Remanufacturing is key to growth in supply chain

Most supply chains move in one direction: New products move from manufacturing to a customer. Increasingly, those products are coming back into the supply chain, either as returns for repair under warranty work or to be remanufactured for reuse. In fact, new research from the nonprofit organization APICS Foundation, finds that remanufacturing serves a broad array of strategic interests for companies, provides considerable career advancement potential for individuals and has become instrumental in furthering sustainability initiatives.

“Remanufacturing was once considered a niche process,” says Jonathan Thatcher, director of research, APICS Foundation. “Today it is becoming a mainstream practice.”

The findings are part of the APICS Foundation’s recent report Examining Remanufacturing in Supply Chain and Operations Management. A copy of the report is available for downloading online. Thatcher will also host a webinar on the findings on June 5, at 1:00 p.m. CT. You can access the report and register for the webinar here.

Remanufacturing, defined as the process of restoring used or worn products to like-new condition, is an area of growing opportunity for supply chain and operations management professionals. Previously segmented to specific areas of the B2C supply chain, like customer service, remanufacturing has established a place in both B2C and B2B supply chain models and is expanding significantly as additional markets accept and trust the “as good as new” concept. While many businesses may look at remanufacturing as part of their warranty processes, Thatcher says there are a number of entrepreneurial opportunities around remanufacturing in areas such as electronic devices, printer cartridges and other products.

“Remanufacturing provides obvious benefit for the forward progress of sustainable supply chain initiatives,” adds Sharon Rice, executive director, APICS Foundation. “Supply chain professionals are eager for more information about this quickly evolving area because, as our survey has shown, more than 50 percent of survey respondents felt it was important for supply chain and operations management professionals to have at least some familiarity with remanufacturing as they expect a growing demand for remanufactured goods.”

To gather information for this report, the APICS Foundation surveyed supply chain and operations management practitioners in 2013 in response to a growing interest in remanufacturing and requests for more research.

Three key findings arose through the surveys that further identify the current perception of remanufacturing and distinguish how professionals anticipate its future industry benefit:

• Remanufacturing drives sustainability – Sixty-eight percent of respondents felt that sustainability was the primary advantage associated with remanufacturing, and 41 percent already consider it a formal component of their organization’s sustainability policies.

• Remanufacturing provides vast organizational benefits – While 59 percent of respondents noted the additional complexity remanufacturing brought to reverse supply chains, the process was commended for the additional benefit it brings to an organization: increases customer satisfaction (66 percent), enhances product and organizational value chain (47 percent), and reduces production costs in relation to new manufacturing (46 percent).

• Remanufacturing adds career versatility – Remanufacturing requires new skills in forecasting, planning, and inventory management. With these skills, a supply chain and operations management professional can better identify potential for opportunity and innovation in forward and reverse supply chains.

APICS also found that a number of supporting trends are converging to support remanufacturing, from the opportunity to build brand awareness in emerging markets that need lower-than-new price points to developing a functioning reverse supply chain path as a risk management strategy.

Just as remanufacturing and reverse logistics is becoming a mainstream supply chain function, in the future, it may also become a required competency for supply chain professionals. “This is no longer in the category of emerging competency,” says Rice. “As APICS looks to keep up to date, we believe that in the future, we’ll see remanufacturing in our certifications as a base line competency.”