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4. Business strategy implementation
The following section describes the results from the first sub-study. First the propositions developed from the literature review are presented, followed by the results from the online surveys.
4.1 Challenges
4.1.1 Industry-level challenges
Customer perspective Considering the customers’ attitude in transitioning towards new business models, more specifically remanufacturing practice is critical (Hazen et al. 2017), as it has been challenging to observe (Gurita et al. 2018). Furthermore, it has been described that without motivation, customers are not interested in more sustainable options (Veleva and Bodkin 2018). –P1: Consumer attitudes and preferences are challenging when working with remanufactured products.
Political perspective Large companies have been described to have a lack of interest or motivation for implementing or scaling up circular activities, such as reuse, remanufacturing or upcycling (Veleva and Bodkin 2018). With a lack of policy incentives, such as tax reductions product standards (Vogtlander et al. 2017), companies’ interest in transitioning towards circularity can be inhibited (Singh and Ordoñez 2016). –P2: The lack of policies, standards and guidelines inhibits the implementation of remanufacturing activities.
4.1.2 System-level challenges
Business model perspective Designing circular revenue models becomes more complicated, as it is necessary to not only predict initial sales, but also circulation of the offering, when comparing to linear business models where the costs are only predicted once (Linder and Williander 2017). Thus, costs that occur later in the product’s lifetime are necessary to account for, such as additional materials for remanufacturing, stock of materials, etc. (Linder and Williander 2017). As companies don’t yet have a sufficient understanding of the market, more investigation is necessary by including other stakeholders, such as the customers in order to reach a suitable revenue model (Jensen et al. 2019). –P3: Visualising the economic value created through remanufacturing is more challenging as the revenue models become more complex.
Marketing strategy perspective A lack of customer demand and awareness for sustainable products (Veleva and Bodkin 2018), along with limited sales arguments including sustainability for remanufactured products (Vogtlander et al. 2017), has led to concerns relating to weak and uncompetitive selling approaches for such goods (Kurilova-Palisaitiene et al. 2018). –P4: Fluctuation of consumer demand and awareness for sustainable products makes it challenging to market remanufactured products.
Information and knowledge perspective Information sharing and knowledge relating to circularity is quite rare (Kurilova-Palisaitiene et al. 2018), potentially leading to a lack of awareness regarding environmental and social impacts of waste generation and disposal (Veleva and Bodkin 2018). –P5: Lack of knowledge and awareness regarding environmental and social impact of waste generation and disposal within fashion companies challenges the implementation of remanufacturing business models.
Design for remanufacturing perspective The main challenges here relate to designing a system that is able to compete with novel design and innovation on a volatile market (Bakker et al. 2014), as designers need to create attractive products from a variety of materials that can be in different conditions, and thus not standardised, leading to limited knowledge along designers (Singh and Ordoñez 2016). –P6: Limited knowledge on aspects related to designing remanufactured products puts the designers in a challenging position.
4.1.3 Process-level challenges
Core perspective The core perspective relates to the materials used in remanufacturing and information regarding the type, model and condition of the goods used for remanufacturing (KurilovaPalisaitiene et al. 2018). Issues related to availability, demand timing and technical capacity to remanufacture products that meet market demands (Krystofik et al. 2018), along with uncertainties regarding remanufacturing potential due to quality and function (Gurita et al. 2018), indicate a lack of regulations for remanufacturing. –P7: Missing product regulations regarding standards and quality challenge the development of remanufactured products.
Operational perspective Scaling up of remanufacturing activities due to lack of financing, and knowledge and expertise related to the activities have been found challenging (Veleva and Bodkin 2018), indicating the relevance of the operational perspective on process-level (Kurilova-Palisaitiene et al. 2018). –P8: Lack of operational knowledge and expertise within the apparel and textile industry challenge the implementation of remanufacturing.
Cost perspective Remanufacturing activities are highly dependent on manual work (Kurilova-Palisaitiene et al. 2018), meaning that costs related to labour are higher compared to mass production (Vogtlander 2017, Veleva and Bodkin 2018). Additional costs can occur due to extra material use, leading to challenges related to pricing of remanufactured products, and scaling up of such activities (Östlin et al. 2009, Krystofik et al. 2018). –P9: Higher operational costs related to an increase in manual work challenge the scaling up of remanufacturing.
4.2 Enabling conditions
4.2.1 Industry-level enabling conditions
Consumer perspective Companies understanding price differentials and their role in environmental initiatives enables them to guide the customer towards remanufactured goods (Hazen et al. 2017). Furthermore, an understanding of what influences the customer and their acceptance of new ownership models (Bakker et al. 2014) facilitates communication with customers. –P10: To attract more customers through personal interest and attitude towards remanufactured products, companies need to understand the factors that influence the customers’ acceptance process, as well as communicate their environmental initiatives.
Political perspective Transitioning towards circularity through remanufacturing requires the implementation of strategies and policies questioning consumerism and driving industry behaviour (Jensen et al. 2019). Policymakers can therefore advance the implementation of circular practices by for example enacting effective regulations; providing incitement to engaged companies, raising awareness and providing financial support (Veleva and Bodkin 2018 pp. 21). However, companies need to take action to influence policymakers (Hazen et al. 2017). –P11: To facilitate the adoption of and transition towards remanufacturing activities, stakeholders (manufacturers and brands) need to take action to influence policymakers to enact regulations, such as tax reduction.
