SSCM develops; however, while internal practices have a direct impact on performance, the effect of external practices on a manufacturing firm’s sustainability performance is fully mediated by key suppliers’ sustainability performance. Yet, buyer–supplier trust significantly influences the scope of such gains. Since evidence suggests that manufacturing firms are still struggling with how to leverage supply chain innovation potential for sustainable development, this study provides a timely and valuable contribution.     

Effects of carbon emission regulations on remanufacturing decisions with limited information of demand distribution

Policy-makers are developing regulation policies to drive down carbon emissions from industries. Independent remanufacturers (IRs), which remanufacture recycled products/components/parts, must manage and evaluate economic costs generated by the production under future carbon emission regulations. We present three optimisation models to determine the remanufacturing quantity that maximises the total profits under three common carbon emission regulation policies: (a) mandatory carbon emissions capacity, (b) carbon tax and (c) cap and trade. These models include sales revenue, remanufacturing cost, disposal cost, inventory holding cost, shortage cost and carbon emission cost. The max–min approach is used to solve the models, which assume limited information on demand distribution. We investigate how the three regulation policies affect remanufacturing decision-making for IRs and we also solve some numerical examples where we vary the magnitudes of incentives, penalties and stringency of constraints to provide implications to policy-makers. The results indicate that remanufacturers should aim to improve yield rate to maximise the profit irrespective of the implemented carbon emissions policy. Policy-makers should prefer the carbon tax policy, if any of the other two policies must be performed, a remanufacturing discount such as a higher carbon emission cap or lower penalty should be implemented to better promote the development of remanufacturers.     

Implications of product upgrading confronting supplier remanufacturing

It is generally believed that new products upgrading is an effective strategy to deal with the cannibalisation problem from remanufacturing, however, it is not clear how the new product upgrading strategy affect the decision-making of the downstream manufacturer and the upstream supplier. By examining the relationship between supplier remanufacturing profits and product cannibalisation, we develop two models to investigate the implications of the manufacturer's product upgrading confronting supplier remanufacturing. The results show that an product upgrading strategy can effectively enhance the manufacturer's profits if the investment cost is relatively low. Although the product upgrading strategy may hinder the remanufacturing operations, it will always be beneficial for the wholesaling of the supplier's new products. Therefore, the upgrading strategy can mitigate cannibalisation problems and create an optimal pareto improvement for both parties. Finally, we conduct a data analysis to provide additional managerial insights regarding the supply chain.     

Green procurement and green supplier development: antecedents and effects on supplier performance

This study adopts the opposing theoretical views of legitimacy – institutional and strategic – in evaluating firm performance and top management commitment as antecedents to green procurement and green supplier development. Additionally, the impact of green procurement and green supplier development on supplier performance is analysed. Using a sample of western European companies, we develop a structural equation model to test our hypotheses. We find that the buying firm’s market performance positively relates to the adoption of green procurement. While financial performance has no effect on green procurement, top management commitment is found to be an important driver of both green procurement and green supplier development. Moreover, the relationship between green procurement and supplier performance is fully mediated by green supplier development. The paper addresses a research gap concerning firm-level antecedents for green procurement and green supplier development showing that both practices may impact supplier performance. Furthermore, it is shown that legitimacy concerns drive basic green procurement, whereas top management is decisive for advanced practices, such as green supplier development.     

Optimal procurement and sampling decisions under stochastic yield of returns in reverse supply chains

We study the problem of optimizing the sampling and procurement decisions in a remanufacturing system under stochastic yield of returns in a single-period setting. Returned products are characterized by uncertainty regarding their ability to be successfully remanufactured. This uncertainty is formulated as a variable probability of each returned unit in a batch to be remanufacturable (returns yield). We study the impact of returns yield on the optimal procurement policy and the benefits of sampling inspection of returns prior to the procurement decision. It is shown that sampling inspection improves the procurement decisions since it allows the Bayesian updating of the prior information regarding the returns yield. We derive analytical expressions for the determination of the economically optimal procurement quantity and structural properties that facilitate the optimization procedure and provide useful insights. The determination of the economically optimal sample size is also discussed and the benefits of sampling are illustrated through numerical examples.     

Trust in supply forecast information sharing

In this paper, we investigate the role of trust in supply forecast signalling in a supply chain with a supplier and a manufacturer in a one-shot game. It is assumed that the supplier faces a random yield uncertainty that is multiplied by the manufacturer’s order quantity. The supplier has a private forecast of yield risk. Based on the information, the supplier decides whether to share its forecast truthfully, or not to share. On the other hand, the manufacturer is faced with two ordering strategies. If it trusts the supplier’s report, then it updates its belief on the yield risk providing a forecast signal by the supplier. Otherwise, it orders based on its prior belief. We analytically obtain the optimal order quantity where the random yield uncertainty follows uniform distribution. The intuitive result indicates that the supplier has a tendency to deviate from reporting true forecast information. The numerical results support the intuitive conclusion.