Product Recovery at the Norwegian National Insurance Administration

Technical Aid Centers (TACs) in Norway supply devices, such as wheelchairs and hearing aids, to people with handicaps. When a device is returned to a TAC, the TAC staff must decide whether to scrap it or to refurbish it so that it can be used again. The Norwegian National Insurance Administration (NNIA) found that decision makers were scrapping units too frequently, basing their decisions mainly on the hours of labor required to refurbish. We developed a more complete decision support system model process that accounts for the full cost of sending a unit to the landfill, the cost of refurbishing, the value of parts that can be used elsewhere, the benefits of refurbishing, and so on. Our model is quite simple and visual. Early results suggest that acceptance has been widespread and that decisions have changed, leading to fewer units being scrapped and more being refurbished for redistribution. Norway is a social democracy that provides free health care to its citizens. People with handicaps are supplied with such devices as wheelchairs, hearing aids, and speech synthesizers without charge. Previously, the responsibility for supplying these devices belonged to the local governments in each of the 19 Norwegian counties. Over time, the local governments organized a series of 19 technical aid centers (TACs), one in each county, for the distribution and servicing of the devices. The first TAC was organized in 1979 and the last in 1995. Because service and costs varied across the country, in 1994 Norway transferred responsibility from the local governments to the Norwegian National Insurance Administration (NNIA), a unit of the national government. The TACs purchase new units at the price negotiated by the NNIA and then distribute them to patients. For example, a person needing a wheelchair gets one from the TAC in his county or from his or her hospital or rehabilitation center, which in turn gets it from the TAC. When patients return devices to a TAC because they no longer need them or because the devices have failed, the TAC staff must decide whether to scrap them or to refurbish them so they can be used again. Discarded units are cannibalized for useable parts. The refurbishing decision falls into a general class of problems called product recovery problems that have generated some academic interest and enormous practitioner interest. The TACs reuse some units, repair others, and refurbish still others (Figure 1). In general, the distinction between repairing and refurbishing is somewhat blurred at the TACs and depends on the specific adjustments to be made. We use the term refurbish to describe the process of replacing components or otherwise fixing or modifying a unit so it can be distributed again.