Materials management in remanufacturing of automotive components - a small remanufacturers perspective

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Materials management in of automotive components – a small IFACremanufacturing PapersOnLine 52-13 (2019) 1738–1743 Materials management management in inremanufacturers remanufacturingperspective of automotive automotive components components –– aa small small Materials remanufacturing of Materials management inremanufacturers remanufacturingperspective of automotive components – a small perspective Materials management inremanufacturers remanufacturing of automotive components – a small P. Golinska-Dawson* remanufacturers perspective remanufacturers perspective  P. Golinska-Dawson*

P. Golinska-Dawson* * Poznan University of Technology, Faculty of Engineering Management, 60-965 Poznan Poland P. Golinska-Dawson*  (Tel: Tel.: +48-61-665-3414; e-mail: [email protected]). P. Golinska-Dawson* * Poznan University University of of Technology, Technology, Faculty Faculty of of Engineering Engineering Management, 60-965 Poznan Poland Poland * Poznan Management, 60-965 Poznan  * Poznan University of Technology, Facultye-mail: of Engineering Management, 60-965 Poznan Poland (Tel: Tel.: +48-61-665-3414; e-mail: [email protected]). (Tel: Tel.: +48-61-665-3414; [email protected]). * Poznan University of Technology, Facultye-mail: of Engineering Management, 60-965 Poznan Poland (Tel: Tel.: +48-61-665-3414; [email protected]). (Tel: Tel.: +48-61-665-3414; e-mail: [email protected]). Abstract: Vehicles require many spare parts for servicing over their life period. The pressure to extend the warranty period require and to many provide highparts service levels pushes companies to search the Abstract: Vehicles spare for servicing servicing over automotive their life life period. period. The pressure pressure to for extend Abstract: Vehicles require many spare parts for over their The to extend most cost efficient options to source spare parts. Previous studies have proven that remanufacturing is Abstract: Vehicles require many spare parts for servicing over their life period. The pressure to extend the warranty period and to provide high service levels pushes automotive companies to search for the the warranty period require and to many provide highparts service levels pushes automotive companies to search the Abstract: Vehicles spare for servicing over their period. The pressure to for extend one ofcost theefficient most efficient ways of product recovery with regard tolife energy and materials usage and the warranty period and to provide high service levels pushes automotive companies to search for the most options to source spare parts. Previous studies have proven that remanufacturing is most cost efficient options to sourcehigh spare parts. levels Previous studies have proven that remanufacturing is the warranty period and to ways provide service pushes companies to search for and the potential for cost reduction. Materials management is crucial forautomotive successful remanufacturing but studies most cost efficient options to source spare parts. Previous studies have proven thatmaterials remanufacturing is one of the most efficient of product recovery with regard to energy and usage one of the most efficient ways of product recovery with regard to energy and materials usage and most cost efficient options toMaterials source spare Previous studies have proven thatmaterials remanufacturing is in this field are limited in the literature. This parts. paper aims to classify the typical challenges whichbut appear in one of the most efficient ways of product recovery with regard to energy and usage and potential for cost reduction. management is crucial for successful remanufacturing studies potential formost cost reduction. Materials management is crucial for successful remanufacturing but studies one of the efficient ways of product recovery with regard to energy and materials usage and the remanufacturing of automotive components. The focus is placed on small companies, who act mainly potential forare cost reduction. is crucial for successful studies in this limited in literature. This to the challenges appear in in this field field limited in the theMaterials literature.management This paper paper aims aims to classify classify the typical typicalremanufacturing challenges which whichbut appear in potential forare cost reduction. Materials management isfocus crucial for the successful remanufacturing but studies as this contracted orlimited independent remanufacturers. The findings from literature review arewhich combined with in field are in the literature. This paper aims to classify the typical challenges appear in the remanufacturing of automotive components. The is placed on small companies, who act mainly the remanufacturing of automotive components. The focus is placed on small companies, who act mainly in this field limited the remanufacturers. literature. paper aims to classify the typical challenges appear in primary andare secondary data fromcomponents. fourThis case studies. The most important with regard to the remanufacturing of in automotive The focus isfrom placed on small companies, who act mainly as contracted or independent The findings from the literature review are arewhich combined with as contracted or independent remanufacturers. The findings the literature review combined with the remanufacturing of automotive components. The focus is placed on small companies, who act mainly materials management are discussed. as contracted independent findings literaturechallenges review are with combined primary and or secondary dataremanufacturers. from four four case case The studies. Thefrom mostthe important challenges with regardwith to primary and secondary data from studies. The most important regard to as contracted or independent remanufacturers. The findings from the literaturechallenges review are with combined with primary and secondary data from four case studies. The most important regard to materials management are discussed. materials management are discussed. © 2019, IFAC (International Federation of Automatic Control) Hosting by Elsevier Ltd. All rights reserved. Keywords: materials planning, core acquisition handling, remanufacturing. primary secondary from four case management, studies. The materials most important challenges with regard to materialsand management aredata discussed. materials are discussed. Keywords: materials core acquisition management, management, materials handling, handling, remanufacturing. remanufacturing. Keywords:management materials planning, planning, core acquisition materials  Keywords: materials planning, core acquisition management, materials handling, remanufacturing. traditional manufacturing remanufacturing with regard to  Keywords:1.materials planning, core acquisition management, materials handling, and remanufacturing. INTRODUCTION MM. Remanufacturers have to cope with aregard lower traditional  traditional manufacturing manufacturing and and remanufacturing remanufacturing with with regard to to INTRODUCTION standardization of product’s structure and process routings 1.an INTRODUCTION Remanufacturing is1. industrial process in which core traditional manufacturing and remanufacturing with aaregard to MM. Remanufacturers have to cope with lower MM. Remanufacturers have to cope with lower 1. INTRODUCTION traditional manufacturing and remanufacturing with to (Kurilova-Palisaitiene et al., 2018, etprocess al., 2017). The (returned product) is industrial disassembled, reprocessed and standardization MM. Remanufacturers have toGaspari cope with aregard lower of product’s structure and routings 1. INTRODUCTION Remanufacturing is an process in which core standardization of product’s structure and process routings Remanufacturing is an industrial process in which core MM. Remanufacturers have toGaspari cope with aroutings lower lead times are more variable than in traditional production, as reassembled in order to bring it back to at least “as good as standardization of product’s structure