Owning or Outsourcing? Strategic Choice on Take-Back Operations for Third-Party Remanufacturing

Wei Yan, Hengyu Li, Junwu Chai, Zhifeng Qian and Hong Chen
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Wei Yan: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
Hengyu Li: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
Junwu Chai: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
Zhifeng Qian: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
Hong Chen: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China

Sustainability, 2018, vol. 10, issue 1, 1-18

Abstract: Despite the remanufacturing process having demonstrated economic, social, and environmental benefits, many original equipment manufacturers (OEMs) have not engaged in the remanufacturing process themselves, as they often outsource it to a third party. In practice, such outsourcing usually involves two different options/modes for OEMs with consideration of take-back operations: (1) owning the reverse channel and collecting cores directly (Model D) or (2) outsourcing these operations to a third-party remanufacturer (TPR) and collecting cores indirectly (Model I). However, this raises the important question of whether OEMs should also outsource their reverse channels to third-party remanufacturers when outsourcing remanufacturing. Furthermore, there needs to be an investigation of which method is more beneficial in terms of economic, social, and environmental outcomes. This paper uses modelling to investigate the costs and benefits of these options in terms of sustainability. We found that, compared to Model I, the OEM conducting take-back operations itself can achieve the overall better outcomes for all economic, social, and environmental situations.

Keywords: sustainability; remanufacturing; reverse channels; outsourcing; game theory (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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