4.2.2 System-level enabling conditions
Business model perspective Integration of several business activities has been described as relevant for the successful implementation of remanufacturing (Jensen et al. 2019). Additionally, rethinking business strategies from selling volumes to selling products is relevant (Veleva and Bodkin 2018). A focus on the triple bottom line allows companies to increase sales, brand awareness, identify new sales opportunities, along with decreasing environmental impact and creation of jobs (Jensen et al. 2019). –P12: Rethinking the business model for remanufactured products enables companies to both increase the revenue and decrease the environmental impact, through focus on the product, rather than volume.
Marketing strategy perspective Emphasising personal benefit, rather than environmental benefits has been highlighted by Vogtlander et al. (2017), while others have highlighted the importance of customer service and flexibility (Veleva and Bodkin 2018). By shaping the customers’ attitude towards remanufactured products through emotional values (Hazen et al. 2017), companies are able to build a strong product and brand (Vogtlander et al. 2017), potentially leading to increased demand for remanufactured products. –P13: Marketing the personal benefit for the customers, such as emotional value and environmental impact will increase the demand for remanufactured products.
Information, supply and demand perspective Information regarding the condition and utilisation of products, combined with the duration and point of return enable remanufacturers to predict the supply, and facilitate meeting demand (Östlin et al. 2009). Furthermore, this information along with data related to customer demand needs to be communicated within the supply chain (Kurilova-Palisaitiene et al. 2018). –P14: Adoption of data collection and analysis systems facilitate the prediction of supply of
“end-of-use materials” and to meet customer demand.
Design for remanufacturing perspective As the design of a remanufactured product should compensate for the desire of buying a newly manufactured product (Singh and Ordoñez 2016), customers could be involved in the process to understand extending the life of a product (Bakker et al. 2014), and a focus should be on long lasting design to reduce potential obsolescence (Linder and Williander 2017). Streamlining the remanufacturing process by only replacing as few components as possible (Jensen et al. 2019), and selecting high quality components that are also easy to replace (Bakker et al. 2014) are expected to optimise the design process. –P15: Optimisation of the design process to develop durable products enhances the attractiveness and competitiveness of remanufactured products, compared to newly manufactured products.
4.2.3 Process-level enabling conditions
Core perspective With the potential of materials moving between different industries and branches, the position of firms can change from within the industry-specific supply chain to material cycles (Fischer and Pascucci 2017). Furthermore, quality of such materials is easier to identify when it comes from industry, preventing issues of uncertainties (Singh and Ordoñez 2016). –P16: A solid flow of reliable end-of-use materials enhances the interest of adopting remanufacturing activities within remanufacturers and brands.
Operational perspective Coordinated networks of entrepreneurs, corporations and other stakeholders has been identified as one solution facilitating scaling up of localised production and consumption (Veleva and Bodkin 2018). This indicates the importance of supplier relationships, improving remanufacturing processes through feedback loops (Kurilova-Palisaitiene et al. 2018). Furthermore, implementing lean improvements with the help of technology should reduce unnecessary activities within remanufacturing and shorten lead times (Kurilova-Palisaitiene et al. 2018, Veleva and Bodkin 2018). –P17: Technology is crucial for establishing remanufacturing process and creating efficient information and material flows between the stakeholders.
Cost perspective Potential financial benefits can occur through remanufacturing and resale of products that normally are discarded (Veleva and Bodkin 2018). In some cases, the core materials can be free of cost, indicating that the focus is on transport and material handling costs (Östlin et al. 2009). Therefore, the higher costs related to increased manual work can be outweighed by a
potential in reduction of raw material costs, new revenues from novel products and markets, etc. (Jensen et al. 2019) –P18: High operational costs around remanufacturing can be decreased by optimising the process, and through establishing collaboration that can enhance the benefits with remanufacturing.
4.3 Online survey results
The online surveys were carried out in three rounds, with the first two rounds focusing on the probability and impact, and the last round examining the relative order of importance of the propositions through ranking. The response rate throughout the surveys was at 65%, 57% and 52% respectively, with the sample decreasing due to issues such as lack of time and commitment.
4.3.1 Probability and impact
To measure the agreement on the probability, IQR was set to 25% for probability (with a range up to 100%), and 1,25 for impact on the industry (on a 5-point Likert scale). The first round showed an agreement on five of the propositions for the probability, and on ten of the propositions for the impact. After the controlled feedback during the second round, agreement was found on ten of the propositions for the probability, and five of the propositions for the impact.