and process (Kurilova-Palisaitiene et al., 2018, et al., 2017). The Remanufacturing is an processreprocessed in which core (returned product) is disassembled, and et al., 2018, Gaspari etprocess al., 2017). The (returned product) is industrial disassembled, reprocessed and (Kurilova-Palisaitiene standardization of condition product’s structure andThe routings it depends on more the of the core. same typeThe of Remanufacturing is to an industrial process in Parkinson which core new” condition (Sundin, 2004; Lund, 1996; & lead (Kurilova-Palisaitiene et al., than 2018, Gaspari et al., 2017). times are variable in traditional production, as (returned product) is disassembled, reprocessed and reassembled in order bring it back to at least “as good as lead times are more variable than in traditional production, as reassembled in order to bring it back to at least “as good as (Kurilova-Palisaitiene et al., 2018, Gaspari et al., 2017). The component may be in different condition (different usage (returned product) is bring disassembled, Thompson, 2003;). Returned products usually lead times are more variable than in traditional production, as it depends on the condition of the core. The same type of reassembled in order to it back to 1996; at reprocessed least “as include: goodand as new” condition (Sundin, 2004; Lund, Parkinson & it depends on the condition of the core. The same type of new” condition (Sundin, 2004; Lund, 1996; Parkinson & lead times more variable than in traditional production, as pattern) andare might require additional reprocessing (Butzler et reassembled in order to bring it back to at least “as good as manufacturing defects/quality returns, obsolete inventory, it depends on the condition of the core. The same type of component may be in different condition (different usage new” condition (Sundin, 2004; products Lund, 1996; Parkinson & component may be in different condition (different usage Thompson, 2003;). Returned usually include: Thompson, 2003;). Returned products usually include: it depends on the condition of the core. The same type of al. 2016; Golinska-Dawson &Pawlewski 2015). The crucial new” condition (Sundin, 2004;returns, Lund, 1996; Parkinson & pattern) end-of-life products, end-of-use products, warranty returns, component in different condition (different usage and might require additional reprocessing (Butzler et Thompson, 2003;). Returned products usually include: manufacturing defects/quality obsolete inventory, pattern) and may mightbe additional reprocessing (Butzler et manufacturing defects/quality returns, obsolete inventory, component may berequire in different (different usage parameter with regards toadditional MM condition is reprocessing the so called material Thompson, 2003;). Returned products usually include: commercialproducts, surpluses. The remanufacturing of components pattern) and might require (Butzler et al. 2016; Golinska-Dawson &Pawlewski 2015). The crucial manufacturing defects/quality returns, obsolete inventory, end-of-life end-of-use products, warranty returns, al. 2016; Golinska-Dawson &Pawlewski 2015). The crucial end-of-life products, end-of-use products, warranty returns, pattern) might require additional reprocessing (Butzler et recovery rate MRR. It defines the is probability thatThe a material manufacturing defects/quality returns, obsolete inventory, gains a lot of attention inThe the remanufacturing automotive industry for various parameter al. 2016;and Golinska-Dawson &Pawlewski 2015). crucial with regards to MM the so called material end-of-life products, end-of-use products, warranty returns, commercial surpluses. of components parameter with regards to MM is the so called material commercial surpluses.end-of-use The remanufacturing of components al. 2016; Golinska-Dawson &Pawlewski 2015). The crucial recovered from a disassembled unit is suitable for further use. end-of-life products, products, warranty returns, reasons, as follows (modified from Seitz, 2007; Ostlin et al. parameter with regards to MM is the so called material recovery rate MRR. It the probability that commercial of components gains aa lot attention inThe the remanufacturing automotive industry industry for rate MRR. It defines defines the is probability that aa material gains lot of ofsurpluses. attention in the automotive for various various recovery parameter with MM the so called material In practice the MRR isto usually variable (Guide, 2000; commercial surpluses. The remanufacturing of components 2008): recovery rate MRR. It defines the probability thatfurther a material recovered from aa regards disassembled unit is suitable for use. gains a lot of attention in the automotive industry for various reasons, as follows (modified from Seitz, 2007; Ostlin et al. recovered from disassembled unit is suitable for further use. reasons, as follows (modified from Seitz, 2007; Ostlin et al. recovery rate MRR. It defines the probability that a material Golinska, 2013), and often more than one core is needed to gains a lot of attention in the automotive industry for various recovered from a disassembled unit is suitable for further use. In practice the MRR is usually variable (Guide, 2000; •2008): Securing spare parts supply forSeitz, warranty servicing reasons, as follows (modified from 2007;and Ostlin et al. In practice the MRR is usually variable (Guide, 2000; 2008): recovered from a disassembled unit is suitable for further use. be disassembled in order to reassemble a good quality reasons, as follows (modified from Seitz, 2007; Ostlin et al. Golinska, In practice2013), the and MRR is usually variable (Guide, 2000; more one is to purposes; Golinska, 2013), and often often more than than one core core is needed needed to •2008): Securing •2008): Securing spare spare parts parts supply supply for for warranty warranty and and servicing servicing be In practice theproduct. MRR is variable (Guide, 2000; remanufactured Forusually thatreassemble reason the core level ofneeded work-inGolinska, 2013), and often more than one is to disassembled in order to a good quality •• purposes; Protecting market share and brand; be disassembled in order to reassemble a good quality Securing spare parts supply for warranty and servicing purposes; Golinska, and often more than one core isofneeded to progress is2013), usually high. The remanufacturers have to deal be disassembled in order to reassemble a good quality remanufactured product. For that reason the level work-in•• Protecting Securing spare parts supply for warranty and servicing Providing novel aftermarket solutions; remanufactured product. For to thatreassemble reason the level of work-inmarket share and brand; • purposes; Protecting market share and brand; be disassembled in order a good quality with small batches encompassing a range of product variants remanufactured product. reason the levelhave of work-inprogress is high. The remanufacturers to purposes; Fulfilling environmental legal obligations; progress is usually usually high.For Thethat remanufacturers have to deal deal Protecting marketaftermarket share and brand; ••• Providing novel solutions; Providing novel aftermarket solutions; remanufactured product. For that reason the level of work-inand generations, which complicates tool-changing, progress is usually high. The remanufacturers have to deal with small batches encompassing a range of product variants •• Fulfilling Protecting market share and brand; Increasing profits; with small batches encompassing a range of product variants Providing environmental novel aftermarket legal obligations; •• Fulfilling environmental legalsolutions; obligations; progress is batches usually high. The processes remanufacturers have to deal disassembly, and encompassing assembly (Seitz & variants Peattie, with small a range of product and generations, which complicates tool-changing, Providing novel aftermarket solutions; Fulfilling CSR policy; and generations, which complicates tool-changing, Fulfilling environmental legal obligations; •• Increasing profits; Increasing profits; with small batches encompassing a results range of product variants 2004).The product’s proliferation also in& the high and generations, which processes complicates tool-changing, disassembly, and (Seitz Fulfilling CSR environmental legal obligations; Reducing costs; disassembly, and assembly assembly processes (Seitz & Peattie, Peattie, ••• Fulfilling Increasing profits; policy; Fulfilling CSR policy; and generations, which complicates tool-changing, inventory of spare parts or half finished products in storage disassembly, and assembly processes (Seitz & Peattie, 2004).The product’s proliferation results also in the high •• Reducing Increasing profits; Enabling green marketing. 