Resource: Case Studies: Electroversal
Electroversal operates a highly organised remanufacturing business which tackles the increasing problem of disposal of PCBs (mainly for photocopiers).
Friday, 17th November 2006
Electroversals activity began in mobile phones, then faxes, and now includes repair and refurbishment of PCBs (mainly for photocopiers) with some R&R activity on photocopiers themselves. They have diversified into parallel markets employing the same skills. Their market is Europe-wide, split roughly 50/50 in UK/Europe. Electroversal employs around 65 people in Luton, handling around 5-6000 PCBs per month and 150 copiers per year, and generating a turnover of �5m in 2001. Their branch in Australia addresses similar markets and employs another 20 people. The company was established as the personal mission of the directors who knew the business and felt the need for the remanufacturing service, backed by clear cost drivers at the time. Special features of Electroversals Operations Electroversal operates a highly organised production flow from receipt to dispatch, embracing lean manufacturing principles. This demonstrates that remanufacturing businesses can be operated to the same standards as primary manufacture, in spite of the variability in input. The current business model is based on contracted remanufacture in support of OEMs. They have considered providing a wider service involving purchase, retail, repair and remanufacture on a hire or sell basis. This business has more margin than pure component repair, but would be more difficult to manage, requiring a distinct branding and sales operation. Electroversal has an ambivalent relationship with the OEMs in which they are almost perceived as a necessary evil. The company is a 4th party supplier, backing up contracted warranty agents in the remanufacture of defect goods. Too high a level of remanufacture would threaten their relationship with OEMs, which is vital in order to gain product knowledge and access to some components. Currently, in return, the OEMs obtain vital feedback on the performance and reliability of the units.
Special Features of the Sector
Photocopiers in general and PCBs in particular present an increasing waste disposal problem, and are explicitly targeted under the WEEE Directive. Remanufacturing in this sector is currently at a very low level; it is thought feasible to reuse items 2-3 times at least. Product life-cycles are very short, although changes are largely cosmetic, and core technology changes little. This is difficult for remanufacturers of units, but is somewhat easier on the component remanufacturers. The packaging or formatting of the components to fit into a specific product is subject to change, often for cosmetic purposes, or to frustrate remanufacture. Generally the technology cannot be considered a barrier to entry for a reasonably competent electronics-based operation. Remanufacturing addresses the needs of warranty and repair outfits contracted to OEM suppliers of photocopier equipment and the like. Business comes largely through the corporate market, with very little from domestic use, mainly because small users do not have high end machines, nor channels to return faulty equipment. PCs and laptops are now standard technology items with multiple providers: there is thus a large pool of OEM product to access. This may make it easier for entry into the remanufacture market, particularly if aligned to an OEM. There are now literally thousands of PC/IT refurbishers, at least 20 in Luton. Correspondingly, margins are eroding rapidly from the 60% of new price 15 years ago. Price comparison is hard because of the various standards that remanufacturers are working to. This is now an extremely competitive environment, where quality is expected to come as standard, and with service differentiated in other ways such as speed of response, carrying spares etc. Customers now demand a "total solution" and the provider must use other companies to repair or replace items which he himself cannot fix.