Report on the remanufacturing of refrigerated display cabinets

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©Centre for Remanufacturing & Reuse 2009 4 Barriers and recommendations A prime objective of the report is to determine the reasons preventing the uptake of more remanufactured RDCs. Conversations with industry sources including retailers, third party remanufacturers and original equipment manufacturers have revealed a number of barriers. This section outlines these barriers and discusses possible solutions. 4.1 Barriers The following are barriers preventing the uptake of remanufactured RDCs which may be actual or perceived: Poor industry perception and technical understanding by retailers Retailers have expressed opinions that, whilst the majority of current remanufacturers in the industry remanufacture to a constantly high standard, historically this was not always the case. Some – now defunct – remanufacturers delivered sub-standard remanufactured RDCs, which resulted in returns and contract cancellations. This problem has largely been rectified; however, the damage to the reputation of the remanufacturing industry has yet to heal. An increase in technical knowledge of the retail buyers could mitigate this issue. For example, giving engineers responsibility in RDC procurement will lead to a deeper understanding of the processes involved in remanufacturing, instilling more trust in remanufactured RDCs. Indeed, several different retail organisations that actively sought remanufactured RDCs suggested that the incorporation of engineers within the purchasing decision would increase demand for remanufactured RDCs. The reality is, however, that most remanufacturers are perceived as „refurbishers‟ or, if they are also an OEM, any remanufacturing performed by the organisation is often perceived as a non-core area of work to the business, and thus probably of inferior standard. This lack of understanding of remanufacture, particularly when purchasers do not have an engineering background can be an issue even without any previous knowledge of poor performance. The word remanufacture can be synonymous with second hand and its associated negative connotations. Page 28 of 38
©Centre for Remanufacturing & Reuse 2009 Poor availability of used units Supply problems are seen as a major issue in stifling remanufacturing potential. The nature of the remanufacturing industry means that supply is dependent on sourcing suitable EoL cabinets, which is not always feasible for larger orders. This is an acute problem where retailers are expanding their business. However, most remanufacturers recognise that there will be a need for new cabinets and, if they are of suitable quality, there will be available to remanufacture in the future. Another frustrating issue for retailers is that OEMs will only remanufacture ownmake units, resulting in unnecessary scrapping of RDCs at end of life. Competition from low-price imports Currently, remanufactured RDCs can be purchased for approximately 70% of the price of new, “budget” units. (These price differentials are smaller than in previous years.) Additional storage leads to increased costs of remanufactured RDCs, which, if not absorbed by the remanufacturer, will push up prices and diminish the savings. Many companies (particularly those with generic „purchasing managers‟ or similar) do not have budgets allocated on a long term basis and insufficient understanding of the whole life benefits of remanufacturing RDCs reduces their uptake. The perceived poorer quality of lower cost RDCs means that retailers generally only consider them for scrap at the end of their lifetimes (usually after five years). However, if the case itself is in good condition these units may also be suitable for remanufacture. This is largely a perception issue held by retail buyers. As waste disposal becomes more expensive, remanufacture may become more attractive. Traditionally, UK supermarkets have wanted units customised with their own brand and look, which resulted in higher costs and specifications for RDCs. Now, in order to reduce costs, the supermarkets are using more standardised European and Far Eastern derived RDCs that are considerably cheaper. However, one of the potential advantages of remanufacture is that individual specifications can be developed. Reliance on goodwill Although not directly raised by retailers as a barrier, asset managers must perform unit reviews (all cabinets in storage, on shop floor, and currently under remanufacture) to determine the need for new and remanufactured cabinets. This can occur relatively frequently, weekly in one case. This is not a technical process and can be handled by non-senior staff, but it still poses a burden on the retailer that they otherwise would avoid by buying new. The use of asset management tools is being used to mitigate of this problem. Historically, the drive to use remanufactured cabinets has been from key individuals within the supermarkets who promoted the use of such products. Page 29 of 38
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Report on the remanufacturing of refrigerated display cabinets

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