Remanufacturing and Refurbishment: A Guide to The Differences
The world of recommerce is leaning into the inevitability of customer returns to increasingly shine a light on remanufacturing and refurbishment. They are two critical concepts under recommerce or the sale of second-hand items because they determine the state of the goods sold.
Recommerce is picking up across the globe, and through these two concepts, pre-owned or second-hand products are made available in conditions that will elicit customer satisfaction. However, remanufacturing and refurbishment are not the same. They are often misunderstood and used interchangeably, but they mean different things.
Remanufacturing and refurbishment are workflows that fall under packaging management within reverse logistics processes. They are options for businesses to leverage in reintroducing pre-owned or second-hand items into the market. After processing returns, a business decides whether to dispose, remanufacture/refurbish, or just integrate the item into inventory management as part of the returns process. The options may depend on the industry, though.
This article will explore the differences and the process behind each.
What is Remanufacturing?
Remanufacturing supply chain management gives products a second life. After managing returns, the product is dismantled to find out the root of the problem and then fixed with new parts to ensure it is better than new. Remanufacturing can be done on diverse products, including electronic gadgets, vehicle engines, and high-quality medical equipment.
The concept is unique because it goes beyond everyday repairs and tries to find out the problem’s pattern or root of the problem and then rework the entire product to ensure that it does not happen again.
The Remanufacturing Process
There are five typical steps the average remanufacturing operation will follow. It is more detailed than the refurbishment and allows for a more thorough approach to the repair of the product at hand.
Step 1: Dissasemble
Through the returns management process, products meant for remanufacturing are allocated to the disassembly system of the operation to be completely dismantled. Efficient disassembly and returns management can significantly enhance customer loyalty by ensuring a smooth and satisfactory returns experience.
Step 2: Clean
After opening and dismantling the product, it is cleaned thoroughly to help for easy repairs and analysis of the problem. Cleaning entails removing chemicals, rust, and other debris that might have clogged up the inner parts of the product.
Step 3: Repair/Replace
Depending on the pattern of the problem, the faulty parts can be repaired or replaced. Replacement could also entail using better materials that would ensure the longevity of the product.
Step 4: Reassemble
After repairs, the parts are carefully put together, and the product is made whole again. Reassembling doesn’t typically deter from the design of the product.
Step 5: Testing
Testing is critical because it ensures the product can be certified before selling to the customers. It also allows the business or remanufacturer, in this case, to properly test the impact of the new parts on the product and how it affects its longevity.
Benefits of Remanufacturing
Remanufacturing makes the recommerce industry worth it for businesses and customers. Customers get to buy products that are as good as new for sometimes half the price, and the remanufacturers or retailers can make hefty profits on it because they spend minimally on acquiring and getting the entire product market ready.
Other benefits include:
1. Sustainability
Millions of products are designed every day. Unfortunately, millions of the same are disposed of every day. Remanufacturing through reverse logistics helps stop a lot of unnecessary disposals. It does this by extending the life of many of these products, selling them as good as new to the set of consumers, and making a decent profit while at it.
2. Profitability
Remanufacturing businesses and supply chains spend minimally to acquire many of these products, especially because they are often tagged as waste. In many cases, the most impactful spend is the logistics that bring the product in and out of the factory or remanufacturing plant. By fixing the issue and presenting it as better than new, these businesses can make more from the product than they would from the first production.
Refurbishment
Refurbishment is less intensive than the remanufacturing process. However, like the remanufacturing process, it also extends the life of the product. It typically entails repairing the actual fault with the product rather than finding the root of the matter. It is a short-term solution because the problem could resurface, or other parts of the product may also become faulty due to the level of work done.
Because refurbishment is mostly focused on getting the product back into the market with as minimal effort as possible, it doesn’t guarantee the long-term success of the product like refurbishment does.
The Refurbishment Process
Although refurbishment is not as intensive as remanufacturing, the process is similar but far less complicated in practice. It is more straightforward and takes less time and cost than remanufacturing.
Step 1: Inspect
At this stage, the product is inspected to find out the problem or why it went bad. In many cases, it could be just a case of wear and tear, or everything is working fine, but the customer is tired of it. In that case, it is taken to the next stage. When there is a fault, it is identified before taking up the next stage.
Customers may be offered store credit for items that are inspected and found eligible for refurbishment.
Step 2: Cleaning
Because it will be resold, the product has to be thoroughly cleaned to appear more presentable. However, unlike the remanufacturing process, the cleaning is more on the outside. The insides are mostly untouched, except in cases when repairs force the refurbishing team to dismantle the product.
Step 3: Repair
Repair is done on the part or section of the product that went faulty. No thorough work is done to determine the root cause of the issue. This means repairs are more straightforward and less expensive than those in the remanufacturing process.
Step 4: Test
Testing is done to ensure the product is working as it should. This will determine if it can be sold to the customer or if it requires more work before being approved to go back into the market.
Benefits of Refurbishment
Although not as technical and complex as remanufacturing, there is still a market for it. However, it cannot be presented as brand new, and customers are also aware that there could be potential challenges with it in the future. In many cases, warranties are given but not as long or as extensive as those for remanufacturing.
Here is why refurbishment plays a role in today’s market:
1. Cost Effective
It is cost-effective for businesses, supply chains, and consumers. When done right, it works well. Customers can often get it at heavily discounted prices. For the business, since they are not spending so much on it, they are also able to make a decent profit. Every party in the refurbishment supply chain wins with regard to the cost.
2. Functional Product
Although not brand new, the product works and will serve the consumer’s needs. This way, the lifecycle of the product is extended, and there is less environmental waste on the planet. Extending the life cycle of products can cut down the impact of that product on the environment by as much as 40%.
The Role of Reverse Logistics and Returns Management Operation in Remanufacturing and Refurbishment
Without reverse logistics and an efficient returns process, running remanufacturing and refurbishment supply chains will be challenging. Through the reverse logistics process and the return management operation, items are effectively collected from the customers and then sorted effectively to ensure they end up in the right place.
The Role of ReverseLogix in Remanufacturing and Refurbishment
ReverseLogix is the only end-to-end returns management software that lets you initiate returns, configure return processing, and even handle repairs. Remanufacturing and refurbishment can be complex and difficult to manage. However, with the ReverseLogix reverse management system (RMS), the operations can be streamlined to ensure better throughput.
Frequently Asked Questions
The reverse logistics providers and platforms can help the refurbishment and remanufacturing supply chain achieve the following:
– Increased Product availability
– Cheaper acquisition of the products
– Improved Sustainability
– Streamlined Customer feedback
Through these processes and operations, the supply chain ensures:
– Accurate product evaluation
– Faster Processing
– Improved quality control
It depends on your priorities. Remanufactured products are as good as new ones without all the initial hassle, and they come with more comprehensive warranties. But, they are more expensive. While refurbished products are cheaper, they might have slightly lower performance or shorter warranties.
Remanufacturing involves disassembly, cleaning, extensive repair/replacement with new parts, reassembly, and testing. Refurbishment involves cleaning, inspection, repair of major issues, and basic testing.
