ENGINEERING THE CIRCULAR ECONOMY

A eld manual for re-designing a regenerative economy

PUBLISHED NOVEMBER 2013

DESIGN FOR REMANUFACTURE

1. Remanufacturing for newness 2. Remanufacturing and the circular economy 3. The process of remanufacturing 4. Design for remanufacture 5. Expanding remanufacturing

BY STEPHEN FOULGER

1. Remanufacturing for newness The circular economy aims to keep products and materials in use for as long as possible, recirculating them when necessary, aiming towards zero leakage from the system as waste. A key principle is tight circles recirculating products and materials with little change for fast return to productive use with minimal energy expenditure. Figure 1 (overleaf) shows the technical materials cycle: the tighter the loop, the more protable the option for the owner of the goods. As is shown, maintenance and reuse are respectively the rst and second options for recirculation, with remanufacturing as the third option. On the outer edge of the diagram lies recycling, which should be understood as the reduction of a product to its raw material form, often achieved through melting. Recycling is a process that can reduce a materials long-term effectiveness, which is why it economically is the least desirable of all four processes in the technical cycle. Recycling a complex product like a vehicle results in the loss of up to 95 per cent of the value originally added during manufacturing, as well as requiring large amounts of energy to be expended processing materials to make new products1. Remanufacturing, on the other hand, entails stripping products down to their constituent parts before reconditioning components and building them into new products. This approach offers more savings compared to recycling, in that it retains the embedded energy, embodied labour and value of manufactured parts. One report suggests that remanufacturing can save up to 90 per cent of the cost of new products. Between 2003 and 2009, CO2e savings from reuse and remanufacturing increased 10-fold2.

Photo: spyker3292

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FIGURE 1 The tighter the loop, the more protable the activity

Mining/materials manufacturing

Farming/collection1 Biological materials Biochemical feedstock Restoration Biosphere Service provider Parts manufacturer Technical materials

Product manufacturer Recycle

Refurbish/ remanufacture Reuse/redistribute

Biogas

Cascades
6 2803 0006 9

Maintenance User Collection

Consumer Anaerobic digestion/ composting Extraction of biochemical feedstock2 Collection

Energy recovery

Leakage to be minimised Landll

1 Hunting and shing 2 Can take both post-harvest and post-consumer waste as an input SOURCE: Ellen MacArthur Foundation circular economy team drawing from Braungart & McDonough and Cradle to Cradle (C2C)

Today, remanufacturing is practised in a number of areas, particularly in the industrial vehicles and machinery markets. Manufacturers such as Caterpillar and Renault have been running remanufacturing subsidiaries for several decades3. Independent remanufacturers have been around for some time too Pharma Machines has been selling remanufactured machines to the pharmaceutical industry since 1975. Other products commonly remanufactured include printer and toner cartridges, telecommunications and computer equipment and aircraft parts4. The total value of remanufacturing to the UK economy in 2009 was almost 2.4 billion, with the carbon savings estimated to be more than 10 million tonnes of CO2e (equivalent) per annum5.

Photo: Flickr user armenage

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2. Remanufacturing and the circular economy Existing remanufacturing businesses have thrived as prot-making enterprises, providing goods that customers want. The circular economy of the future can build on this sound business thinking and look at ways to apply established remanufacturing approaches into new markets. Remanufacturing benets customers. It gives them access to quality replacement parts or products at a fraction of the price of new products, yet often with the same warranty. It can enable customers to upgrade to the latest technical specications without the expense of new machinery or products. And, as is the case with Renaults remanufactured parts, prices can be lower for the customer. Remanufacturing benets businesses. Engaging with remanufacturing, either through in-house facilities or licensed third parties, enables original equipment manufacturers to control the quality of cheaper spare parts to ensure the reputation of their brand is maintained. While remanufactured products sell at a lower price than new items, studies have shown that prot margins can be up to double6. The energy requirements, for one thing, are much lower when remanufacturing a product, compared to manufacturing from virgin materials - the reduction in energy needs can reach up to 80% for a motor vehicle engine. Remanufacturing can make companies less reliant on third party component manufacture. This in turn can help insulate them from volatilities in the markets for raw materials. Companies can reach new, emerging markets with remanufactured products, while customers in those markets have access to equipment they might not otherwise have had. A remanufacturing revolution is an industrious revolution, supporting employment around parts and products that once went to waste. Furthermore, remanufacturing operations tend to be located where the users are, hence the process provides opportunities to create jobs that are not outsourceable - it would not make economic sense to ship a photocopier back to Japan where it was originally produced to remanufacture it, and companies like Ricoh or Canon have dedicated facilities at the heart of their key markets. The areas in which remanufacturing has established itself over the past few decades are predominantly in business-to-business markets and in applications where newness is not such an important factor. Managers operating eets of earth moving vehicles, or the drivers themselves for that matter, do not feel quite the same way about their equipment and replacement parts as the proud owner of a new sports car. In the future, remanufacturing will need to adapt to (or provide a pragmatic answer to) consumers desire for newness in order to keep materials in tighter loops within a circular economy. 3. The process of remanufacturing The rst stage in remanufacturing is collecting the assets after their rst owners or users have nished with them. Various incentives can induce users to return items themselves, including the return of a deposit or a reduced price on a replacement part, or access to the latest technical upgrades. Companies carrying out remanufacturing can be the original equipment manufacturer or its subsidiary, with easy access to original component specications and materials. They could be a licensed remanufacturer or, in some instances, companies with no ofcial connection with the original manufacturer. Once in the factory, the product is inspected, veried as faulty and then disassembled. Any parts that can be reused or remanufactured are cleaned and inventoried. Depending on the industry, this part or parts is called the core. Other parts are sent for recycling.

