Remanufacturing: From old to new

Germany had a raw materials problem after the Second World War. This forced Volkswagen to recondition used vehicle components in order to be able to supply customers with spare parts. What began in 1948 with gearboxes, carburettors and engines was so successful that just ten years later the company set up its own plant, where today over 13,000 different components are reconditioned. Today, Volkswagen reconditions used components because it is financially worthwhile. Customers thus receive spare parts as good as new. And as with new spare parts, they receive the full factory warranty.

Volkswagen, Xerox and Apple do it

Not only the ecological arguments are convincing, but also the lower price. The lower price for the same performance is quite enough. Unlike Volkswagen, Xerox does not refurbish individual components but entire devices [see footnote I]. Because of the high purchase price, Xerox had difficulty selling new equipment and was forced to rent out its products. It thus remained the owner of its products.

From this, Xerox developed a fundamental interest in being able to use products for as long as possible through reconditioning. In 1987, Xerox started the "Asset recovery" program in the Netherlands with the goal of refurbishing complete printing stations.

Consumer goods manufacturers also remanufacture their products. Fuji has been operating a fully automated line for the disassembly, cleaning, reloading and testing of disposable cameras since 1998. HP remanufactures not only printer cartridges, but also printers and computers. And Apple does it, too. Under the designation "refurbished", customers can order used iPhones, iPads, etc. with the original manufacturer's warranty at a lower price over the Internet.

The remanufacturing process

The remanufacturing of products is more comprehensive than one might think. Remanufacturing requires not only broad knowledge of products and processes, but also logistics and market know-how. A typical remanufacturing process consists of the following sub-processes:

• Collection and incoming inspection of used equipment and components;
• their dismantling, sorting and cleaning;
• Reconditioning of individual components or their replacement with new parts (in the case of poor quality and wear parts);
• Reassembly and final testing of the unit to original specifications.

However, simply installing a remanufacturing process is not enough. One of the central tasks is to obtain enough old parts from the market in sufficient quality to be able to remanufacture them. Customers become suppliers. Contact with them requires a new type of market cultivation and communication. It also requires logistics that run counter to the sales channels.

Design for Remanufacturing

Instead of one point to many, the legacy parts from many must be merged to one point. This is also called reversed logistic.

Optimal remanufacturing revolves around procurement, product remanufacturing, development, logistics and product sales.

Remanufacturing is also made much easier if the dismantling, cleaning and reconditioning of used parts is already integrated during product and process development. The so-called Design for Remanufacturing takes into account platforms with modular product architecture, for example. They reduce product diversity and allow upgrades.

However, an appropriate design also includes aspects such as an undivided responsibility of development and production teams for new and refurbished products. Uniform standards for initial and secondary assembly are also important, covering production equipment, procedures, instructions and training alike. Due attention should also be paid to the sale of refurbished products.

If sellers do not receive the same financial incentives for the sale of refurbished vehicles as they do for new ones, there is a risk that remanufacturing efforts will be undermined in the last place. - Remanufacturing is an integral system and is made up of more than a multitude of individual measures that need to be coordinated. A clear, strategic positioning within the company greatly facilitates its establishment.

add value

Old appliances - even in defective condition - have a value that is usually far higher than the value created by recycling the raw materials. This is because the molded parts and the components assembled into a product still contain a considerable portion of the value added that was created during the manufacture of the new product. With remanufacturing, this value is preserved and increased to such an extent that customers are willing to pay a price for it again.

The example of Xerox shows that this works. With its "Asset recovery" program, the company managed to refurbish 75 percent of its printing stations, or 60,000 units, within 10 years, saving 65 million dollars in the process.

Specifically, remanufacturing creates the following benefits:

1. a company can increase customer loyalty and open up new customer segments with refurbished products.

2. not only the software, but also the hardware can be upgraded.

Remanufacturing increases the availability of spare parts and reduces the effort required to keep them in stock. Spare parts also remain available over the phaseout.

4 With remanufacturing, a company makes itself independent of developments on the raw materials market to a certain extent.

5 With the reprocessing, manufacturers gain knowledge about the weaknesses of their products. These can be incorporated into the development process.

Remanufacturing offers not least ecological advantages. The remanufacturing of used equipment and components requires fewer resources and produces fewer emissions. This result was shown in a life cycle assessment conducted by the Technical University of Berlin in 2012, which determined the ecological impact of the production and remanufacturing of alternators for passenger cars [II]. By remanufacturing old parts, almost 90 percent of emissions can be avoided compared to new alternators and almost 70 percent of raw materials can be saved.

Do not disregard risks

Of course, remanufacturing also involves risks. For example, there are always uncertainties regarding the quality and quantity of the returned end-of-life products. The varying quantities are more difficult to plan and can quickly lead to expensive logistics due to irregular transports and small quantities. Reclaimed products can not only displace competing products, but also "cannibalize" the company's own.

Framework conditions can change. The introduction of the lead ban in electronic devices by the European RoHS Directive, for example, made remanufacturing more difficult across product generations. Rapid technological change can also simply make products obsolete.

Nevertheless, remanufacturing is a promising strategy that extends the service life of products for the benefit of companies and their customers. This is not only ecologically sensible. With a cleverly set up remanufacturing process, it is also economically attractive.

Michael Vogt, Dipl. Nat. ETH, is managing director of resnova gmbh.