THE REVALUE CHAIN

There has been a number of different 'frameworks' that have been developed, by different groups around the world, that show potential alternatives to the existing business-as-usual industrial paradigm. This map is an attempt to show some of them, in relation to the existing ‘Linear Value Chain.' It was initially developed to clearly communicate what remanufacturing is, and how it fits' within the other eco-system of alternative and complimentary strategies; and so there is some bias towards remanufacturing in the main text below, and in the 'Design for Revalue' processes.

As the map is based on the Linear Value Chain, it maybe advisable to watch a short introduction to what that is first, before going into further detail on this page.

This work was initially developed in 2015, as part of a first regional remanufacturing initiative, that was provoked in the Basque Country, by Acede (an industrial cluster), H-Enea Living-Lab and the Provincial Government of Gipuzkoa, entitled ‘Reman Gipuzkoa.’ The map and the presentation was developed by Agence designContext, and was facilitated by Régis Dando of remanufacturing.fr; with the stakeholder development being managed and dynamised by H-Enea Living Lab. The first meeting was entitled ‘Reman 101,’ which had the dual objective of creating an initial dialogue between key ‘soft infrastructure’ actors (political, economical, environmental, industrial clusters, innovation, media, university…), those industries and social groups already involved in revalue activities in the region (Emmaus, Zero Waste Gipuzkoa, Motorlan, ReBattery…), mixed with an intensive overview of the revalue chain - to build a shared level of understanding between all involved.

Since this initial work, projects have been developed, and more are currently in development, and the understanding of the potential of remanufacturing has spread across the Basque region.

Revalue Actor Examples

 

Why the need to 'Extend' Products & Materials?
The Factors of Production in the Revalue Chain
Industrial Sectors that can benefit from 'Reindustry'
Products that can enter into 'Reindustry'

This section looks at product life extension strategies that can and are made in the market (by retailers and customers) and by the market, after the product has already been sold by the original manufacturer to the original distributor or to the original customer.

1: REUSE
2: RENT
3: REPAIR
4: REPURPOSE

This section looks at the systems that can be and are put in place to make many of the product life extension strategies possible: you can not 're' something that you don't have...

5: WASTE MANAGEMENT
6: REVERSE LOGISTICS
7: INVENTORY

This section looks at the systems and processes the manufacturing industry can put in place to extend the life of products - and recapture value (make a profit), in the process.

8: MAINTENANCE
9: REFURBISH

10: RECONDITION
11: REMANUFACTURE
Optimum Obsolescence Point

This section looks at the systems and processes available to extend the life - and this case the value that can recaptured from waste or secondary materials.

12: FUNCTIONAL RECYCLING
13: DOWNCYCLING
14: UPCYCLING

15: RECOVERY

This section looks at those strategies that can be made at the 'start-of-the-pipe' (opposed to the 'end-of-pipe') - during the design of the actual product or service. Work done here has the potential to vastly increase the effectiveness and efficiency of the waste or used product in REMARKET and REINDUSTRY, by looking at the causes, and not only the effects. Design for revalue, therefore, can increase margins, qualities and quantities. And it also increases the potential for new services and features, for both the manufacturers and the customers or retailers.

Design for Recapture

Design for Disassembly & Reassembly
Design for Inspection, Fault Detection and Sorting
Design for Cleaning
Design for Multiple Cycles
Design for Reverse Production & 3R
RE-Market-Segmenting
Business Models
Integrative Design & Biomimicry

Video Coming Soon

Many of these activities are systemic - that is to say, they involve multiple stake-holders, across industrial sectors and public sectors, and require diverse (and new) skills sets - and so the system 'below' (the infrastructure) needs to support these new collaborations, and relationships, to also increase their existence and potential. As with 'RE-DESIGN,' this can focus on causes, and effects, barriers and opportunities, and start-of-pipes, and end-of-pipes... Public departments, education, research, investors and ecologists play a key role in this section.

16: HARD INFRASTRUCTURE

17: GREEN ARCHITECTURE
18: REGENERATIVE AGRICULTURE
19: SOFT INFRASTRUCTURE

November, 2015

Revalue

Written by Tom Snow


There is still a lot of discussion in this field about terminology. And one realises, very quickly, how terminology can both help frame information, but if incoherent, can complexify things very quickly. The writer then adds this new term with this in mind, in the hope that it will help do the former.

Sometimes, remanufacture, repair, or recondition can be used as the umbrella term for some, or all of the activities defined in this study. However, these activities are also relatively clear activities in their own right, and so mixing them as an umbrella term, potentially moves the terminology dial towards confusion.