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Remanufacturing itself may involve re-machining elements of mechanical components or wiping the memory and loading new software onto digital components. This process often involves removing original component serial numbers, so that they lose their previous identity, ready to be assigned a new one as part of a remanufactured product. Individual parts are tested and added to the pool of parts used to assemble remanufactured products. New products are built from a mix of remanufactured and new components. They are given a new serial number, tested, quality assured and warrantied like any entirely new product. During the remanufacturing process, product specications and standards may be updated, for example ensuring they conform to the latest emissions standards or include the latest software patches. 4. Design for remanufacture The specic technical and business conditions that favour remanufacturing are clearly sector dependent. However, there are some key features of successful remanufacturing operations which may be usefully applied to expand remanufacturing into new sectors. Products must be designed to contain a core component, or set of components, which retains signicant residual value at the end of the products life. These elements must be robust and relatively easy to return to an as-new condition. This includes considering choice of materials and ease of cleaning as well as options for remachining and software updates. Components must be easy to inspect, which may include digital data logging or possibly the inclusion of sacricial parts that clearly show wear but are easily and cheaply replaced during each remanufacture. Disassembly must be easy to carry out with xings that are robust during a single component lifetime but are nevertheless easy to undo during remanufacturing. While some components may, in theory, be innitely recyclable, others may be suitable for only a handful of remanufactures. Service life times are also likely to be varied. Platform or modular design groups together components that may fail or become obsolete at the same rate so that they can be more easily removed and updated. Having identied core elements and remanufacturing routes, the next hurdle is ensuring used components are collected and returned for remanufacture. Customers and users must understand that products or parts may be returned for remanufacture. This may be as simple as clear labelling on machines and components or could involve digital data logging with specic messages directed to users. Users also need an incentive to remanufacture. These are usually nancial, such as the return of a deposit, but also include access to the latest technical upgrades. It could also be the case that the ownership of the product remains with the manufacturer or retailer, while the user simply pays for the performance of the product over a specied period of time. Remanufacturing is made much harder if products are abused during their lifetime, or simply used for too long. Appropriate maintenance regimes must be specied to ensure that used parts are suitable for remanufacture. This may just require providing paperwork for some products. Others with digital elements may actually be selfreporting. Similar approaches can ensure that products are not used beyond their optimum lifespans, degrading the quality of components to the point where remanufacturing becomes difcult. Incorporating integral components that fail after a specic time period can ensure that units are returned for remanufacture at the optimum time. Remanufacturing generally requires networks of companies covering original manufacture, collection, remanufacturing, and redistribution. The free movement of information between these companies is vital to the process to ensure quality and manage inventories. Remanufactured products need customers. Establishing a quality brand like Cat Reman takes time and investment. Companies recognise that there is a balance between building new demand in remanufacturing products and cannibalising a market for new products. This is mitigated somewhat by the generally higher prot margins on these products and remanufactured products enabljng companies to enter new, less afuent markets7. However, customer perception and preference for newness, even in business-to-business applications, can be hard to overcome. Manufacturers have been known to seed markets with new products labelled as remanufactured to establish a demand for remanufactured items.
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5. Expanding remanufacturing Remanufacturing is a well-established and protable activity in a number of product areas, mostly in business-tobusiness markets. The challenge for the circular economy of the 21st century is establishing the product designs, business models, knowledge, competencies, information ows and networks to make remanufacturing work on a much larger scale across a greater diversity of products. Some of the toughest markets to crack will be consumer products where newness is at a premium, such as the mobile and smart phone markets. Some 1.8 billion mobile devices were sold worldwide in 2011 while most consumers use them for just two and a half years before moving on to a new phone8. Mobile phone refurbishment and remanufacturing does occur in the world today, but tends to move products from richer countries into developing countries. In the EU, only 15 per cent of mobile phones are collected for recycling or reuse. There is clearly a large potential for expanding remanufacturing in this market. Prime components for reuse include the camera, display, battery and charger while tweaking designs could provide standardisation, modularity and ease of access to dramatically increase the opportunities for remanufacturing. Higher reuse and remanufacturing rates for mobile phones in the EU could eradicate at least 1.3 million tonnes of CO2e annually at 2010 production levels9. In a context characterised by rising materials prices and overcapacity, considering products and assets as material banks is getting more and more like a credible way of decoupling economic development from the consumption of nite resources. In that perspective, remanufacturing establishes itself as one of the key strategies to safeguard value and optimise technical material owsnaturally, some hurdles will have to be overcome (reverse logistics, consumer acceptance etc) but the potential seems considerable and key players are starting to look at remanufacturing in a whole new light.

Photo: Flickr user m-i-k-e

References 1 Remanufacturing Towards A More Sustainable Future, Loughborough University, 2006 2 Remanufacturing in the UK a snapshot of the UK remanufacturing industry, Centre for Remanufacturing and Reuse, 2010 3 The circular economy applied to the automotive industry, Ellen MacArthur Foundation, 2013; Caterpillar Remanufacturing case study, Ellen MacArthur Foundation, 2013 4 Ricoh Case Study, Ellen MacArthur Foundation, 2012 5 Remanufacturing in the UK a snapshot of the UK remanufacturing industry, Centre for Remanufacturing and Reuse, 2010 6 Remanufacturing and Product Design Designing for the 7th Generation, The Centre for Sustainable Design 7 Remanufacturing and Product Design Designing for the 7th Generation, The Centre for Sustainable Design 8 Gartner press release, February 15, 2012 9 Towards the Circular Economy vol. 1: Economic and business rationale for an accelerated transition, The Ellen MacArthur Foundation, 2012