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Retailer or the third-party remanufacturer: Which is the greener contractor for outsourcing remanufacturing?

Author

Listed:
  • Hong Tan

    (Chongqing University, China)

  • Pengfei Sheng

    (Henan University, China)

  • Jakub Horák

    (Institute of Technology and Business in České Budějovice, Czech Republic)

Abstract

The aim of this paper is to understand how outsourcing remanufacturing operations to different OEMs agents (i.e., the retailer or third-party remanufacturer) affected a supply chain's sustainable issues. Although outsourcing strategies have been well studied in the remanufacturing literature, existing research has focused primarily on operational options between original equipment manufacturers (OEMs) and third-party remanufacturers (3PRs). In practice, however, many brand name retailers have recently created business models in which product remanufacturing is an integral part. The question showed the retailer or the third-party, which was the right remanufacturer for OEM's remanufacturing outsourcing? To answer this question, we developed two models for an OEM that had two options for remanufacturing outsourcing: (1) outsourcing remanufacturing to a 3PR (Model T) or (2) to its retailer (Model R). Using these two models, we addressed the questions: from the profit-maximizing perspective, how does outsourcing remanufacturing operations to retailers create strategic issues that are different from those with 3PRs? Which is more profitable for the OEM, 3PR, retailer, and the total supply chain? From an environmental impact perspective, how does outsourcing remanufacturing operations to retailers create strategic issues different from those with 3PRs? Which is more beneficial for our environment? Our analysis revealed that if the OEMs cared about economic performance, outsourcing the remanufacturing operations to the 3PR was a practical strategy. Conversely, if they cared about environmental sustainability, outsourcing the remanufacturing to the retailer was the preferred strategy. Numerical studies further validated our conclusions

Suggested Citation

  • Hong Tan & Pengfei Sheng & Jakub Horák, 2022. "Retailer or the third-party remanufacturer: Which is the greener contractor for outsourcing remanufacturing?," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 10(1), pages 435-452, September.
  • Handle: RePEc:ssi:jouesi:v:10:y:2022:i:1:p:435-452
    DOI: 10.9770/jesi.2022.10.1(24)
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    References listed on IDEAS

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    1. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    2. Bacik Radovan & Fedorko Richard & Nastisin Ludovit & Gavurova Beata, 2018. "Factors of communication mix on social media and their role in forming customer experience and brand image," Management & Marketing, Sciendo, vol. 13(3), pages 1108-1118, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    outsourcing; third-party remanufacturer; original equipment manufacturer; greener contractor;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices

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