2004).The product’s proliferation results(Seitz also in& the high CSR costs; • Fulfilling Reducing costs;policy; disassembly, andSome assembly processes Peattie, (Sundin, 2004). cores that are returned be 2004).The product’s proliferation results also incannot the high inventory of spare parts or half finished products in storage Fulfilling CSR policy; inventory of spare parts or half finished products in storage is a common way to provide replacement Reducing costs; ••Remanufacturing Enabling green marketing. •• Enabling green marketing. 2004).The product’s proliferation results also in the high remanufactured at acceptable costs due to extensive damage inventory of spareSome parts cores or halfthat finished products cannot in storage 2004). are be Reducing costs;services (Sundin, 2004). Some that are returned returned cannot be for warranty or the aftermarket. It is also used (Sundin, •parts Enabling green Remanufacturing is aa common inventory of spare parts cores or half finished products in damage storage that would2004). require extensive reprocessing. Remanufacturing ismarketing. common way way to to provide provide replacement replacement remanufactured (Sundin, Some cores that are returned cannot be at acceptable costs due to extensive •in case Enabling green marketing. remanufactured at acceptable costs due to extensive damage of Product-Service–System agreements to facilitate Remanufacturing is a common way to provide replacement parts for or aftermarket. It is (Sundin, 2004). Some cores that due are to returned cannot be parts for warranty warranty isservices services or the theway aftermarket. It replacement is also also used used that remanufactured at acceptable costs extensive damage would require extensive reprocessing. Remanufacturing a common to provide The paper aims to identify the factors influencing the that would require extensive reprocessing. thecase life-cycle management The Automotive Parts parts forof warranty services of orproducts. the aftermarket. It is also used remanufactured at acceptable costs due to extensive damage in Product-Service–System agreements to facilitate in case of Product-Service–System agreements to facilitate wouldMM require reprocessing. parts forofwarranty services orproducts. the aftermarket. It is used effective in theextensive remanufacturing process. It addresses the Remanufacturers Association (APRA) identifies overParts 50 that paper aims to the in case Product-Service–System agreements to also facilitate the life-cycle management The that reprocessing. The would paperrequire aims extensive to identify identify the factors factors influencing influencing the the the life-cycle management of of products. The Automotive Automotive Parts The existing research gap by summarizing the findings from the the in case of Product-Service–System agreements to facilitate different components which are currently remanufactured. The paper aims to identify the factors influencing effective MM in the remanufacturing process. It addresses the life-cycle management of products. The Automotive Parts Remanufacturers Association (APRA) identifies over 50 effective MM in the remanufacturing process. It addresses the Remanufacturers Association (APRA) identifies over 50 The paper aims to identify the factors influencing the literature review and analysis of the primary and secondary the life-cycle management of products. The Automotive Parts The value of European automotive remanufacturing sector is effective MM in the process. It addresses research gap by the from Remanufacturers Association (APRA) identifies over 50 existing different components which currently remanufactured. existing research gapremanufacturing by summarizing summarizing the findings findings from the the different components which are are currently remanufactured. effective MM the remanufacturing process. Itand addresses the data fromresearch fourincase studies from the automotive sector. Remanufacturers Association (APRA) identifies over 50 estimated to be €7.4 billion (ERN, 2015). existing gap by summarizing the findings fromThis the literature review and analysis of the primary secondary different components which are currently remanufactured. The value of European automotive remanufacturing sector is literature review and analysis of the primary and secondary The value of European automotive remanufacturing sector is existing research gapstudies by answers summarizing the findings fromThis the paper aims to case provide to automotive research questions, as different components which are 2015). currently remanufactured. literature review and analysis of the primary and secondary data from four from sector. The value of European automotive remanufacturing sector is estimated to be €7.4 billion (ERN, data from four case studies from the automotive sector. This estimated to be €7.4 billion (ERN, 2015). Materials management (MM) in case of remanufacturing is isa literature review and analysis of the primary and secondary The value of European automotive remanufacturing sector follows: RQ1: What are the typical challenges with regard to data from four case studies from the automotive sector. This aims to provide answers to research as estimated to betask, €7.4 billion is (ERN, 2015). paper aimsfour to case provide answers to automotive research questions, questions, as very complex not sufficiently investigated ina paper data studies from sector. This estimated to be €7.4 which billion (ERN, 2015). MM from inaims the toremanufacturing ofthe automotive components? Materials management (MM) in of Materials management (MM) in case case of remanufacturing remanufacturing is is a follows: paper provide answers to research questions, as RQ1: What are the typical challenges with regard to follows: RQ1:toWhat are the typicaltochallenges regard as to the literature. There (MM) areis not several between paper aims provide answers research with questions, RQ2: Which challenges aretypical most important and therefore Materials management in case ofdifferences remanufacturing very complex task, sufficiently investigated in follows: RQ1: What are the challenges with regard to very complex task, which which is not sufficiently investigatedis inaa MM in the remanufacturing of automotive components? MM in the remanufacturing of automotive components? Materials management (MM) in case of remanufacturing is follows: RQ1: What are the typical challenges with regard to very complex task, which is not sufficiently investigated in RQ2: the literature. There are several differences between the literature. There are several differences between MM in the remanufacturing of automotive components? Which challenges are most important and therefore Which challenges are most important and therefore very complex task, which is not sufficiently investigated in RQ2: MM in the remanufacturing of automotive components? the literature. There are several differences between Copyright © 2019 IFAC 1764RQ2: Which challenges are most important and therefore the literature. There(International are several differences between 2405-8963 © 2019, IFAC Federation of Automatic Control) Hosting by Elsevier Ltd. All rights reserved. RQ2: Which challenges are most important and therefore Copyright 2019 IFAC 1764 Copyright ©under 2019 responsibility IFAC 1764Control. Peer review© of International Federation of Automatic Copyright © 2019 IFAC 1764 10.1016/j.ifacol.2019.11.452 Copyright © 2019 IFAC 1764

