Remanufacturing and Refurbishment: A Guide to The Differences
Recommerce, the sale of second-hand items, depends on two processes: remanufacturing and refurbishment. They determine the condition of the goods that are resold.
For the software side of this topic, see recommerce software.
The two terms are often used interchangeably, but they mean different things.
Both are reverse logistics workflows for putting pre-owned items back on the market. After a return is processed, the business decides whether to dispose of the item, remanufacture or refurbish it, or return it straight to inventory. The right option depends on the product and the industry.
This article explains the differences and the process behind each.
What is Remanufacturing?
Remanufacturing gives products a second life. The product is dismantled to find the root cause of the problem and rebuilt with new parts to the standard of a new product. It is used for products such as electronics, vehicle engines and medical equipment.
It goes beyond an everyday repair: the aim is to find the pattern behind the fault and rework the product so it does not happen again.
The Remanufacturing Process
A remanufacturing operation typically follows five steps. It is more detailed than refurbishment and allows a more thorough repair.
Step 1: Disassemble
Products assigned to remanufacturing during returns processing are sent for complete disassembly.
Step 2: Clean
The dismantled product is cleaned thoroughly so that the fault can be analyzed and repaired. Cleaning removes chemicals, rust and debris from the internal parts.
Step 3: Repair/Replace
Depending on the fault, parts are repaired or replaced. Replacement parts may use better materials to extend the life of the product.
Step 4: Reassemble
After repairs, the parts are put back together. Reassembly does not usually change the design of the product.
Step 5: Testing
Testing confirms that the product can be certified before it is sold. It also shows how the new parts affect the product’s performance and life.
Benefits of Remanufacturing
Remanufacturing works for both sides. Customers buy products that are as good as new, often at a much lower price. Remanufacturers and retailers earn a margin because the cost of acquiring the product and preparing it for sale is low.
Other benefits include:
1. Sustainability
Large numbers of products are thrown away every day. Remanufacturing, supported by reverse logistics, prevents a lot of unnecessary disposal by extending the life of those products.
2. Profitability
Remanufacturers pay little to acquire these products, which are often classed as waste. The largest cost is often the logistics of moving the product to and from the plant. That leaves room for a healthy margin on the resold product.
Refurbishment
Refurbishment is less intensive than remanufacturing. It also extends the life of the product, but it repairs the specific fault and does not look for the root cause. The problem could come back, or other parts could fail later.
Because refurbishment aims to get the product back on the market with minimal work, it does not offer the long-term assurance that remanufacturing does.
The Refurbishment Process
The refurbishment process is similar to remanufacturing but simpler, faster and cheaper.
Step 1: Inspect
The product is inspected to find the fault. Sometimes it is ordinary wear and tear, and sometimes the product works and the customer simply no longer wants it. Any fault is identified before 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 is cleaned to make it presentable. Unlike remanufacturing, the cleaning is mostly external. The inside is left alone unless a repair requires opening the product.
Step 3: Repair
The faulty part is repaired. No work is done to find the root cause, so repairs are simpler and cheaper than in remanufacturing.
Step 4: Test
Testing confirms the product works as it should and decides whether it can be sold or needs more work.
Benefits of Refurbishment
Refurbishment is less technical than remanufacturing, and there is still a market for it. A refurbished product cannot be presented as new, and customers know it may have problems later. Warranties are usually shorter and narrower than for remanufactured products.
Here is why refurbishment plays a role in today’s market:
1. Cost Effective
Refurbishment is cost-effective for businesses and consumers. Customers buy at a heavy discount, and the business spends little on the product, so it still makes a profit.
2. Functional Product
The product is not new, but it works and meets the customer’s needs. Its life is extended and less waste is produced. Extending a product’s life can cut its environmental impact by as much as 40%.
The Role of Reverse Logistics and Returns Management Operation in Remanufacturing and Refurbishment
Remanufacturing and refurbishment depend on reverse logistics and an efficient returns process. The return management operation collects items from customers and sorts them so each one ends up in the right place.
The Role of ReverseLogix in Remanufacturing and Refurbishment
ReverseLogix is end-to-end returns management software that lets you initiate returns, configure return processing and handle repairs. Remanufacturing and refurbishment are complex to manage. The ReverseLogix returns management system (RMS) routes each item to the right workflow and tracks it through to resale.
Frequently Asked Questions
Q1: What are the benefits of efficient reverse logistics providers and platforms for refurbishment/remanufacturing?
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
Q2: How does the return process contribute to refurbishment/remanufacturing benefits?
Through these processes and operations, the supply chain ensures:
– Accurate product evaluation
– Faster Processing
– Improved quality control
Q3: Which is better, refurbished or remanufactured?
It depends on your priorities. Remanufactured products are as good as new and come with more comprehensive warranties, but they cost more. Refurbished products are cheaper and may have lower performance or shorter warranties.
Q4: How are the processes different?
Remanufacturing involves disassembly, cleaning, extensive repair/replacement with new parts, reassembly, and testing. Refurbishment involves cleaning, inspection, repair of major issues, and basic testing.
Where returned stock goes next
Recovering value from returned inventory through grading, resale and recommerce.
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