And sometimes, studies just focus on remanufacture; but this looses the overall view, as Winfred Ijomah et al (2007) illustrate there are “A hierarchy of secondary market production processes” available, and remanufacturing is but one process within a spectrum of possibilities, which should be taken into account when developing a strategy for a company, or an industry, or at regional level.

So, we came up with a new overall term, that encompasses, all the relevant design and business activities (‘Design for Revalue’), all the ‘Recapture’ systems, all the ‘Reverse Engineering’ activities, all the ‘Recycling,’ and all the ‘Reselling’ and more.

This term is ‘Revalue.’

December, 2015

Non of the above...


Written by Tom Snow

Anyone that knows a little about remanufacturing has probably been told or read about the large multinational OEM (Original Equipment Manufacturer) examples of Caterpillar Inc., Xerox Inc., Rolls Royce Aircraft Engines, and Michelin…; and more recently Ricoh, and Renault.

These case-study examples are great, in showing how, in many cases through a mix of luck, being in the right place at the right time, historical, war, economical and regional contexts, and of course a persistence to go beyond the norm, these companies are clearly one of the first places to learn about concrete examples of revalue, and particularly remanufacturing, activities.

However, if you are not a multi-national, a lead manufacturing company (a company that leads it’s upstream and downstream supply chains - like Caterpillar Inc.), then you might be wondering as ‘non of the above,’ can your company even consider transitioning into this field - it already seems ‘out of our league’. And if one just focuses on the many of the typical case-study companies, and not the system and the processes, and the local opportunities in a region, then this reflection is valid - and probably quite typical.

January, 2016

Advanced After Sales Services


Written by Tom Snow

Revalue, and remanufacturing in particular, is really a company level strategy, and so its success can weigh a lot on the buy-in and leadership from the top of an organisation, and the subsequent collaboration between the different departments. Without the leadership from the top, the next place to look for leadership maybe within the Marketing or R&D departments; however, if there is no leadership from the top, revalue can go against the typical short-term objectives of these departments (particularly R&D) to continue to reduce costs (which can also be linked to short-term bonuses systems). So, if there is no access to the top, and Marketing and R&D are not motivated, is there somewhere else revalue activities could start?

Many manufacturing companies, wherever they are in the supply chain, have an After-Sales-Service department. This department is already involved in revalue activities, and so this is a logical place to start a transition into more advanced revalue activities. For example, some companies already repair some products under warranty, either on-site or at the customers site, or through exchanging the faulty product like-for-like and then repairing the faulty back at the factory. In this last case, the company is already actually quiet advanced in reverse engineering. The motivation for the After-Sales-Sevice department is, if it’s well managed, that these new activities can create jobs, create new income streams, and bring the department more in a leadership position for change within the company. Now, which After-sales-service manager wouldn’t like the sound of that?

February, 2016

A Spectrum


Written by Tom Snow

Any company already in the reverse-engineering, or thinking to enter into reverse-engineering activities, should look at them as a spectrum of possibilities, and that strategies can be made either towards remanufacturing or towards maintenance. For instance, it may make sense for a company that is already working in refurbishment, to actually start developing activities to the 'left' of the spectrum - in maintenance - rather than looking to moving 'right,' to recondition or remanufacturing for example. A Remanufacturer, in many cases, has the ability to choose the most appropriate process they want to follow for each end-of-cycle product that enters their facility, whereas, a Refurbisher does not often have this same luxury. And so, a remanufacturer can also add more activities to the left - and they often do so naturally, as reconditioning frequently makes a lot of sense for many of the recaptured products.

“…don’t repair what is not broken, don’t remanufacture what can be repaired, don’t recycle what can be remanufactured.” (Walter Stahel, 2013)

Choosing the right intervention from the spectrum of options (reverse-engineering process and/or Inventory/Cannibalisation) for the specific end-of-cycle product, is key to economic success. But what is the right intervention? Is it the most cost efficient, or the best for the environment? Can it be both? To make it both, each and every product/component/material that enters into the revalue process needs to be screened with a efficient and effective process, that is able to identify the right course of action for revaluing each good. As Stahel highlights, 'don't repair what is not broken,' underlines the critical point that it may seem more efficient to develop bulk processes for all situations, but this may cause a lot of waste (materials and time), and so, effective systems need to be in place, whereby companies can be flexible, product-by-product, so that the right solution is made for the right problem each time; whilst connecting this to tight feed-loops that assess the screening criteria and the results of the interventions that were made.

November, 2016

Pioneer or Follower


Written by Tom Snow

When looking at a regional strategy for revalue, a reflection on chronological development maybe helpful.

Starting with this question: What’s the difference between a pioneer or a follower, when looking at development strategies for ‘revalue’?

Firstly, this question needs to be broken into (A) the micro-economic view - the view of the firm and its’ value chain, and (B) the macro-economic view - the view of the region, including its’ soft and hard infrastructure and institutions.

