1. science
2. ecology
3. waste management
4. recycling

How to support the OEM’s in product life
time extension by collaboration in the
reman supply chain?
Project High Tech Remanufacturing Business Development
Setup of a Supplier Base
Final Report
Werkzaamheden ihkv Logistic Accelerator
Recomax V.O.F.
Nuland, July 2013
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Contents
1. Introduction
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2. Life time extension by collaboration in the reman supply chain
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2.1 Supplier Base project
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2.2 OEM needs
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2.3 Supplier capabilities
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2.4 Supplier Base framework
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2.5 Supplier Base process
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3. Conclusion and follow-up
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4. Appendix: Detailed information participating suppliers
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1. Introduction
Remanufacturing (sometimes also called refurbishment) means ‘fixing’ used equipment in
order to give them a second life. The main advantage of remanufacturing is that by
extending the economic lifetime the service period is also extended. This can dramatically
increase service revenues due to a larger installed base (see figure 1).
Remanufacturing can also strengthen the sales proposition of existing products. And it is
sustainable: re-use of parts and materials is an element of the ‘circular economy’. From a
development perspective, remanufacturing offers substantial opportunities for the Brainport
region as well as for individual companies in the region to improve their own position.
Figure 1: increased revenue through remanufacturing
The potential value of remanufacturing is currently not fully exploited by OEMs (Original
Equipment Manufacturer) and suppliers in the south of The Netherlands. The project ‘Life
Cycle Management II’ provided ample evidence and reasons:
 Remanufacturing is at present not a boardroom priority for most OEMs
 Investment in remanufacturing conflicts with budgets and production capacity for
new equipment
 Local suppliers are underutilized with regard to remanufacturing
Therefore BOM and a number of companies initiated the project: High Tech
Remanufacturing Business Development (HTRBD). The purpose of the project was to get a
better insight in remanufacturing, the challenges for further development of
remanufacturing in the Brainport Region and possibilities for cooperation between OEMs
and OEMs & suppliers.
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The project was divided in two sub-projects:
1. Supplier Base: cooperation in pro-active End-of-Life Management on the level of parts,
including the development of a framework for a supplier base. This project was
supported by Recomax. Participated OEM’s: ASML and OCE. Participated suppliers (for
detail company information see appendix)
2. Business Modeling of Remanufacturing: development of an integral best-practice
business model for remanufacturing. This project was supported by Mare Advies. ASML,
FEI, Océ and Philips Healthcare were four OEMs that participated in this sub-project.
This report provides the main outcomes of sub-project ‘Supplier Base’. The outcomes are
based on desk research, questionnaires to Suppliers and OEM’s, five workshops with the
Suppliers and one workshop with OEMs and Suppliers, in which the various ways were
discussed to improve the collaboration between OEM’s and Suppliers in remanufacturing.
This resulted in a set-up of a Supplier network and a proposal for a process to manage the
collaboration between OEM’s and Suppliers.
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2. Life time extension by collaboration in the reman supply chain
2.1 Supplier Base project
In the project Supplier Base, the focus was on the improvement of collaboration between
OEM’s and Suppliers in remanufacturing. Improved collaboration is needed since OEM’s
have difficulties to organize the remanufacturing process in-house at the right cost levels
and Suppliers are capable of delivering expertise in repair and reengineering. However, the
collaboration is not there. There’s no process in place which supports the collaboration
between OEM’s and Suppliers. In some cases, OEM’s are even not aware of the existence of
Suppliers with competencies in repair and re-engineering.
This project started with the investigation of the needs of OEM’s in remanufacturing and the
difficulties to collaborate with the Suppliers. The outcomes of these investigations were
discussed with the Suppliers, which resulted in a proposal how to give insights in the repair
and re-engineering possibilities of the participating Suppliers in this project (Supplier Base
framework). Besides the Supplier Base framework, the project created a proposal for a
process to improve the collaboration between OEM’s and Suppliers.
The objectives of the Supplier Base project:
 Development of Supplier Base Framework for High Tech repair and re-engineering
solutions
 Insight in capabilities and competencies of High Tech Remanufacturing suppliers
 Process proposal for collaboration between OEM’s and Suppliers in remanufacturing
In this project, the following deliverables were identified:
 Best practices and possible solutions to between OEM’s and supplier/service
providers in remanufacturing
 Supplier Base framework including proposal for infrastructural organization (the idea
of a one-stop shop)
 Set-up of a Supplier Base network (per competency, repair and re-engineering) for
South of Netherlands in High Tech Remanufacturing for participating Suppliers
2.2 OEM needs
The OEM’s participating in this project, were interviewed and asked to submit a
questionnaire. The interview was meant to identify why OEM’s were not collaborating with
the existing Suppliers in remanufacturing. The main reason for this had to do with the nonfocus on remanufacturing business within the OEM. The focus is on the newest technology
and the manufacturing of new equipment. The remanufacturing process is therefore seen
often as a difficult process. Within the OEM’s organizations, it’s difficult to get delta’s in the
remanufacturing process organized.
