Product, Service & Design Innovation
#BusinessCase:
Report Reveals 11:1 ROI for Remanufacturing-Focused Business Models

Earthshine, a consultancy and think tank focused on business and economic transformation, and remanufacturing company Norsk Ombruk have released a new business case white paper demonstrating how remanufacturing within a circular economy can deliver a wide range of benefits for society, environment and economy.

Across the globe, businesses and governments are struggling to find new ways to create lasting economic success and shared prosperity. The circular economy offers a potential way forward to help policymakers and business leaders tackle key sustainability challenges, while simultaneously enabling economic growth within planetary boundaries.

According to Earthshine and Norsk Ombruk, remanufacturing will play a critical role in the transition toward a circular economy, enabling products, components and valuable resources to be kept at their highest use for a greater period of time. Beyond helping realize significant savings in resources, energy, emissions, water and waste, remanufacturing also has the potential to create new jobs and generate sustainable economic activity.

It is estimated that remanufacturing in Europe could be worth around €90 billion by the year 2030, employing up to 600,000 people. However, the remanufacturing sector is still in its infancy in the EU and the necessary infrastructure and capabilities required to realize its potential are currently lacking.

To fill this gap and demonstrate the triple-bottom-line benefits arising from a radical shift in sustainability performance in order to accelerate change, The Benefits Case for Remanufacturing provides businesses with detailed insight into how a remanufacturing model, as seen through the lens of Norsk Ombruk, works, how the resulting benefits may be modeled and quantified, along with insights and recommendations on the future of remanufacturing.

The report reveals that through business model innovation, Norsk Ombruk was able to deliver an estimated €9.4 million in benefits in 2016 alone. This includes €441,000 in added brand value, €2.131 million in resource conservation, €4.476 million generated consumer and societal value and €768,000 in reduced economic leakage. By remanufacturing only 48 percent of products and resources, the ratio of benefits delivered in proportion with the company’s operating costs was 11:1, or €11 million worth of benefits to people, the environment, business and economy for every €1 million of operating costs.

The report also shares further insights and lessons to help support and advance the spread of remanufacturing within a circular economy, placing emphasis on scale, systems thinking, collaboration and remanufacturing as a catalyst for forging new links, dependencies, relationships and partnerships. It goes on to highlight areas of future improvement, particularly on the end of Original Equipment Manufacturers (OEMs) and where future research is needed to further develop visibility and transparency of product costs and performance.

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