Resilient remanufacturing networks: forecasting, informatics and holons

The value of remanufacturing is estimated at £2.4B to the UK economy, potentially increasing to £5.6B in the near future. The entire process relies upon the timing, quantity and quality of the returned items (cores), and yet there have been no studies to-date that look at returns forecasting and how such forecasts can be integrated in a systemic way with inventory and production optimisation (IPO) procedures. Such procedures are stepping-stones towards financial, environmental and societal sustainability. If supported, this is the first study to look at these issues and therefore would make a considerable contribution to the theory and practice of remanufacturing in the UK.

Our vision is to create a sustainable and resilient world where remanufacturers and their closed-loop supply networks have 'visibility' of product returns and reflect such information into circular economy (CE) compatible IPO to improve sustainability and resilience.

In a remanufacturing context, the bill of materials loses its original meaning, and greatly depends on the state of the returned-used items. This introduces a need to forecast not only the timing and volume of the returns, but also their quality, in order to decide: i) what parts need to be replaced for the item to be restored to the desired state? ii) which usable parts can be fed back into the manufacturing process when restoring the item is not economically or practically viable?

Rate of returns is expected to strongly correlate to the number of items in use and the stage in the item's life cycle. In-use product data, service information and judgmental inputs should also have explanatory power while time series effects, e.g. seasonality, may also be present. The above make the utilisation of classic demand forecasting methods impossible, calling for novel estimation approaches. Despite the obvious importance of returns forecasting in a CE context, the relevant literature is extremely limited. Further, the uncertainty associated with returns does not imply that the classic demand uncertainty for (re)manufactured products is not present, leading to what may be termed a 'two-tailed uncertainty'!

Critically, the foregoing forecasting problems translate into systemic IPO challenges. A growing body of literature looks at inventory and/or production problems in closed-loop supply chains. Interestingly though, all these works are conditioned to no uncertainty with regard to returns and thus no need to forecast them, obviously diminishing the practical utility of these solutions. Integrating returns and demand forecasting with IPO requires a holonic approach, not previously attempted. A holon is an element that is both a whole in its own right but also part of a wider system - for example, in any organisation each department may establish its own strategic priorities but potentially they could act in conflict with each other if there is no general higher level organisation strategic direction to optimise their interactions. Hence, each different forecasting protocol, inventory controller and production ordering rule has its own dynamic properties but which, when integrated in different combinations, creates a new whole that may not be the simple addition of the different parts. Therefore, we will develop appropriate forecasting protocols and integrate them into IPO through systems modelling.

Inventory and production optimisation in the CE are stepping-stones towards: i) immense inventory reductions and space liberation, resulting in reduced supply chain costs and cheaper, more affordable products in the market (financial sustainability); ii) reduced obsolescence risk for materials, parts and finished items, with huge implications for environmental sustainability; iii) greater availability of remanufactured products, creating a more ethical marketing channel to consumers (societal sustainability).

This project's national and international importance may be demonstrated through the following impactful ways:

People and society - our research will result in greater availability of remanufactured products, creating a more ethical marketing channel to consumers. At the same time, while remanufactured products are generally considered cheaper to produce, our research will help to lower costs even further by determining optimal inventory levels i.e. just high enough to satisfy customer demand but with low holding and obsolescence costs. As our research outcomes will lead to the minimisation of unwanted dynamics in the production system itself, the on-costs of capacity fluctuations will be reduced. All of these cost reductions can then be passed onto the customer.

Environment - while, by their very nature, remanufactured products have a positive impact on the environment, our research will enhance environmental sustainability. Reducing inventory holding, while maintaining customer satisfaction, means less energy usage and pollutant reduction associated with estate to hold excess inventory. Similarly, reducing production on-costs means the energy required when ramping production both up and down is also reduced. Such benefits will encourage the uptake of remanufacturing by industry by reducing the risks currently associated with the uncertainties of returns.

Government - given the focus of the project on remanufacturing, it is explicitly associated with the important national endeavour to reduce energy usage and minimise pollution. As a member of the EU, the UK government is determined by 2050 to reduce the nation's CO2e (CO2 emissions) level by 20% compared to 1990. Implementation of this project's outcomes will lead to greater uptake of remanufactured products, which are by their very nature more environmentally friendly, leading to reduced energy consumption, fewer pollutants and lower price inflation for products, contributing positively to addressing current governmental concerns.

Remanufacturers and Third Party Logistics Firms - all supply chain members will potentially benefit from the research. We should see immense inventory reductions and space liberation, resulting in reduced supply chain costs and cheaper, more affordable products in the market. Hence, while ensuring high customer service levels, market demand will increase and, with appropriate pricing strategies and customer incentivisation, will lead to profit maximisation but at ethical levels. This will be achieved through the development of our research outputs, especially the creation of a public domain dashboard, and case studies, describing the holons and their applications. These will include the ability for interactive 'playing' by users and will be available in different forms for the Internet, including tutorials.
Post-doc research associates - with little existing research on the forecasting of product returns, and the coupling with product informatics and a holistic approach to production / inventory control, the researchers will be in a positon to develop unique core skills that may be exploited either in academia or in industrial practice.

Through our partnership with WRAP and via our membership of the European Remanufacturing Network, we will exploit the research we propose and disseminate our findings to practitioners and policy makers via a workshop and conference, as well as exploring synergies with other RCUK, EU funded R&D and Knowledge Transfer projects, including those in the Circular Economy initiative.

We will equally target practitioner publications through both specialist journals, like the FORESIGHT for example (produced by the International Institute of Forecasters, IIF) but more general ones as well (e.g. Sloan Management Review, Harvard Business Review, etc.)
The academic impact of our work is discussed under 'Academic Beneficiaries'.