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influence decisions on MM in automotive remanufacturing in small companies? The paper is organized as follows; Section 2 discusses the theoretical background, Section 3 presents case studies. Section 4 provides discussion on the results. Section 5 concludes the paper and provides directions for future research. 2. THEORETICAL BACKGROUND 2.1 Flow of materials in the remanufacturing process The remanufacturing process is case-dependent and industrydependent. Remanufacturing can be performed by different actors in the supply chain like: original equipment remanufacturers (OEM) or original equipment suppliers (OESs), third parties, like independent remanufactures (IR) or subcontractors/ contracted remanufacturers (CR). For that reason in the literature there are studies on the generic models for the remanufacturing process. One of the most referenced is the model by Sundin (2004) who identities 7 generic processes in remanufacturing, as follows: inspection, cleaning, disassembly, reprocessing, testing and storage. The flow of materials in the remanufacturing process includes used or discarded products (known as cores), the new parts and the components from cannibalized products. A core is the main input to a remanufacturing process, and it is the equivalent of the raw material in the primary production (Golinska, 2013). With regard to the MM it is important to distinguish also the additional process of kitting. Kitting significantly influences the remanufacturing lead time, as during it, components (remanufactured, cannibalized and new) are combined together in sets for the purpose of later reassembly. One of the main challenges in remanufacturing is to achieve a steady flow of cores (Lind et al., 2011). There are several ways to organize the core collections. The most common sources of cores are: • a product exchange (at the end of lease period, or after purchase of a new product) • contracts with cores’ brokers • remanufacturing contracts when the remanufacturer doesn’t own the core but just provides the service • deposit systems, when the customer at purchase time is placing a deposit, which is given back at return • deliveries of the rejected parts from production plants • deliveries from scrap yards and dismantling stations Companies usually need to apply multiple sourcing strategies in order to achieve a steady flow of cores. The sourcing strategy depends on the remanufacturing model. For example in the previous studies, (Golinska-Dawson et al., 2015) data has been collected from a group of 40 SMEs remanufacturing in the automotive sector in Poland. The majority of the responders (87, 5%) have remanufactured, as independent or as contracted-remanufactures. They have claimed that in such conditions the problems with availability of cores is reduced. However they still have experienced problems with a very variable quality of cores, which can be translated into a

