Remanufacturing in Asia: location choice and outsourcing

• Published date: 06 May 2014
• Date: 06 May 2014
• Pages: 20-34
• DOI: https://doi.org/10.1108/IJLM-10-2012-0125
• Author: Qing Lu,Mark Goh,Miti Garg,Robert De Souza
• Subject Matter: Management science & operations,Logistics

Remanufacturing in Asia: location

choice and outsourcing

Qing Lu and Mark Goh

The Logistics Institute – Asia Pacific, National University of Singapore,

Singapore, Singapore

Miti Garg

SIM University, Singapore, Singapore, and

Robert De Souza

The Logistics Institute – Asia Pacific, National University of Singapore,

Singapore, Singapore

Abstract

Purpose – Remanufacturing is a process whereby value from old products is recovered by replacing

and recovering used components tobring such products toa new or like-new state.Today,both original

equipmentmanufacturers (OEMs)and third partiesare engaged in remanufacturing activities, investing in

many locations throughout Asia. The purpose of this paper is to examine the reasons for initiating

remanufacturing activities as well as the location determinants for the remanufacturing sector in Asia.

Design/methodology/approach – The authors conduct a multiple case study. Triangulation is

applied to gain objective views from interviewing three OEMs, one logistics firm, and three local small

enterprises. Real options theory is the theoretical lens used to examine the location choice of the OEMs.

Findings – Firms engaged in remanufacturing tend to co-locate facilities with existing manufacturing

facilities, and those investing in new sites for remanufacturing view the regulatory environment as the

most important factor. OEMs tend to leverage on existing manufacturing facilities or third-party

remanufacturers to reduce their cost of commitment when starting remanufacturing at new locations.

Research limitations/implications – The sample size is still small for the generalization of the

results. Further empirical study is needed to test the propositions from this paper.

Practical implications – This paper could assistmanagers and decision makersin the multinational

corporations to design appropriate logistics-related solutions for remanufacturing in Asia.

Originality/value – The authors work contributes to the theory on remanufacturing location

determinants.It shows that OEMs and third-partyremanufacturerscan have a collaborativerelationship

instead of the commonlyassumed competitive one, which is currently not found in the literature.

Keywords Case study, Remanufacturing, Location choice, Third-party remanufacturers

Paper type Research pap er

1. Introduction

Traditional supply chain management (SCM) is concer ned with the flow of raw

materials, components, and finished goods from source to the point of consumption

(Prahinski and Kocabasoglu, 2006). Today, the scope for SCM in the context of

environmental sustainability has extended to include the reverse flow of unsold

finished goods, parts, and packaging materials from the point of consumption back to

the source or to the rework/refurbishing vendors (Rogers and Tibben-Lembke, 2001).

With greater environmental awareness, many firms have started to reduce waste ,

recycle, refurbish, and remanufacturing their products for a more sustainable future.

Governments in many countries are starting to develop clearer and stricter

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0957-4093.htm

Received 31 October 2012

Revised 18 April 2013

10 July 2013

Accepted 19 July 2013

The International Journal of Logistics

Management

Vol. 25 No. 1, 2014

pp. 20-34

rEmeraldGroup PublishingLimited

0957-4093

DOI 10.1108/IJLM-10-2012-0125

This paper is based on a paper presented at the 17th International Symposium on Logistics

(www.isl21.net) held in July 2012 in Cape Town, South Africa.

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