Wednesday, September 24, 2008

Green Manufacturing

We have often seen a company's salesperson selling their products to the customers but have you ever seen any collecting them back from the customer. You may see such activities within a few years, as manufacturing companies are planning to go 'green'. In traditional approach of manufacturing, manufacturers typically do not feel responsible for what happens to their product after customer use. Consequently, the majority of used products are either land filled or incinerated with considerable damage to the environment. Breaking this conventional idea of unidirectional flow of goods in a manufacturing environment to a closed-loop logistics system has brought forward a new concept of production of goods called 'Green manufacturing' or remanufacturing. 'Green manufacturing' not only comprises of forward channel of moving goods from industry to market but also collecting them back from the market and redirecting them to the industry, where these used products are transformed to serviceable ones.
Interestingly, this idea of reuse is not a new phenomenon. Recycling of plastics, papers, metals, reuse of glass bottles, etc. are being practiced for a few decades. In contrast to recycling, where recovery is done for useful material, remanufacturing is done for recovery of parts, components, modules or even at product level. These recovered parts/components are thoroughly cleaned, inspected and if necessary repaired and replaced with new ones and then reassembled to build up a product with quality 'as good as new'. One should remark that a remanufactured item is often cheaper than a new one as the reprocessing and manufacturing expenditures (time, energy, cost, etc.) are avoided. For example, a used machine can be remanufactured to "as good as new" for 50-60% of the cost of new machine and Berkeley Auto Mall is selling refurbished Maruti 800 series 1997 (AC) model at Rs. 130,000.
With global concern over environmental issues, various countries have formed stringent laws on disposal of goods and take-back policies are made mandatory for companies. Disposal cost has drastically increased several times. Consumers too demand for a 'green' image of the company. The best option available for a company to come out with such pressures from the government and customers is 'Green manufacturing'. It is not only economically profitable but also ecologically beneficial.
'Green manufacturing' is successfully operating in western world like US and Europe. Several companies, like Xerox, IBM, Kodak, etc., have adopted it for their products. There are estimated to be in excess of 73000 firms engaged in remanufacturing in USA directly employing over 350 000 people with total sales accounting for $ 53 billion per year. In India, unfortunately product recovery is still not well known in business sector and market. Although, environment has already become a serious issue in strategic plans for an Indian manufacturer, no organized effort has yet been seen in recovery of used products or remanufacturing. On the other hand, India being a developing country, perhaps, bears enough potential as a market for remanufactured products. We cannot deny the facts that product recovery practices exist in the Indian market as an unorganized business sector and there is a presence of strong secondhand market segment. In a price sensitive market like India, if there is availability of refurbished/remanufactured products, one would definitely plan to buy a remanufactured product from the company as the price is comparable to a secondhand product and the quality is comparable to a new product.
'Green manufacturing' involves product recovery activities and reverse logistics. The former reflects on various operations, which are directly applied on the returned product to convert it to a usable one. There are various types of such activities like remanufacturing, recycling, refurbishing, etc. On the other hand, reverse logistics is the area that focuses on inbound supply and distribution of the used products and the inventory management. This once again can be divided into inventory management activities and reverse distribution processes.
The uniqueness of these activities is mainly centered on the uncertainty factors, particularly relating to timing, quality and quantity of supply of used products. The following facts justify the reasons for the complexity inherent to 'Green manufacturing'.
• The timing, quality and the quantity of returns are unknown
• Demand is also stochastic in nature, so balancing returns with demand is vital
• Disassembly operations are highly variable with respect to the time required which, in fact depends on the condition of the returned product, modules, components or parts
• There exist various methods of product recovery depending on the condition of the product, for example, returned items may either be remanufactured or used for spares or sold to secondary market or recycled
• Reverse logistics network is also a complex domain of 'Green manufacturing' due to the involvement of stochasticity both in supply of returns and demand of remanufactured products, and existence of both forward and reverse distribution channels
• Uncertainty exists also in routing and processing times, as the condition of a returned product is not known before disassembly operation
As a scientific field, 'Green manufacturing' is still young. It needs new inter- and intra organizational processes. However, the inherent scarcity in natural and environment resources is creating the necessity and the motivational forces to make it a field of active research and an efficient business proposition in years is yet to come. In addition, within a few years, like a newspaper boy or a milkman, you may not be surprised to see a company-van coming to your doorstep collecting their products back.

Authored by:
Rajan Jindal (PGP24041)


Charan said...

Nice informative article guys!!! Keep it going!

Angela Reese said...

I'm not much of a fan of The Cheese. We will never forget how excited I was to go when I was little and how disappointed I was when I finally went to a birthday party there.

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