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variable MRR for each order. The core control and forecasting play a bigger role in case of OEM. The purchase of new replacement components is tricky as often the demand is not known in advance (prior disassembly). Therefore it is difficult to use optimized batch sizes or benefit from economies of scale. The supply of old replacement components is usually limited. The remanufacturers often keep a buffer inventory of cannibalized parts from cores of not sufficient quality. An example of the remanufacturing process with regard to material flows is presented in Figure 1. Recycling or if not possible then disposal Scrap

cores delivery (input buffer)

inspection/quality assessment

Scrap

disassembly

inspection

cleaning Reused components

final quality assessment

re-assembly

kitting

new parts deliveries

output buffer

Figure 1. The Example remanufacturing process.

reprocessing of components

of

material

flow

in

the

For the purpose of this paper the MM in remanufacturing context is defined, as follows: “The materials and cores planning, sourcing, handling through the remanufacturing process, and associated inventory management with regard to economical and technical requirements”. The efficient MM allows to sustain and perform the remanufacturing process timely and at required cost. 2.2 Material management in remanufacturing The studies on MM in remanufacturing are relatively limited in the literature. The search in SCOPUS (September 2018) has allowed for the identification of only nine relevant papers for keywords: “material* management“ AND remanufacturing. The subsequent search in the WoS has identified an additional 6 papers. The thematic analysis has revealed that this can be assigned to the following categories: • Core acquisition management for example (Priyono et al., 2012; Wei et al., 2015) • Material planning/Material requirements planning (including hybrid planning systems), for example (Raupp et al., 2015;Yazici et al., 2016; Ferrer & Whybark, 2001) • Inventory management & control (e.g. De Crox, 2006) • Materials handling, for example (Östlin, & Svensson, 2005). Core acquisition management is “the active management of the core acquisition process in remanufacturing to achieve a better balance between return and demand, by dealing with the uncertainties in terms of return volume, timing and core quality” (Wei et al. 2015, p.4). Materials planning is defined here as: “determining the requirements (forecasting and planning of procurement) of raw materials, replaceable parts and other miscellaneous materials essential for the remanufacturing process”. The problems of the MM in remanufacturing are often presented also, as a part of

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production planning and control (DuPuy et al.2007; Guide, 2000). In the previous studies Östlin, (2008) proposes to analyse the MM in remanufacturing from the external and the internal perspective. The external processes considers logistics operations, which are performed before or after the internal remanufacturing process (Östlin, 2008). The second dimension in the MM in remanufacturing is the internal perspective, which reflects the materials flow through the process. Table 2 presents the classification of the challenges in the MM in remanufacturing. It is elaborated based on the literature review from Scopus and WoS (keywords: “material* management“ AND remanufacturing), as well as additional manual searches by the author in those databases by cross-referencing. The final pool of 22 papers is selected for analysis. 3. CASE STUDIES

processes are case-dependent and sector-dependent. The rigor of rationalist research requires a set of simplifications of the real life problem and might lead to data which is precise and measurable but trivial. Meredith (1998) states that case studies and field research are preferred to the more traditional rationalist methods (e.g. optimization, simulation, statistical modelling) in case of new theories/methods in the field of operations management. It allows for the answering of questions with “why” not only “what” and “how”. It allows for the conducting of an early stage explanatory investigation, even if variables are not known and a phenomenon is not fully understood. In order to reduce the limitations of the case study approach the results will be tested against the findings from the literature review. The primary data from direct observations is triangulated with data from secondary sources (e.g. similar case studies describe in the literature, companies web pages, online industry report, leaflets etc.).

3.1 Material management in remanufacturing

3.2 Company characteristics

This paper combines the outputs from the literature review with results of four case studies from the automotive sector. Both primary and secondary data is used for case studies. Remanufacturing research is grounded mainly in the operations management domain. The previous studies in the area of MM have focused on the interpretivist approach, mainly on the case studies method (e.g. Seitz & Peattie, 2004, Östlin 2008, Kurilova-Palisaitiene & Sundin, 2015) or on the advanced mathematical optimization and modelling approach (Inderufth 1997; DeCroix 2006, Raupp et al, 2015). The problem with the application of the rationalist approach in remanufacturing results from the fact that, remanufacturing

Often papers on remanufacturing present the MM challenges from the perspective of an OEM. There are relatively limited studies on the remanufacturing performed by independent small size remanufacturers. The case studies include four companies providing remanufacturing of automotive components. All of them are SMEs.