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The OEM’s were often not aware of the existence of the Suppliers participating in this
project. In case the OEM’s are aware of the existence, the internal process will not allow the
OEM’s to collaborate with new (smaller) Suppliers, because of sustainability and supplier
qualifications.
However, the OEM’s are interested how to get access to the remanufacturing capabilities of
the Suppliers, since this could be (far) more cost efficient then to organize the
remanufacturing in-house. OEM’s have a need in all competency fields for cost efficient
repair and/or re-engineering solutions:
 Electrical
 Mechatronics
 Mechanical
 Optical
 Logistics
 Service providers
Procurement
requirements
Transparency
supply chain
OEM
outsourcing
demand
Sustainability
and reliability
Cost efficiency
Figure 2: Challenges in outsourcing repair/reman business for OEM’s
The repairs in-house (or at original supplier) sometimes seems to be too expensive and it will
jeopardize production of new parts/modules. Therefore, the OEM’s are looking for:
 Cost efficient solutions
 Quality guaranteed parts/modules
 Reliability and sustainability
OEM’s are not willing to extend their Procurement Network with too many new suppliers
(especially not for low volume/low value business). The idea of working with a “One-stop
Shop” could therefore be a solution for OEM’s. In this model, there’s one organization which
acts as a main supplier with the access to the Suppliers in the Supplier Base.
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2.3 Supplier capabilities
Suppliers participating in this project, all have capabilities in remanufacturing, repairs and/or
re-engineering. Some of these Suppliers act already as first-tier Suppliers to OEM’s, others
do not deliver products or services to OEM’s. These Suppliers do claim they can support the
remanufacturing business of the OEM’s by delivering them their expertise in a more efficient
way then the OEM can organize. However, the biggest difficulty they are facing is how to setup the collaboration with the OEM.
Understanding the outcome of the OEM’s interviews, Suppliers do recognize the need for:
 Transparency in their field of expertise in remanufacturing
 Easy access for OEM’s to collaborate with Suppliers via a “One-stop Shop” model:
o Simple procurement process from OEM to Supplier
o Copy of the existing relationship between OEM’s and their first-tier Suppliers
As soon as the collaboration is there, the key element of success is the communication
between the OEM’s and the suppliers. For OEM’s, reliability and sustainability of their
products is important. Not all Suppliers are therefore qualified to deliver to OEM’s. The only
way to make sure that the reliability and sustainability requirements are met, is by close
communication channels on the remanufacturing activities. In this communication, OEM’s
can make clear what the remanufacturing activity needs to deliver. The Suppliers can make
clear what their remanufacturing capability is and what the specifications are they can
deliver.
2.4 Supplier Base framework
The key elements in the success of the remanufacturing Supplier Base will be:
 Transparency
 Accessibility
 Collaboration
Transparency is needed to give insight in the available competencies and expertise in the
supply chain for remanufacturing, repair and re-engineering. Transparency for OEM’s and
transparency between Suppliers is the basis to make the right connections in the
remanufacturing Supply Chain. This can be created by building a network of suppliers,
divided in competency and with specific information for reman expertise per supplier.
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Figure 3: Create transparency in Supplier capabilities
Accessibility is needed to stimulate the collaboration. Access to the reman supply chain can
be given by registration of OEM’s and Suppliers into a database. This database contains a
specific set of parameters (figure 4). These parameters will support the set-up of
collaboration between OEM and Suppliers and collaboration between Suppliers. By knowing
the parameters, matching can be possible. In case parameters between companies do
match, collaboration can follow. If not all parameters match, collaboration can be done by
taking some specific actions.
