Consumer value considerations and adoption of remanufactured products in closed-loop supply chains
| Published date | 12 March 2018 |
| Pages | 480-498 |
| DOI | https://doi.org/10.1108/IMDS-10-2016-0437 |
| Date | 12 March 2018 |
| Author | Yacan Wang,Benjamin T. Hazen,Diane A. Mollenkopf |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
Consumer value considerations
and adoption of remanufactured
products in closed-loop
supply chains
Yacan Wang
Beijing Jiaotong University, Beijing, China, and
Benjamin T. Hazen and Diane A. Mollenkopf
Department of Marketing and Supply Chain Management,
University of Tennessee, Knoxville, Tennessee, USA
Abstract
Purpose –The success of closed loop supply chains is contingent upon consumer acceptance of
remanufactured products, yet little is known about how consumers value such products. The purpose of this
paper is to provide theoretical grounding for understanding consumers’value perceptions as related to
remanufactured products.
Design/methodology/approach –Diffusion of innovation theory and customer perceived value literature
help form the theoretical model, which is tested empirically using survey data of consumers. Structural
equation modeling was employed to test the hypotheses.
Findings –Perceived value of remanufactured products is measured as a function of perceived benefits
(environmental benefits; price advantage) and perceived sacrifices (perceived quality; perceived risk), all of
which are shown to impact perceived value. Additionally, perceived risk is found to partially mediate the
relationship between perceived quality and perceived value.
Originality/value –This research makes two significant contributions. First, mid-range theory that is
contextualized to the closed loop supply chain is developed to aid researchers and practitioners in better
understanding the consumer’s role in the closed loop supply chain, as related to the acceptance of
remanufactured products. Second, consumer acceptance of remanufactured products represents a form of
supply chain demand risk that has previously been unrecognized. The results provide a foundation for
incorporating this type of demand risk in to future research efforts.
Keywords Remanufacturing, Structural equation modeling, Closed-loop supply chains,
Diffusion of innovations, Consumer perceived value
Paper type Research paper
1. Introduction
Remanufacturing is a closed-loop supply chain (CLSC) strategy to recover the residual value
of used products via reusing, refurbishing, and/or replacing components so that the
end-item is restoredto like-new condition (Debo et al., 2005; Thornand Rogerson, 2002). Thus
remanufacturing represents an opportunity for firms to engage in environmentally
responsible activities, such as conserving raw material content, while simultaneously
improving productivity, reducing costs and preserving value (Giuntini and Gaudette, 2003;
Tseng et al., 2016).Recent estimates for remanufacturedproduct sales exceed $100 billion per
year, with consumer markets representing approximately $10 billion worth of sales
per year (Abbey, Blackburn and Guide, 2015; Abbey, Meloy, Guide and Atalay, 2015).
Although the availability of remanufactured products continues to increase, consumers
remain generallyunaware of remanufacturing processes and the productsderived therefrom
(Krikke et al., 2013; Zhu et al., 2015). According to the survey of Chinese automobile owners
conducted by Dusai Consulting Company in 2014, only 35 percent of respondents have ever
heard of remanufactured products, and just 7 percent have actually used remanufactured
products. To this end, this low level of consumer acceptance of remanufactured products is
Industrial Management & Data
Systems
Vol. 118 No. 2, 2018
pp. 480-498
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-10-2016-0437
Received 18 October 2016
Revised 4 January 2017
Accepted 28 February 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
480
IMDS
118,2
recognized as the major bottleneck by many companies from realizing the potential value
from productrecovery activities. Ultimately, successof the CLSC is dependent upon consumer
acceptanceof remanufactured products(Guide and van Wassenhove, 2009).Researchers have
exploredreturns management processes (Mollenkopfet al., 2007, 2011), but are onlybeginning
to explore the role of the consumer in closed loop supply chains (Abbey, Meloy, Guide and
Atalay, 2015; Abbey, Blackburn and Guide, 2015; Jiménez-Parra et al., 2014). Since both
network design and firm profitability hinge upon sufficient consumer acceptance of goods
that have been previously reclaimed (Guide and van Wassenhove, 2009; Sangwan and
Mittal, 2015),a deeper understanding of the endconsumer (e.g. see Oflac et al., 2012; Wangand
Hazen, 2016) in the CLSC context is important. Understanding how consumers value
remanufactured products will help industry professionals develop supply chain strategies
that are effective at creating both firm and consumer value through provision of
remanufactured products (Agrawal et al., 2015; Atasu, Sarvary and Van Wassenhove, 2008).
The purpose of this research is to: examine salient antecedents to consumers’perceived
value of remanufactured automobile parts; and determine the extent to which value
perceptions influence purchase intentions regarding remanufactured automobile parts.
At least two contributions can be made with this research. First, research on consumers
within the CLSC can help shape theory. The integral role of the consumer will become
increasingly recognized in forward, reverse and “re-forward”stages of CLSC management.
This enables better model development and clearer explanations for improved supply chain
performance. Developing a preliminary understanding of end-customer value in the
closed-loop context provides a foundation for future research related to customer service,
supply chain design, and inventory management.
Second, addressing consumers’perceptions of remanufactured products is particularly
important because of the demand risk that manufacturers face when marketing
remanufactured products to consumers. Demand risk relates to the volatility and volume
of demand as well as parallel interactions in which the demand for one product can affect
the demand for another product (Christopher, 2011; Manuj and Mentzer, 2008). This is
particularly relevant as organizations manage inventories and capacity for both new and
remanufactured versions of the same product. Such complexity can create chaos in the
supply chain that must be understood and mitigated (Christopher and Lee, 2004).
Addressing this form of demand risk provides a basis for scholars to develop the growing
supply chain risk literature as it relates to the CLSC. It also provides insight for practitioners
trying to market remanufactured products.
This paperproceeds as follows:the conceptual foundations are provided in the nextsection,
followed by development of the hypothesized model. The methodology section discusses the
survey instrument and structural equation modeling procedures, beforeresults are presented.
The discussion sectionprovides implicationsfor research andpractice. The paper closeswith a
brief discussion of research limitations and avenues for future research.
2. Conceptual background
While the idea of remanufacturing is not new to those in the manufacturing industry,
end-consumers are generally unaware of remanufactured products in terms of product
characteristics and how they differ from new, used, or simply repaired products (Chen, 2011;
Tseng et al., 2015). Indeed, lack of recognition and acceptance is seen as a key bottleneck to
the growth of the remanufacturing industry (Guide and Li, 2010; Liang, 2011). As such, the
idea of remanufacturing and the products derived therefrom are still “new”to many
consumers. From their perspective, remanufactured products fit Rogers’(2003) definition of
innovation. Diffusion of innovation (DOI) theory describes the processes through which
innovations such as new products or services are adopted and accepted. Thus, DOI provides
a useful lens through which to frame this research.
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Consumer
value
considerations
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