Company A: 1) contracted remanufacturer and independent remanufacturer, 2) products: alternators, starters, 3) source of cores: customer owned, in case of shortages purchases from core broker, 4) remanufacturing to order RTO (90%) for contracts and remanufacturing to stock RTS (10%) for own brand. Table 3. Categories of challenges in materials management in remanufacturing

Core acquisition management

Thematic category

Material planning

Internal

External

Perspec tive

Problem characteristics

Literature source

Uncertainty in availability of cores (quality, quantity, timing)

(Kurilova-Palisaitiene et al., 2018); (Gaspari et al., 2017); (Butzer et al., 2016); (Yazici et al.,2016); (Golinska-Dawson &Pawlewski , 2015); (Raupp et al., 2015); (Östlin & Ekholm, 2007); (Golinska, 2013); (De Puy, 2007); (Östlin, 2005)

Limited balance of supply and demand

(Kurilova-Palisaitiene et al., 2018); (Golinska-Dawson &Pawlewski , 2015);( Raupp et al., 2015); (Östlin,& Ekholm, 2007); (Golinska & Kawa, 2011); (Guide & Srivastava, 1997); (Östlin et al. 2008); (Kurilova-Palisaitiene & Sundin, 2015)

High cores’ proliferation

(Butzer et al., 2016);(Golinska-Dawson &Pawlewski , 2015); (Golinska, 2013); (Golinska & Kawa, 2011); (Östlin et al., 2008);

Poor core information

(Kurilova-Palisaitiene et al., 2018); (Gaspari et al., 2017);(Golinska, 2013); (Golinska & Kawa, 2011); (Ferrer & Whybark, 2001); (Östlin, & Svensson, 2005)

Insufficient quality management of cores

(Kurilova-Palisaitiene et al., 2018); (Butzer et al., 2016); (Östlin,& Ekholm, 2007); (Kurilova-Palisaitiene & Sundin, 2015)

Uncertain or stochastic demand

(Golinska, 2013); (Gallo et al. 2009); (De Puy, 2007);( DeCroix, 2005); (Ferrer & Whybark, 2001); (Indefurth 1997); (Guide & Srivastava, 1997); (Östlin et al. 2008)

Insufficient recovery network Variable lead times/uncertain lead time

(Östlin & Ekholm, 2007; (Golinska & Kawa, 2011), (Lin & Chang, 2009)

Lack of integration between flows of information and materials Lack of MRP system/insufficient MRP

(Golinska & Kawa, 2011) ; (Guide & Srivastava, 1997); (Kurilova-Palisaitiene & Sundin, 2015); (Östlin, 2005)

(Kurilova-Palisaitiene et al., 2018); (Gaspari et al., 2017); (Butzer et al., 2016); (Golinska & Kawa, 2011), (De Puy, 2007), (Guide & Srivastava, 1997)

(Kurilova-Palisaitiene et al., 2018); (Yazici et al.,2016); (Raupp et al., 2015) ; (Morgan & Gagnon, 2013), (Kurilova-Palisaitiene & Sundin, 2015) 1766

Materials handling

Inventory management and control

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Insufficient material planning methods

(Golinska, 2013); (Lin & Chang, 2009); (De Puy, 2007), (Ferrer & Whybark, 2001); (Indefurth 1997); (Guide & Srivastava,1997)

Lack of spare parts

(Kurilova-Palisaitiene et al., 2018) ; (Kurilova-Palisaitiene & Sundin, 2015)

Variable MRR

(Golinska-Dawson &Pawlewski, 2015); (Morgan & Gagnon, 2013); (Östlin,& Ekholm, 2007); (Golinska, 2013); (Gallo et al., 2009); (De Puy, 2007), (Guide & Srivastava, 1997); (Ferrer & Whybark, 2001); (Indefurth 1997)

Materials matching restrictions

(Golinska-Dawson &Pawlewski, 2015); (Morgan & Gagnon, 2013) , (Östlin,& Ekholm, 2007); (Kurilova-Palisaitiene & Sundin, 2015); (Östlin, & Svensson, 2005)

Small batches

(Golinska-Dawson &Pawlewski, 2015); (Morgan & Gagnon, 2013) , (Östlin,& Ekholm, 2007); (Kurilova-Palisaitiene & Sundin, 2015); (Östlin, & Svensson, 2005)

Poor spare parts information Lack of standardized procedures Stochastic product's structure

(Kurilova-Palisaitiene et al., 2018); (Kurilova-Palisaitiene & Sundin, 2015)

High inventory of work in progress

(Gaspari et al., 2017) (Golinska-Dawson &Pawlewski, 2015); (Morgan & Gagnon, 2013) ; (Golinska, 2013);

High inventory of replacement components (new and remanufactured) Low turnover of inventory/high obsolesce

(Kurilova-Palisaitiene et al., 2018) ; Golinska-Dawson &Pawlewski, 2015); Golinska, 2013) ; (Östlin, & Svensson, 2005); (Östlin,& Ekholm, 2007)

Stochastic materials routings through reman process

(Kurilova-Palisaitiene et al., 2018); (Gaspari et al., 2017); (Butzer et al., 2016); (Golinska-Dawson &Pawlewski, 2015); (Morgan & Gagnon, 2013) ; (Golinska, 2013) ; (Östlin, & Svensson, 2005); (Östlin,& Ekholm, 2007)

