The Potential for Cannibalization of New Products Sales by Remanufactured Products*

Guide, V. Daniel R.; Li, Jiayi

doi:10.1111/j.1540-5915.2010.00280.x

Cited by 377 publications

(309 citation statements)

References 57 publications

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“…This is in line with Guide and Li (2010) finding that commercial products face a higher risk of market cannibalization from a remanufactured one.…”

Section: Market Issuessupporting

confidence: 90%

“…However, while a remanufactured product should be of the same or better quality (due to technical upgrading of the remanufactured product) compared with the original, consumers tend to regard remanufactured products as of lower quality and lower market price (Dowlatshahi, 2005;Kapetanopoulou and Tagaras, 2011). The poor quality image for remanufactured products from customers combined with OEMs' fear of market cannibalization -the potential for a remanufactured product drawing customers away from a new product by the same company and thereby eroding the sales of the new product -has been identified as the central issue in the continuing development of closed-loop supply chains (Guide and Li, 2010;Wu, 2013).…”

Section: Marketmentioning

confidence: 99%

“…There is no fact-based evidence for market cannibalization with respect to remanufactured products (Guide and Li, 2010). In fact, some argue that there is an entirely new segment of consumers who are not likely to purchase new products but remanufactured ones (Stock, et al, 2006;Jayaraman and Luo, 2007;Ferrer and Swaminathan, 2010;Giannetti, 2012).…”

Section: Marketmentioning

confidence: 99%

See 2 more Smart Citations

Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies

Abdulrahman

Subramanian

Liu

et al. 2015

Journal of Cleaner Production

114

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Remanufacturing is a sustainable and proven profitable practice in the western world.Research on remanufacturing practices is relatively unexploited in China, despite being the "global factory" and both the world's largest automobile manufacturer and vehicle market.The increasing amount of automotive output and End-of-Life vehicles (ELVs) in China provides Chinese auto-parts companies with significant potential for environmentally conscious manufacturing and product recovery. Using case studies, we have investigated the status of remanufacturing practices, key determinants for strategic decision making to remanufacture in-house, outsource remanufacturing and/or not to engage in remanufacturing in Chinese auto parts firms using an analytical hierarchy process (AHP). This study suggests that Chinese firms are keen to adopt remanufacturing practice in-house compared to outsourcing despite a lack of technical and managerial capabilities.Key words: Remanufacturing, automotive, China, strategic decision making, analytical hierarchy process (AHP) INTRODUCTIONThe unprecedented and sometimes wasteful use of the environment as the natural provider of resources and sink for discarded end-of-life/end-of-use products and waste is proving to be unsustainable. There is increasing realization that manufacturing needs to produce more with less and different raw materials, to be ethical and sustainable. Achieving this will require materials wastage to be reduced and production to more closely match demand. This is why manufacturing firms, especially original equipment manufacturers (OEMs) and their suppliers, are under increasing pressure from stakeholders, including regulators, customers and employees to produce ethically, reuse/recycle, remanufacture, and/or to safely discard 3 their waste in accordance with the absorptive and regenerative capacity of the planet (Barker and Zabinsky, 2011).Of the many sustainable strategies, tools and techniques developed over the years aimed at improving productivity and economic longevity of manufacturing businesses, remanufacturing plays an important role. Remanufacturing has resulted in increased profits and market share for manufacturers in Western countries (Jayaraman and Luo, 2007;Giannetti, 2012). Remanufacturing further benefits businesses in terms of cost saving from reduced resource requirements, through assets recovery and reusing/recycling, cost savings from not using landfills, expanded product life cycle, increased employment rate and improved brand image (Sarkis, 2010;Kapetanopoulou and Tagaras, 2011;Zhang, et al., 2011).The automotive industry is one of the leading industries in remanufacturing and product recovery strategy, with 70% of all remanufacturing companies being in the automotive sector (Steinhilper, 2011;Zhang, et al., 2011). Furthermore, of all major products that are being The major motivation for this study is to (i) develop a remanufacturing decision-making framework for the Chinese auto-parts manufacturers' strategic decisions to either engage in the rem...

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“…This is in line with Guide and Li (2010) finding that commercial products face a higher risk of market cannibalization from a remanufactured one.…”

Section: Market Issuessupporting

confidence: 90%

Section: Marketmentioning

confidence: 99%

Section: Marketmentioning

confidence: 99%

See 1 more Smart Citation

Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies

Abdulrahman

Subramanian

Liu

et al. 2015

Journal of Cleaner Production

114

View full text Add to dashboard Cite

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“…In recent years, remanufacturing has become more prevalent due to the high growth of the secondary product market [22,23]. Govindan et al [24] and Kumar and Ramachandran [25] present a comprehensive review of research in this area.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Remanufacturing Certification Contracts in the Electrical and Electronic Industry