Reman Supplier Base - profiel
Bedrijfsnaam:
Contactpersoon:
Functie:
Vestigingsadres:
Postadres postcode/plaats:
Adres is hetzelfde als postadres:
Postcode en Plaats:
Post Adres
Land:
Telefoonnummer:
Faxnummer:
Mobiel nummer:
Email adres contactpersoon:
Website:
Email adres algemeen:
Buyer of maker:
KvK nummer:
Alle vestigingen:
Wachtwoord:
Bevestig wachtwoord:
Reman Supplier Base - parameters
Bedrijfsprofiel
NACE code:
Kennisgebied
Toepassingen
Afzetmarkten
Certificaten
Testen
Logistiek
ICT
Locatie
Algemene informatie
Achtergrond
Aanleiding
Afmeting & Gewicht
Kennisgebied
Toepassingen
Afzetmarkten
Certificaten
Testen
Logistiek
ICT
Locatie
Bestanden
Reman Supplier Base - competencies
Electrical
PCB/boards
Computer systems
Wires/cable trees
Power supplies
Sensors
Switches
Electrical-Mechanical
Computer console (wired)
Racks/cabinets (wired)
Robots
Printheads
Electro motors
Fans/blowers
Sub assemblies
Sub assemblies intern
Mechanical
Frames/bodies
Racks/cabinets (empty)
Covers/panels
Rollers
Mechanical assies
Mechanical assies intern
Optical
Lasers
Lenses
Mirrors
Prisma's
Fibers
Figure 4: Supplier Base parameters for matching in remanufacturing
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Collaboration starts from the “matching” process, to bring OEM’s and Suppliers or Suppliers
and Suppliers together. Matching starts with identification of the matching parameters, and
the non-matching parameters. Non-matching parameters need to be solved to come to
collaboration. The collaboration needs to result in the right communication between OEM’s
and Suppliers and in the end in the outsourcing of a repair and/or re-engineering activity
from the OEM to one of the Suppliers.
OEM requests in remanufacturing
Figure 5: Reman Supplier Base can support the various requests from OEM’s in remanufacturing
The transparency and the accessibility of the Supplier Base can be supported by a
framework. This framework will visualize the Supplier network. The network will be sorted in
terms of capabilities since this will be a key element for OEM’s to look into the Supplier Base.
With the participating Suppliers, the project did set-up a draft framework to show the
available competencies in Remanufacturing.
Figure 6: Framework of participating Suppliers in project
The detailed information per participating Suppliers is listed in the Appendix.
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2.5 Supplier Base process
The transparency, accessibility and collaboration can be stimulated and developed by a
process. With the requirement from OEM’s to keep things simple, the process can be set-up
in two different models:
 One-stop Shop model: Independent “control tower” organization matching Supply
and Demand
 First-tier Supplier(s) model: Outsourcing of activities from OEM to first-tier Supplier
and from first-tier Supplier to a company in the Supplier Base
Both models have been discussed with the Suppliers. No conclusion could be taken on what
the best model is to bring the collaboration in place. The set-up of this process therefore
needs to be further investigated and will most likely have the best of both models in place:
 Independency of the “matching”-organization; bring OEM and Supplier together for a
certain remanufacturing capability. Fair competition.
 Reliability and sustainability; first-tier suppliers have an agreement and relationship
with OEM’s on which the Supplier Base can built
The (high-level) proposal for a Supplier Base process consists of the blocks in the below
figure 7.
Figure 7: Steps in collaboration set-up OEM and Suppliers
In the above process steps, the matching process is a key element. This matching process
consists of the comparison of the requirements from the outsourcing request of the OEM
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and the identified capabilities of the Supplier. This last one has been captured in a database,
in which the various parameters of the Supplier are listed.
In not all cases, there will be a 100% match between a OEM and a Supplier. In these cases,
the “matching-organization” will act as an intermediary to come up with a solution. The endgoal will always be to provide the OEM with a best possible solution for their outsourcing
request.
Figure 8 shows the proposed process in a swimming lane overview. In this proposal, the
database and matching explained in more detail.
The proposed process will be the basis for a follow-up discussion with Suppliers and OEM
and will lead into an agreed pilot project where the process will be tested and validated.
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Figure 8: Supplier Base process proposal
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3. Conclusion and follow-up
The main conclusions are:
 Collaboration between OEM’s and Suppliers needs stimulation.
o Life Cycle management of older equipment is not structured/organized in the
supply chain.
o The reverse flow of equipment is difficult to organize in OEM and First-tier
supplier environments because of interference with new/volume production
flow.
o Knowledge and skills of older equipment are not maintained at OEM and
First-tier suppliers
o Sustainability and reliability of OEM products is critical, existing contracts with
First-tier suppliers will be maintained
 Transparency and accessibility are the stimulators to create collaboration in the
Remanufacturing Supplier Base
o Set-up of Remanufacturing Platform containing all needed Remanufacturing
competencies and disciplines (repair and engineering capabilities)
o Supplier Base as foundation of the platform to cover all needed competencies
and disciplines
o Process to optimize the solution power of the platform
o Clear overview of Roles and Responsibilities in platform
The critical question drawn from the main conclusions is therefore “How to support the
OEM’s in product life time extension by collaboration in the reman supply chain?”
The answer is by setting up a platform, which can be validated by a pilot in the follow-up
project “Roadmap Remanufacturing”.
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Appendix: Detailed information participating suppliers
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