Process complexityInefficient materials handling through process

Gaspari et al., 2017); (Butzer et al., 2016); (Golinska-Dawson &Pawlewski, 2015); (Morgan & Gagnon, 2013) ; (Golinska, 2013); (Östlin,& Ekholm, 2007); (Östlin, 2005); (Kurilova-Palisaitiene & Sundin, 2015)

Waiting for operations

(Butzer et al., 2016, Östlin,& Ekholm, 2007); (Östlin, & Svensson, 2005)

(Kurilova-Palisaitiene et al., 2018) ; (Golinska & Kawa, 2011) (Golinska-Dawson &Pawlewski, 2015); (Morgan & Gagnon, 2013); (Golinska, 2013)

(Ferrer & Whybark, 2001), (Östlin, & Svensson, 2005); (Östlin, 2005); (Östlin et al. 2008)

Table 4. The importance of the problems Code

Challenge

A

B

C

D

CA1

Uncertainty in availability of cores

CA2 CA3 CA4 CA5 CA6 CA7 MP1 MP2

Limited balance of supply and demand High cores’ proliferation Poor core information Insufficient quality management of cores Uncertain or stochastic demand Insufficient recovery network Variable lead times/uncertain lead time Lack of integration between flows of information and materials Lack of MRP system/insufficient MRP syst. Insufficient material planning methods Lack of spare parts /material Variable MRR Materials matching restrictions Small batches Poor spare parts information Lack of standardized procedures Stochastic product's structure High inventory of work in progress High inventory of replacement components Low turnover /high obsolesce of cores inv. Stochastic materials routings through process Process complexity- Inefficient materials handling through process Waiting for operations

moderate marginal

moderate marginal

marginal N/A

marginal N/A

very important very important marginal marginal marginal very important very important

very important important marginal marginal moderate very important important

relatively important important marginal marginal marginal important moderate

relative. important very important marginal N/A marginal very important very important

N/A moderate moderate important very important very important important N/A important moderate marginal moderate important important

N/A moderate moderate important important very important moderate moderate important moderate moderate moderate important important

moderate rather important important important important moderate important moderate marginal N/A moderate N/A N/A moderate

important important very important important very important moderate very important moderate moderate N/A N/A N/A N/A moderate

important

important

marginal

moderate

MP3 MP4 MP5 MP6 MP7 MP8 MP9 MP10 MP11 IMC1 IMC2 IMC3 MH1 MH2 MH3

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Company B: 1) is a contracted remanufacturer & independent remanufacturer, 2) products: alternators & starters, 3) source of cores: customer owned &deposit based 4) remanufacturing to order RTO (70%) for contracts and remanufacturing to stock RTS (30%) for its own brand. Company C: 1) is an independent remanufacturer, 2) products: engines 3) source of cores: customer owned, 4) remanufacturing to order RTO. Company D: 1) is a contracted remanufacturer, 2) products: engines 3)source of cores: customer owned, 4) remanufacturing to order RTO. Alternators and starters are the most common components which are remanufactured. In those product’s categories on average 70% of sold products are coming from remanufacturing (Kim et al., 2008). Engines are high value products which are very desirable for remanufacturing (Palisatiene et all 2018). In order to provide higher representativeness of the results, the companies that are chosen apply the RTO policy and the RTS policy. Companies try to avoid sourcing the cores on the market, as it increases uncertainty. 4. DISCUSSION OF THE RESULTS The challenges related to cores availability are not as important, as in the case of OEMs. The OEMs usually are responsible for the organization of the recovery network (own or outsourced) and collections of used or obsolete products from customers (e.g. by law regulation on extended producer responsibility). Only challenges CA3 “High cores’ proliferation” and CA4 “Poor core information” were relatively important/important or very important. It is coherent with the previous studies (Golinska-Dawson et al, 2015; Palitiesene et al. 2018). The analysed companies remanufacture mainly cores which are owned by the customers. Only company B applies a deposit-based system for sales of the products which it remanufactures for stock. The deposits helps to stimulate the returns of the desirable cores. In case of contracted remanufacturing the core often needs to be remanufactured 1:1. That means that core information is crucial to estimate the remanufacturing lead time and cost as well as to provide on time deliveries of the new components. High proliferation of the cores results in problems in optimizing the remanufacturing process, as often the batch size is 1 pcs. Variable lead times/uncertain lead times (MP1) is important or very important for decision making in the analysed companies. Lack of integration between flows of information and materials (MP2) is very important/important in case of contracted remanufacturers, as they have to achieve the expected MRR for their customers. Very often customers, who are OEMs or OESs, do not want to share the information about the product. The companies (A, B, D) need to perform reverse engineering to achieve, as accurate as possible information on the original Bill of Materials (BOM). Companies A and B are using the MRP system for materials planning and they believe that they are sufficient. Companies C and D perform material planning manually (challenge MP3), as the batch size is very small (mainly 1 pcs.) and production volume is low (below 50 pcs. /month). For that reason they search for more efficient methods for material planning.