The relative importance of the propositions after the second round is presented through positioning the probability in relation with the impact for each of the propositions (see Figure 2 below). As seen on the figure, enabling conditions from the consumer perspective (P10) on the industry-level and core perspective (P16) on the process-level are the most likely to occur and are evaluated to have the highest impact on the industry. Regarding the challenges, the business model perspective (P3) on the system-level, and the cost perspective (P9) on the process-level are most likely to occur and are evaluated to have the highest impact. On the contrary, enabling conditions from the information, supply and demand perspective (P14) and design for remanufacturing perspective (P15) are the least likely to occur and are evaluated to have the least impact on the industry. Furthermore, challenges from the marketing strategy perspective (P4) and design for remanufacturing perspective (P6) on the systemlevel are the least likely to occur and are evaluated to have the least impact on the industry.
4,50
4,00
Impact
3,50
3,00 P4 P6 P2
P14
P15
P1 P5 P11 P18
P12 P7
P8 P13 P16 P3
P10
P17 P9
2,50 45% 50% 55% 60% 65%
70% Probability
75% 80% 85% 90%
Figure 2. Probability and impact of the developed propositions. Figure 2. Probability and impact of the developed propositions.
4.3.2 Importance ofthe propositions 4.3.2 Importance of the propositions To get an understating of the relative importance of the propositions, the practitioners were To get an understating of the relative importance of the propositions, the practitioners were asked to rank the propositions in the last round of the online surveys. The propositions were asked to rank the propositions in the last round of the online surveys. The propositions were presented in the same order as in the previous two rounds, avoiding any potential to affect presented in the same order as in the previous two rounds, avoiding any potential to affect the practitioners’ decision. The results of the ranking are presented in Table 1 below. Low the practitioners’ decision. The results of the ranking are presented in Table 1 below. Low dedegree of consensus was found in the third round, with a Kendall’s W value of 0,13 for the gree of consensus was found in the third round, with a Kendall’s W value of 0,13 for the chalchallenges and 0,10 for the enabling conditions. While only a low level of agreement was lenges and 0,10 for the enabling conditions. While only a low level of agreement was found, found, the results provide an indication of which aspects enable and inhibit the adoption of the results provide an indication of which aspects enable and inhibit the adoption of remaremanufacturing activities. However, as some of the findings are controversial when nufacturing activities. However, as some of the findings are controversial when comparing to comparing to the results of the second round (e.g. P9 related to high operational costs), the the results of the second round (e.g. P9 related to high operational costs), the consideration consideration of results of the third round in managerial decision-making should be critically of results of the third round in managerial decision-making should be critically evaluated. evaluated.
Table 1. Relative importance of the propositions.
Rank
1.
2.
3. Enabling conditions P18: High operational costs around remanufacturing can be decreased by optimising the process, and through establishing collaboration that can enhance the benefits with remanufacturing. P15: Optimisation of the design process to develop durable products enhances the attractiveness and competitiveness of remanufactured products, compared to newly manufactured products. P17: Technology is crucial for establishing remanufacturing process and creating Challenges P6: Limited knowledge on aspects related to designing remanufactured products puts the designers in a challenging position.
Table 1. Relative importance of the propositions.
Rank
1.
2.
3.
4.
5.
6. Enabling conditions P18: High operational costs around remanufacturing can be decreased by optimising the process, and through establishing collaboration that can enhance the benefits with remanufacturing. P15: Optimisation of the design process to develop durable products enhances the attractiveness and competitiveness of remanufactured products, compared to newly manufactured products. P17: Technology is crucial for establishing remanufacturing process and creating efficient information and material flows between the stakeholders.
P10: To attract more customers through personal interest and attitude towards remanufactured products, companies need to understand the factors that influence the customers’ acceptance process, as well as communicate their environmental initiatives.
P13: Marketing the personal benefit for the customers, such as emotional value and environmental impact will increase the demand for remanufactured products.
P14: Adoption of data collection and analysis systems facilitate the prediction of supply of “end-of- use materials” and to meet customer demand. Challenges P6: Limited knowledge on aspects related to designing remanufactured products puts the designers in a challenging position.
P1: Consumer attitudes and preferences are challenging when working with remanufactured products.
P8: Lack of operational knowledge and expertise within the apparel and textile industry challenge the implementation of remanufacturing. 17 P4: Fluctuation of consumer demand and awareness for sustainable products makes it challenging to market remanufactured products.
P5: Lack of knowledge and awareness regarding environmental and social impact of waste generation and disposal within fashion companies challenges the implementation of remanufacturing business models. P2: The lack of policies, standards and guidelines inhibits the implementation of remanufacturing activities.
7.
8. P16: A solid flow of reliable end-of-use materials enhances the interest of adopting remanufacturing activities within remanufacturers and brands.
P11: To facilitate the adoption of and transition towards remanufacturing activities, stakeholders (manufacturers and brands) need to take action to influence policymakers to enact regulations, such as tax reduction. P7: Missing product regulations regarding standards and quality challenges the development of remanufactured products. P3: Visualising the economic value created through remanufacturing is more challenging as the revenue models become more complex.
9. P12: Rethinking the business model for remanufactured products enables companies to both increase the revenue and decrease the environmental impact, through focus on the product, rather than volume. P9: Higher operational costs related to an increase in manual work challenge the scaling up of remanufacturing.
Table 1. Relative importance of the propositions. 5. Consumer perceived value The following chapter describes the concept of consumer perceived value, and identifies further aspects affecting those values.