A) Looking at a pioneer company, economical historian David S. Landes (2003), suggests that a pioneer company carries the highest economic burden, in two ways:

…a pioneer in any field incurs additional expense owing to ignorance and inexperience; and in theory those who follow may profit by his mistakes.

This is also known as the ‘economics of backwardness’, and focuses on the costs of breaking the new path. However, Landes follows with an important tranquilliser for the followers:

Yet this assumes on the part of the imitators a wisdom that historical experience belies. If the pioneer often sins on the side of excessive modesty, the follower often suffers from excessive ambition; if the one does not quite know where he is going, the other knows too well and undoes himself by his eagerness. There is such a thing… as machines that are too big, engines too powerful, plants that are too capital-intensive.

Landes, however, goes on to suggest that this reason for the higher economic burden carried by the pioneer is over-cited, and is a lesser factor when compared to the second, which is the adjustments to subsequent changes - known as ‘related costs.’

…the burdens imposed by interrelatedness, that is, the technical linkage between the component parts of the industrial plant of an enterprise or economy. (Landes, 2003)

No machine in a factory rests in a vacuum: …the engine, the machine it drives, and the means by which it transmits power are all built to fit. (Landes, 2003)

And so, it is rare that the upgrading, removal or addition for example, of machines or processes can be considered in isolation. Changes to machines can also often be influenced (or obliged) by outside actors (i.e., clients, supply chain partners, regulators).

This issue of interrelatedness goes beyond the walls of the factory, and this is even more true when talking about process changes along value chains. An example was Britain in the mid-to-late nineteenth century, who's pioneering steel factories were hemmed into cities that were not designed for them. Integrating backwards, which often requires more space, was not an option, and this prevented many innovations that proceeded from ‘follower’ countries, that had the advantage of foresight to develop in areas with more space.

The very sight of the spacious arrangements of the Homestead plant in the United States made Windsor Richard wish he ‘could pull down the whole works at Bolckow’s and start afresh.' (Landes, 2003)

And so, taking in mind that the development gap between the pioneer and the follow must not be too large, then at the micro-economic level the advantage may lie with the latecomer.

B) Looking at the issue from the view of the region - the macro-economy, the answer is not the same: the greatest cost of developing the new industrial activities, from the macro-economical perspective, falls heaviest on the region that is following.

Why is this? Well, large scale mechanised manufacturing and assembling requires not only the value chain shown in the map above (the central column), but it also requires the hard and soft infrastructure and institutions. In terms of revalue, this includes legislations, norms, financial services, transport systems, education and training facilities, R&D labs, access to technology (see the section on hard and soft infrastructure for more details)…. 

These are all costly, can take a lot of time to develop/build, investments are not regular, and all go beyond the financial capabilities of any one company, and so the burden here is clearly on the regional government. If the following nation is too far behind the pioneer country in question, it can mean that the leap might be too great:

The much vaunted freedom of the latecomer to choose the latest and best equipment on the basis of the most advanced techniques has become a myth. (Landes, 2003)

Countries like Sweden, Germany, Scotland and the UK as a whole, as an European example, are all nations that are (or are in the process of) maximising their soft and hard infrastructural and institutional assets to maximise the opportunities for firms at the micro-economic level. All are developing their own strategy, which is based on their own specific hard/soft infrastructural and institutional context - which is already in place.

Conclusion for the Follower

As a follower, the strategy at the micro-economic level maybe to look at ‘revalue’ as a ‘Portfolio of potential Strategies,’ and ‘Business Models’ and develop the most appropriate for the firm (or group of firms) - learning (as much as is possible) from the successes and failures of the many different types of pioneers - whilst not forgetting that context is key, as revalue activities can not be ‘cut-and-paste’ from one company or region to another.

At the same time, as a follower at the macro-economic level, institutions should help to develop a ‘healthier’ context for those companies managing or wanting to develop revalue activities in their region. As mentioned above, this is potentially very expensive, and so a strategy should maximise the the use of existing resources (institutions and infrastructure) where appropriate. And in an ideal situation, develop a road map, similar to the ‘Big Push Theory,’ where policies are selective - targeted to maximise backward and forward linkages along the supply and value chains. The state can also implement complementary indicative investment planning, where the government clearly communicates where it is willing to invest, this then can also encourages private investors to enter directly, and indirectly into complimentary areas, and then firms have the choice to transition their activities towards the government goal, and benefit from these credit and/or subsidy opportunities. The government, with its unique view across the entire state, can also help:

[identify] the interdependence of investment decisions and sequencing the investments... the state can ensure that risk is reduced as a barrier to investment and that increasing returns are exploited." (Toner, P. et al. 2009)

Bibliography