The Barriers and Challenges of the Remanufacturing Industry

Remanufacturing offers an excellent environmental and financial opportunity for society to move in the direction of a Circular Economy. Although the United States and several European countries have established remanufacturing industries, many barriers and challenges remain of obstacles and challenges. (Read my article on remanufacturing facts and figures here.)

Here are some of the already identified significant challenges and barriers for the remanufacturing industry:

No Universally Accepted Definition of Remanufacturing

Currently, there is no universally accepted definition of remanufacturing and people often confuse remanufacturing with repairing, refurbishment, reuse and even recycling. So, it is quite difficult for many to understand the periphery of remanufacturing. Lack of a universally accepted definition of remanufacturing also affects the international trade of remanufactured goods as they are often considered as used products.

Product Design

If a product is not designed with remanufacturing in mind, it can be tough to return a product to its original performance and actual specifications. The design is often mentioned as the most important factor to enable remanufacturing because design directly affects the ability of a manufacturing organization to monitor, disassemble, inspect and reassemble the products. Again, the diversity of products makes it difficult to standardize the remanufacturing processes.

Use of varieties of materials and less durable materials also make it difficult to remanufacture a given product. So, it is crucial for companies to design their products with the Circular Economy in mind to be able to remanufacture their products.

Another consideration is that companies can design products to inhibit remanufacturing if they are not likely to recycle from the remanufacturing process- hence the importance of models such as leasing that can secure end-of-life products for remanufacturing by the manufacturer.

 

Supply Chain Communication

Supply chain communication is often a significant barrier to remanufacturing. When there are no efficient communications between parties including aspects such as product design, the assembly process, testing, and sub-component sourcing, and disassembly, remanufacturing the product gets complicated and less efficient. Even lack of information about the product during its use phase affects its remanufacturing.

Consumer Perception and Attitude

Effective communication with customers additionally is very essential, because users need to understand that remanufactured products are of similar or better quality. Consumer participation in returning end-of-life products to manufacturers is a vital issue as well. Of course, the best way to shape consumer behavior in the return of goods for remanufacturing is through effective economic incentives such as lease or buy-back models that better position the manufacturer to recover products when they reach their end of life.

Pricing of Remanufactured Products

As remanufactured products are similar or better quality than new products, by definition, it is important to price remanufactured products realistically based on their value.

Currently, remanufactured products are sold for 30 to 70 percents of the price of new products. The prices of remanufactured products are better in countries with an established remanufacturing industry, but it is more concerning in the markets where there is no established remanufacturing industry. Getting good prices for remanufactured products will encourage more companies to engage in remanufacturing but that will not happen overnight. Setting reasonable prices for remanufactured products will boost consumer confidence in them as well.

Legislation

It’s always important to have supportive legislation to establish an industry in an economy. Currently, there is not much support for the remanufacturing industry from a legislative perspective even in the U.S. There should be laws and incentives that will encourage companies to come up with remanufacturing-friendly design, public supply chain architecture, and proper end-of-life product acquisition approaches to ensure a higher volume of remanufacturing.

There are further barriers of remanufacturing including international trade bans on used products, efficient logistics, the high cost of used product inspection, and variability and complexity related to end-of-life product cleaning.

References

http://remanet.org/index.php?option=com_content&view=article&id=12&Itemid=119

http://www.policyconnect.org.uk/apsrg/sites/site_apsrg/files/apsrg_-_remanufacturing_report.pdf