“Lack of spare parts” (MP5) is an important/very important challenge in case of engines’ remanufacturing (Company C&D). An engine is a component of high value, so both companies are limited in the usage of the cannibalization policy, which is more common in case of smaller and less valuable components (like starters &alternators). Company C&D need to ask customers to provide the missing components or to search on the market for them. Both options are very time consuming and influence also negatively the remanufacturing lead time. Variable MRR (MP6) is important in case of all companies. Materials matching restrictions (MP7) are important or very important for all companies. It is coherent with findings of Guide (2000), who has stated that in a situation when the same unit must be returned to customers the replaceable components cost is higher than in RTS. Waiting for the specific parts to be reprocessed may extend the expected lead time. “Small batches” (MP8) are an important factor in case of company A&B. Alternators and starters are preferable components to scale up the remanufacturing operations in order to achieve economies of scale. Due to the characteristics of contracted remanufacturing each customer order must be dealt with separately. Both companies have a lot of small orders. If they have bigger orders then they cover many products’ indexes (each index must be treated as separate batch). It limits the possibility to lower the remanufacturing cost and it reduces the possibility to use the resources in a more efficient way. It is coherent with findings of (Kim et al. 2008). Moreover such situations complicates materials planning and it reduces the possibility to optimize new components purchases. “Poor spare parts information” (MP9) is important in company C and very important in company D. Engine remanufacturing requires very close cooperation with the customers, as especially for older generations of engines the availability of spare parts are limited. If the customer does not want to share the product information before disassembly it is very time consuming to find spare parts on the market. Stochastic product's structure (MP11) is important or very important in company A&B. This challenge is related to the high products’ proliferation and many variants of starters and alternators which are remanufactured in the same facility. The challenges in the area of inventory management (IMC1IMC3) have moderate or marginal influence on decision making. The companies don’t keep an extensive inventory of replaceable components. The cores are kept in stock mainly for the purpose of order execution, so the extensive inventory of core or it’s obsolescence is marginal. Materials handling challenges (MH1-MH3) were important in case of company A and company B. Alternators and starters are relatively small automotive components, so they are remanufactured in batches of variable size. In order to achieve lower cost some batches might be combined for time-consuming operations (like drying). It results in unnecessary waiting and extended lead time. The engine is remanufactured individually (due to its value and size), so the stochastic routings are usually not applicable. However the stochastic routing are important in case of starters and alternators where one customer’s order may consist of many different generations and models of

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them. The findings are coherent with previous studies of Kim et al. (2008) or Seitz & Peattie (2004). 5. CONCLUSIONS Efficient materials management allows companies to sustain and perform the remanufacturing process timely and at required cost. In the literature there are many studies which identify different challenges, which make efficient MM difficult. The paper presents the classification of the challenges in materials management which are discussed in the remanufacturing literature. The author proposes the classification framework (RQ1) based on the distinction of the internal and external perspective and four thematic areas. The proposed classification is tested by four case studies from the automotive sector (RQ2). Further research steps will include the development of the decision framework for efficient MM which will be based on the proposed classification. The importance of the factors for decision-making will be further tested by the AHP method with participation by the industrial experts. REFERENCES Butzer, S., Schötz, S., & Steinhilper, R. (2016). Remanufacturing process assessment–a holistic approach. Procedia CIRP, 52, 234238. DeCroix, G. A. (2006). Optimal policy for a multiechelon inventory system with remanufacturing. Operations Research, 54(3), 532-543. DePuy, G. W., Usher, J. S., Walker, R. L., & Taylor, G. D. (2007). Production planning for remanufactured products. Production Planning and Control, 18(7), 573-583. ERN (2015) European Remanufacturing Network Report by Parker, D, Riley, K, Robinson, S, Symington, H, Tewson, J, Jansson, K, Ramkumar, S & Peck, D 2015, Remanufacturing market study. Ferrer, G., & Whybark, D. C. (2001). Material planning for a remanufacturing facility. POM, 10(2), 112-124. Gallo, M., Grisi, R., Guizzi, G., & Romano, E. (2009, October). A comparison of production policies in remanufacturing systems. In Proceedings of the 8th WSEAS International Conference on System Science and Simulation in Engineering, ICOSSSE'09 (pp. 334-339). Gaspari, L., Colucci, L., Butzer, S., Colledani, M., & Steinhilper, R. (2017). Modularization in material flow simulation for managing production releases in remanufacturing. Journal of Remanufacturing, 7(2-3), 139-157. Golinska, P. (2013). The materials management for remanufacturing shop floor- case study on automotive parts. Proceeding of the 22nd ICPR, Iguassu Falls, Brasil, 1-4. Golinska-Dawson, P., & Pawlewski, P. (2015). Multimodal approach for modelling of the materials flow in remanufacturing process. IFACPapersOnLine, 48(3), 2133-2138. Golinska-Dawson, P., M. Kosacka, & A. Nowak. (2015). The Survey on the Challenges of Organization of Automotive Component Reman. in Small-sized Companies in Poland. In: Toward Sustainable Operations of SC and Logistics Systems: 241-254, Springer Verlag, Berlin Heidelberg Golinska, P., & Kawa, A. (2011). Remanufacturing in automotive industry: Challenges and limitations. Journal of Industrial Engineering and Management, 4(3), 453-466. Guide Jr, V. D. R. (2000). Production planning and control for remanufacturing: industry practice and research needs. Journal of operations Management, 18(4), 467-483. Guide, V. D. R., & Srivastava, R. (1997). Buffering from material recovery uncertainty in a recoverable manufacturing environment. Journal of the Operational Research Society, 48(5), 519-529.

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