Initiating Original Equipment Manufacturer Remanufacturing

Abstract: Remanufacturing is an industrial process in which a core – a used, discarded, or broken product – is transformed into a product whose specification and condition are new-like. However, to this date, remanufacturing activities on the market are few in comparison to manufacturing. There are several types of remanufacturers; the least common type is the original equipment remanufacturer, an original equipment manufacturer that not only manufactures new products but also remanufactures cores of its own products. The potential for remanufacturing to become a more widely used industrial process for original equipment manufacturers is therefore high. Increased remanufacturing activities can positively contribute to the environment by transforming cores into a new-like condition instead of manufacturing new ones. The contribution comes from a reduction of raw material and energy consumption compared to manufacturing. Therefore, remanufacturing has the potential to decouple environmental impact from economic growth, thus contributing to more sustainable societies. However, assessing the benefits of remanufacturing does not directly correlate to growth within the remanufacturing industry. To encapsulate the environmental, social, and economic benefits of remanufacturing, manufacturers need to be aware of how remanufacturing can be initiated and implemented in practice with positive economic effects. The aim of this licentiate thesis, therefore is, to explore how original equipment manufacturers can initiate profitable remanufacturing. This research takes a stand in a single case study where the prospect of profitable remanufacturing is studied at an original equipment manufacturer. The applied case study developed knowledge of how remanufacturing could be incorporated into existing operations at an original equipment manufacturer. In parallel, analytical economic assessment models based on cost-benefit analysis were built to measure how well the case company could perform remanufacturing. There were seven primary remanufacturing scenarios developed, ranging from centralised remanufacturing performed by the original equipment manufacturer to decentralised performed at multiple locations using a retail network. Which scenario is preferable depends on, for example, risk-consciousness, cooperation between actors, and volume targets. However, given ideal circumstances, remanufacturing in-house in a centralised scenario was the most beneficial for the original equipment manufacturer since the fewer middle hands and economies of scale also enable lower costs. The modelled remanufacturing scenarios were based on a set of eight prerequisite factors for original equipment manufacturer remanufacturing that were derived during this research. These factors are divided into essential and supporting prerequisite factors and are illustrated through a framework called the remanufacturing rocket. The essential factors highlight fundamental requirements to perform remanufacturing. Should one of the four factors be missing, remanufacturing cannot be successfully initiated. The supporting factors can be neglected to a larger extent but are valuable to enhance the effectiveness and efficiency of the process, such as by streamlined operations, organisational change, or information exchange. Hence, to reach the fullest potential of remanufacturing, both the essential and the supporting factors are needed. Conclusively, as an answer to the thesis aim, it is proposed to apply the prerequisite factors together with an economic assessment in an iterative manner to investigate the profitability of initiating remanufacturing at original equipment manufacturers. The essential prerequisite factors influence the first iteration of the economic assessment, which then contributes to refinements of how the essential factors should be aligned in an economically preferable way. Once satisfactory, another iterative process could be initiated between the supporting prerequisite factors and the economic assessment. By using the proposed approach, the prospects of profitable remanufacturing could be thoroughly investigated before attempting to initiate a process in practice, thus reducing the number of resources spent in vain. Additionally, the iterative process was integrated into a five-step approach for initiating remanufacturing (5AFIR) to guide original equipment manufacturers towards initiating profitable remanufacturing. Through applying this approach, it was shown that the case company could initiate profitable remanufacturing.