Production Planning and Control for Remanufacturing Industry Practice and Research Needs.docx

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ProductionPlanningandControlforRemanufacturingIndustryPracticeandResearchNeeds

JournalofOperationsManagement182000.467–483

rlocaterdsw

TechnicalNote

Productionplanningandcontrolforremanufacturing:

industrypracticeandresearchneeds

V.DanielR.GuideJr.）

A.J.PalumboSchoolofBusinessAdministration,RockwellHall,DuquesneUniÍersity,600ForbesAÍenue,Pittsburgh,PA15281USA

Received1December1999;accepted11January2000

Abstract

Remanufacturingrepresentsahigherformofreusebyfocusingonvalue-addedrecovery,ratherthanmaterialsrecoveryi.e.,recycling..RemanufacturingsystemsarewidespreadintheUnitedStatesandareprofitable.However,themanagementofproductionplanningandcontrolactivitiescandiffergreatlyfrommanagementactivitiesintraditionalmanufacturing.WereportonmanagerialremanufacturingpracticesviaasurveyofproductionplanningandcontrolactivitiesatremanufacturingfirmsintheUnitedStates.Productionplanningandcontrolactivitiesaremorecomplexforremanufacturingfirmsduetouncertaintiesfromstochasticproductreturns,imbalancesinreturnanddemandrates,andtheunknownconditionofreturnedproducts.Weidentifyanddiscusssevencomplicatingcharacteristicsthatrequiresignificantchangesinproductionplanningandcontrolactivities.Wealsodescribetheresearchopportunitiesthatexistforeachofthecomplicatingcharacteristics.q2000ElsevierScienceB.V.Allrightsreserved.

Keywords:

Environmentalissues;Productionplanning

1.Introduction

Remanufacturingisanenvironmentallyandeco-nomicallysoundwaytoachievemanyofthegoalsofsustainabledevelopment.Remanufacturingclosesthematerialsusecycleandformsanessentiallyclosed-loopmanufacturingsystem.Remanufacturingfocusesonvalue-addedrecovery,ratherthanjustmaterialsrecovery,i.e.,recycling.Thereareesti-matedtobeinexcessof73,000firmsengagedinremanufacturingintheUnitedStatesdirectlyem-ployingover350,000peopleLund,1998..Remanu-facturingoperationsaccountfortotalsalesinexcess

）Tel.:

q1-412-396-6242;fax:

q1-412-396-4764.E-mailaddress:

guide@duq.eduV.D.R.GuideJr...

of$53billionperyearU.S.EnvironmentalProtec-tionAgency,EPA1997..Asapointofreference,considerthattheUSsteelindustryhasannualsalesof$56billionperyearanddirectlyemploys241,000Lund,1998..TheEPAcitesremanufacturingasanintegralfoundationofreuseactivitiesandreportsthatlessenergyisusedandlesswastesareproducedwiththesetypeofactivitiesU.S.EPA1997..How-ever,veryfewguidelinesareavailabletothepractic-ingmanagertoaidinplanning,controllingandmanagingremanufacturingoperation.

Theevidencesuggeststhatproductionplanningandcontrolactivitiesareinherentlymorecomplexanddifficultforremanufacturers.Arecentindustry-wideassessmentNasretal.,1998.showsthatfewtechnologiesandtechniqueshavebeendeveloped

0272-6963r00r$-seefrontmatterq2000ElsevierScienceB.V.Allrightsreserved.PII:

S0272-696300.00034-6

468V.D.R.GuideJr.rJournalofOperationsManagement18（2000）467–483

specificallyforremanufacturing,andthatthelackofthesetoolsmaylimitthegrowthofremanufacturingasanindustry.

Remanufacturingis‘‘...anindustrialprocessinwhichworn-outproductsarerestoredtolike-newcondition.Throughaseriesofindustrialprocessesinafactoryenvironment,adiscardedproductiscom-pletelydisassembled.Useablepartsarecleaned,re-furbished,andputintoinventory.Thenthenewproductisreassembledfromtheoldand,wherenecessary,newpartstoproduceafullyequivalent-andsometimessuperior-inperformanceandex-pectedlifetimetotheoriginalnewproduct.’’Lund,1983..Remanufacturingisdistinctlydifferentfromrepairoperations,sinceproductsaredisassembledcompletelyandallpartsarereturnedtolike-newcondition,whichmayincludecosmeticoperations.Remanufacturingisaformofwasteavoidancesinceproductsarereusedratherthanbeingdiscarded.Thesediscardedproductsareusuallylandfilled,de-spiteanyresidualvalue.Remanufacturingalsocap-turesvalue-addedremainingintheproductintheformsofmaterials,energyandlabor.

FirmsbasedinEurope,ordoingbusinessintheEuropeanUnion,haveaddedincentivestoengageinrecoverableoperations:

legislativeacts.TheGermanRecyclingandWasteControlActrequiresthatman-ufacturersactivelyseektechniquesandproductsthatavoidwasteandthereuseofnon-avoidablewastesRembert,1997..Additionally,scrappedproductsmustbetakenbackandrecycledrreusedattheendoftheirlife.ThisactappliestofirmsdoingbusinessinGermany,aswellasGermancompanies.TheEuropeanUnionisrapidlyfollowingtheGermaninitiativewithAustria,Belgium,Finland,France,Italy,TheNetherlands,SpainandSwedenallpassingstringentlawsonreuseRembert,1997..IntheUS,severalstateshavepassedlaws,orareconsideringlawsaimedatreducingwaste.MassachusettsnowprohibitsthelandfillingorincinerationofcathoderaytubesCRTs.,Minnesotahasproposedstrictrequirementsforelectronicsproductstewardship,andCaliforniahasproposedlawsmandatingproducerresponsibilityforplasticsLindsay,1998..

