Importance of closed-loop supply chain relationships for product remanufacturing

Remanufacturing is an industrial process where used products are restored (remanufactured) to useful life. In comparison to manufacturing, remanufacturing has some general characteristics that complicate the supply chain and production system. For example, a company must collect the used products from the customers, and thus the timing and quality of the used products are usually unknown. Remanufacturing companies are dependent on customers to return used products (cores). In this paper, seven different types of closed-loop relationships for gathering cores for remanufacturing have been identified. The relationships identified are ownership-based, service-contract, direct-order, deposit-based, credit-based, buy-back and voluntary-based relationships. Building theory around these different types of relationships, several disadvantages and advantages are described in the paper. By exploring these relationships, a better understanding can be gained about the management of the closed-loop supply chain and remanufacturing.