et al. 2017

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While remanufacturing is highly encouraged worldwide, some original equipment manufacturers (OEMs) in the electrical and electronics industry are still not willing to embrace remanufacturing, for fear of expensive investment or the cannibalization of existing products. Meanwhile, third-party remanufacturers' (TPRs) remanufactured products are developing quickly. Due to quality reasons, consumers usually have a higher preference for OEM-certified remanufactured products than uncertified ones. As such, remanufacturing certification has become a strategy that OEMs can use to benefit from product remanufacturing. Our paper focuses on the remanufacturing certification contract between an OEM and a TPR. Once certified, the TPR makes payments to the OEM. These payment terms will affect their enthusiasm for participating in remanufacturing certification. By establishing game models among an OEM, a certified TPR, and an uncertified TPR, our paper explores three certification contracts, namely, the lump-sum payment, profit-sharing payment, and piece-rate payment. We identify the conditions for the OEM and certified TPR to reach a win-win outcome. Our results show that when TPRs have a high profit margin and there is no significant difference in consumers' preferences between certified and non-certified remanufacturing channels, the profit-sharing payment contract yields the highest profit; otherwise, the piece-rate payment contract is best for the OEM.

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“…Ferrer and Swaminathan discussed the joint manufacturing/ remanufacturing decision-making problem under the heterogeneous demands given recycling ratio [11]. Guide & Li analysed how the cannibalization of remanufactured products influences the optimal manufacturing/ remanufacturing policies [12]. Wang et al studied the manufacturing/remanufacturing decision-making problem for products with brief life cycle under the random demands and quantities of recyclable products and extensively discussed the influences of the percentage of remanufactured products on the total cost of the mixed production system [13].…”

Section: State Of the Artmentioning

confidence: 99%

Optimal manufacturing/remanufacturing policies with fixed investment for the underdeveloped remanufacturing system

Huang

Liu

2017

Teh. vjesn.

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Original scientific paperIn an underdeveloped remanufacturing system, poor infrastructure and low technical level impede further development of remanufacturing. To overcome this obstacle, a huge amount of fixed investment is required to improve the remanufacturing system. However, this investment inevitably influences the manufacturer's manufacturing/remanufacturing decision-making economically. The relationship between fixed investment and recycling ratio was investigated, and the two-and multi-period manufacturing/remanufacturing mixed optimization models were developed. Based on the Karush-KuhnTucker (KKT) conditions, the optimal manufacturing/remanufacturing and fixed investment policies were obtained in closed-form expressions. Moreover, the influences of the fixed investment were analysed. Results show that the optimal policies are significantly influenced by the degree of underdevelopment of the remanufacturing system. When the remanufacturing system is underdeveloped, the manufacturer shows a lack of enthusiasm in remanufacturing, thereby resulting in the decrease of the investment and the recycling ratio. The manufacturer raises the sale price to alleviate the loss caused by fixed investment, but the total manufacturing quantity and profit decrease. In the multi-period case, the manufacturer gradually increases the investment for continuously improving the remanufacturing system to increase the recycling ratio and obtain additional profits from remanufacturing. The proposed models can effectively provide the reference for determining the reasonable manufacturing/remanufacturing and fixed investment policies in the underdeveloped remanufacturing system. Keywords: fixed investment; heterogeneous demands; KKT conditions; remanufacturing Smjernice za optimalnu proizvodnju/preradbu s fiksnim ulaganjem u nedovoljno razvijeni sustav preradbeIzvorni znanstveni članak U nedovoljno razvijenom sustavu preradbe, slaba infrastruktura i nizak tehnički nivo onemogućavaju daljnji razvoj preradbe. Za otklanjanje ove prepreke i unapređenje sustava preradbe potrebna su velika fiksna ulaganja. Ta ulaganja nedvojbeno utječu na proizvođača i ekonomičnost u donošenju odluke o proizvodnji /preradbi. Analizirao se odnos između omjera fiksnog ulaganja i preradbe te su razvijeni modeli optimizacije s dva i više perioda proizvodnje/preradbe. Na temelju Karush-Kuhn-Tucker (KKT) uvjeta, dobivene su smjernice za optimalnu proizvodnju/preradbu i fiksno ulaganje. Uz to, analizirani su učinci fiksnog ulaganja. Rezultati pokazuju da na optimalne odluke značajno utječe stupanj nerazvijenosti sustava preradbe. Kad je sustav preradbe nedovoljno razvijen, proizvođač pokazuje manjak entuzijazma za prerađivanje, a to dovodi do smanjenja ulaganja i omjera preradbe. Proizvođač podiže prodajnu cijenu kako bi ublažio gubitak izazvan fiksnim ulaganjem, ali ukupna proizvodnja i profit opadaju. U slučaju multi-perioda, proizvođač postepeno povećava ulaganje u trajno poboljšanje sustava preradbe kako bi se povećao omjer recikliranja i dobila dodatna z...

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The Potential for Cannibalization of New Products Sales by Remanufactured Products*

Cited by 377 publications

References 57 publications

Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies

Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies

Optimal Remanufacturing Certification Contracts in the Electrical and Electronic Industry

Optimal manufacturing/remanufacturing policies with fixed investment for the underdeveloped remanufacturing system

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