Supply Chain for Remanufacturing Operations: Tools, Methods, and Techniques

Introduction

Remanufacturing is an End of Life (EoL) strategy requiring new skills in forecasting, planning, inventory management, and many other supply chain practices. The demand of remanufactured goods is growing and it is an opportunity in price sensitive markets as well as in emerging economies. The APICS Dictionary | Best Document Library in The World (1998), defines remanufacturing as an industrial process in which worn-out products are restored to like-new condition. In contrast, a repaired product normally retains its identity, and only those parts that have failed or are badly worn are replaced or serviced. Remanufacturing is distinguished from other end-of-life strategies by bringing the product considered waste to design specifications, retaining its original geometry, with the consequent benefits that it represents in saving energy, raw material, labor and reducing environmental impact. Remanufacturing is considered as a part of the R&D process of some visionary companies due to an EoL process complying with sustainability policies, goals, and requirements; thus it is a necessity. This process adds complexity to supply chains where the client becomes a provider.

Remanufacturing consists of a series of activities (classification, inspection, disassembly, cleaning, reprocessing and re-assembly) designed to return a component or product discarded to its original design specifications, thus achieving a second useful life, offering customers guarantee again at a much lower price. In a remanufacturing system, the following are the main actors: the clients (who are the source of obtaining the core); the collection / inspection centers and the remanufacturing plants (may be the original manufacturers, outsourcing services of the original manufacturer or independent remanufacturers). The steps to follow in the remanufacturing process may vary depending on the type of product to be remanufactured.

Unlike a conventional manufacturing system, the route followed by a product can vary depending on the conditions of the main part, commonly called core (which is the part of the product returned at the end of its useful life), which is developed the remanufacturing process to refine the product to the original design specifications). Figure 1 shows, in addition to the actors, the intervening parameters in the material flow. The scheme reflects the primal and dual flow. The used products are collected in the customer area. The collected products are cleaned and inspected at the inspection centers, where the products containing reusable components are disassembled and sent to the remanufacturing plants to serve as the core for the remanufacturing process; the non-functional components are discarded for final disposal (Zhang et al. 2010).

• DC = Distribution centers RP = Remanufacturing plants

• CZ = Customer Zone a_i = Remanufacturing capacity of RP i

• IC = Inspection Centers S_i = Manufacturing capacity of the factory i

• 1-α_t = waste d_kt = Demand of the CZ k in period t

• τ_t = Percentage of product recovered in period t hi = Fixed cost of locating a RP in i

• cp_ji = Cost of sending an IC unit j to the RP I c_ij = Cost of sending a unit from Factory i to DC j

• f_j = Cost to locate a DC in j g_j = Cost of locating an IC in j

• e_jk = Cost to send a unit of the DC j to the CZ k ep_kj = Cost of sending a unit from CZ k to IC j

• α_t = Percentage of product collected found useful in period t.

Figure 1.

Inverse logistics network, actors and parameters

Guide (2000) analyzed 76 papers to identify the main complicating characteristics of remanufacturing. According to Guide et al. (1997), Guide (2000), Gungor & Gupta (1999) and Ferrer & Whybark (2001), the major complicating characteristics of PPC in remanufacturing are as follows: