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Caterpillar Remanufacturing Vehicle Parts

Challenge

Develop remanufacturing processes and business models, and design for remanufacturing.

Problem

Many complex products are discarded or scrapped when some components are worn out, rendering it non-functional. Remanufacturing is a viable alternative for any type of product made up of standard interchangeable parts for which replacement parts can be easily manufactured, built, or obtained. The approach can be much more resource efficient but isn’t always straight-forward to achieve.

Caterpillar’s products are very large plant and vehicle equipment with a high intrinsic material value. Their dealerships had begun to renovate components on behalf of customers thus disrupting Caterpillar business. The company decided it was best placed to address this market need and could provide certified remanufacturing ‘as new’ backed by warranties.

Solution

Caterpillar has developed a US$1 billion turnover remanufacturing division which is growing at a significant rate year on year. Caterpillar’s Shrewsbury plant now processes thousands of end-of-first-life car, truck, plant, rail and marine engines and parts a month. Approximately 40% of these were originally built by other companies.

Achieving this scale has involved customer incentives for returning worn-out products, and many advanced technologies, including software systems to detect metal tolerance, blasters to remove dirt and paint, and metal sprayers to provide millimetre thick coatings of chrome and nickel.

Caterpillar sees particularly attractive growth prospects in Europe. Regulation, such as the EU’s End of Life Vehicles Directive which requires 95% recovery of car parts by 2015, is expected to increase the supply of raw materials.

In addition to in-house remanufacturing, Caterpillar anticipates more work providing advice on – and management of (as it already does for Land Rover) – remanufacturing services in other companies. Such aspects include redesigning first-life products to enable remanufacturing (eg the tolerance and dimensions of components for remilling and coating). Opportunities also exist in refreshing cars after initial leases so that they can be sold as good as new.

Benefits

Customer benefits: • Off-the-shelf availability • Same ‘as new’ warranty and quality • Fraction of new price • Lower owning and operating costs
Caterpillar’s benefits: • Retaining link to end customer • Learning where parts deteriorate and build improvements into new models • Reducing raw material costs while growing business • Retention of skilled workers • Using experience to expand into other markets • Fastest growing part of the business

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