Lund1998.hasidentified75separateproducttypesthatareroutinelyremanufactured,andhasdevelopedcriteriaforremanufacturability.Thesevencriteriaare:

1.theproductisadurablegood,2.the

productfailsfunctionally,3.theproductisstandard-izedandthepartsareinterchangeable,4.there-mainingvalue-addedishigh,5.thecosttoobtainthefailedproductislowcomparedtotheremainingvalue-added,6.theproducttechnologyisstable,and7.theconsumerisawarethatremanufacturedproductsareavailable.OurresearchfindingssupportthesecriteriaandprovidefurthersupportforLund’swork.Intheirrecentnation-wideassessmentofre-manufacturing,Nasretal.1998.reportaverageprofitsmarginsof20%,showingthatremanufactur-ingisalsoprofitable.

2.Remanufacturingliterature

Previousresearchonremanufacturinghasad-dressedavarietyofproblems,andwesummarizetheeffortsrelevanttoproductionplanningandcontrolinTable1.AthoroughdiscussionofthisliteratureisavailableinGuideetal.1999.,soourdiscussionherewillbelimited.Whileanumberoftopicshavebeencoveredindepthbytheexistingbodyofknowledge,significantareashavenotbeenaddressedinpreviousworks.AverylimitednumberofcasestudiesexistThierryetal.,1995;Ferrer,1996;Guide,1996.,andthemajorityofthesestudiesarelimitedtoaspecificfunctionalactivity,suchasscheduling.

Anumberofcharacteristicsthatsignificantlycomplicateproductionplanningandcontrolactivitiesmaybeinferredfromtheresearchliterature.Specifi-cally,sevencomplicatingcharacteristicshavebeenproposedinvariousformsbyresearchers.Nore-searcheridentifiesmorethanfourofthecomplicat-ingcharacteristics,andmanyofthecharacteristicsareonlymentionedinpassing.Thesevencharacter-isticsare1.theuncertaintimingandquantityofreturns,2.theneedtobalancereturnswithde-mands,3.thedisassemblyofreturnedproducts,4.theuncertaintyinmaterialsrecoveredfromreturneditems,5.therequirementforareverselogisticsnetwork,6.thecomplicationofmaterialmatchingrestrictions,and7.theproblemsofstochasticrout-ingsformaterialsforremanufacturingoperationsandhighlyvariableprocessingtimes.Table2showseachofthecomplicatingcharacteristicsinvestigatedby

V.D.R.GuideJr.rJournalofOperationsManagement18（2000）467–483

469

Table1

Remanufacturingresearch

Forecasting

Reverselogistics

Productionplanningandcon-

Inventorycontrolandman-

General

trol

agement

Statisticalmodels

Literaturereviewand

Disassemblyoperations

GohandVaraprasad,

problemstructure

Brennanetal.,1994;Guide

1986.

Fleischmannetal.,

andSrivastava,1998.

1997.

IndependentdemandperiodicreviewsystemsInderfurth,1996,1997;Richter,1996a,b,1997.

Ferrer,1996,1997a,b.,Gungoretal.1998.,Lund1983,1998.,Thierryetal.1995.

Reusablecontainer

Problem

structure

Disassemblyeconomics

returnsKelleandSil-

Flapper,

1995a,b,

JohnsonandWang,1995;

ver,1989.

1996;

Sarkis

et

al.,

PenevanddeRon1996;

1995;

Driesch

et

al.,

Lambert1997;Zussmanetal

1997.

1994;Veerakamilmaland

Gupta,1998.

PartrecoveryKrupp,

Networkdesign

and

AggregateplanningClegget

1992.

collection

strategies

al.,1995.

KroonandVrijens,

1996;

Krikke,

1998;

Jayaraman

et

al.,

1999.

ContinuousreviewsystemsMuckstadtandIsaac,1981;vanderLaan,1997;vanderLaanetal.,1996.

MixedremanufactureandnewSalomonetal.,1994;vanderLaanandSalomon,1997;vanderLaanetal.,1995,1996,1999.

SchedulingandshopfloorcontrolGuide,1996;GuideandSrivastava1997;Guideetal.,1997a,b.

CapacityplanningGuideandSpencer,1997;Guideetal,1997c.

DependentdemandFlapper,1994;GuptaandTaleb1994;GuideandSrivastava,1997;Talebetal.1997;InderfurthandJensen1998.

GeneraloverviewCorbeyetal.,1998.

Table2

Researchliteratureindentificationofcomplicatingcharacteristicbyproductionplanningandcontrolactivity

Complicatingcharacteristic

Productionplanningandcontrolactivity

Forecasting

Logistics

Schedulingrshop

Inventorycontrol

floorcontrol

andmanagement

1.Theuncertaintimingand

U

U

U

U

qualityofreturns