Consumer product returns in the United States are approaching three-hundred billion dollars annually. In the majority of cases, the returned products are perfectly functional convenience returns. Managers have a multi-billion dollar profit opportunity to reuse the products by strategically employing remanufacturing. Yet, remanufacturing has multiple barriers that must be understood and addressed. This article addresses several key managerial issues regarding remanufactured consumer products. First, will consumers buy remanufactured products? Second, will the green consumer segment desire remanufactured products? Third, will remanufactured product sales cannibalize new product sales? Finally, this article provides guidance regarding pricing and cannibalization mitigation strategies.

Remanufactured products do not always cannibalize new product sales. To minimize cannibalization and create additional profits, managers need to understand how consumers value remanufactured products. This is not a static decision and should be re-evaluated over the entire product life cycle. While managers have a responsibility to maximize profits for the firm, this is not necessarily equivalent to maximizing new product sales. A portfolio that includes remanufactured products can enable firms to reach additional market segments and help block competition from new low-end products or third-party remanufacturers.

The flow of product returns is becoming a significant concern for manufacturers. Typically, these returns have been viewed as a nuisance, resulting in reverse supply chains that are designed to minimize costs. These minimum cost reverse supply chains often do not consider product return speed. The longer it takes to retrieve a returned product, the lower the chances that there are financially attractive reuse options. Unlike forward supply chains, design strategies for reverse supply chains are unexplored and largely undocumented. The most influential product characteristic for reverse supply chain design is the marginal value of time. Responsive reverse supply chains are the appropriate choice when the marginal value of time for products is high, and efficient reverse supply chains are the proper choice when the marginal value of time for products is low. Product returns and their reverse supply chains represent a potential value stream and deserve as much attention as forward supply chains.

The case describes how Sylvia Davey, HP, handles the product returns for the printer division. It discusses product returns from a holistic business perspective starting with what affects consumer returns and how to influence this. It then discusses the reverse logistics and remanufacturing issues. Finally, it looks into how to create markets for the ""as good as new"" remanufactured products.

Companies should make design and manufacturing decisions with eventual recycling and reconditioning of their products in mind. Here are the five key activities for establishing a reverse supply chain.