Process innovation for green product in a closed loop supply chain with remanufacturing

TLDR: In this article, a closed-loop supply chain consisting of an upstream supplier and a downstream manufacturer is analyzed using game-theoretic models, where process innovation can effectively improve remanufacturing performance while increasing the recovery rate of the manufacturer.

Abstract: The rapid development of green products, such as electric vehicle (EV) batteries, has brought about challenges in recycling and remanufacturing. To help tackle these challenges, in this research, we investigate how process innovation affects green product remanufacturing. Specifically, using game-theoretic models, we analyze process innovation strategies for green product remanufacturing in a closed-loop supply chain consisting of an upstream supplier and a downstream manufacturer. In these models, process innovation is implemented individually (i.e., non-cooperative mechanisms) by either the supplier or the manufacturer, or jointly (i.e., cooperative mechanism) by both firms. Our main findings are threefold. Firstly, process innovation can effectively improve remanufacturing performance while increasing the recovery rate of the manufacturer. Secondly, although the cooperative mechanism is always beneficial to the supplier, the supply chain and the environment, it may not be favourable by the manufacturer. Lastly, by extending the main models, we show that government subsidies can incentivise the manufacturer to adopt the cooperative mechanism, thereby achieving a win–win situation.