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Managing product returns for remanufacturing

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Firms are often encouraged to offer environmentally friendly products as part of corporate citizenship; being a good citizen environmentally. However, this is an unrealistic expectation since a rational firm will only engage in profitable ventures; those that increase shareholder wealth. We develop a framework for analyzing the profitability of reuse activities, and show how the management of product returns influences operational requirements. We show that the acquisition of used products is the control lever for the management and profitability of reuse activities. These activities, termed product acquisition management, affect several important business decisions. First, if a firm is to pursue reuse activities, these activities must be value-creating. Second, if a firm is to compete by offering remanufactured products then we show how to maximize profits via product returns management. Third, operational issues are strongly influenced by the approach used to manage product returns. Finally, product acquisition management must address the creation of new markets for reused goods and products.

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