Hidden potentials in open-loop supply chains for remanufacturing

Abstract

Purpose The circular economy grows in popularity in sustainability-oriented environments. Remanufacturing contributes to circularity though it faces challenges regarding reverse supply chains (SCs). Literature focusses on closed-loop supply chains (CLSCs) for reverse flows of products. However, alternative SCs and different market actors provide used components (cores) for remanufacturing through “open-loops”. The purpose of this paper is to investigate the influence of independent actors on core supply and how especially middlemen implement supplier relationship management to address supply shortages in automotive remanufacturing. Design/methodology/approach The study follows a qualitative research approach to compare remanufacturing SCs in Europe and North America. The analysis aims to identify managerial leverage to reduce supply shortages. Findings Reduction of information asymmetries and transaction costs is crucial for “open-loop supply chains” to compete with more integrated CLSCs. The study identifies an e-procurement solution that addresses these issues and helps to increase the supply through “open-loops”. Furthermore, regulation may hinder or facilitate supply. Research limitations/implications It needs to be further investigated to what extent e-procurement and supplier relationship management can reduce shortages. Middlemen who can collaborate with the research would provide further research opportunities. Practical implications If supplier relationship management adapts to the requirements of remanufacturing, it can increase the supply potential through “open-loop” SCs. The e-procurement solution could serve SCs beyond automotive remanufacturing. Policy makers need to revise legislation hindering these SCs. Originality/value The study provides novel findings regarding independent actors, their supplier relationship management and their potential to reduce shortages in independent SCs for remanufacturing.