Journey from American Standard to International Standard

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Don Chenevert, Jr.Deputy General Counsel

SRC Holdings Corporation417-575-8336

dchenevert@srcholdings.com

Dr. Ramesh SubramoniamChair, Trade & Policy Committee

Remanufacturing Industries Council248-515-0861

subramoniamramesh@yahoo.com

Reman Day promotes the common understanding of the industry, demonstrates the innovative ways

members of the industry are advancing the circular economy and the positive environmental impact of

remanufacturing.

https://remanday.org

The Remanufacturing Industries Council (“RIC”) is a strategic alliance of businesses and academic institutions that works across industry sectors to support the entire remanufacturing industry.

• Promotes the growth of all sectors of the remanufacturing industry

• Provides a forum for members to identify and address issues of common interest, benchmark and share best practices

• Builds a strong network to stay informed of developments in remanufacturing technology

• Provides education and training to the industry

• Works to increase awareness of the benefits of remanufacturing in governments and the general public

• Advocates with policy-makers and government regulators to promote remanufacturing

RIC published intent to create new American Standard through ANSI Standards Action.

RIC-Consensus Body formed; initial draft developed.

Revised draft Standard circulated.

Consensus Body approved draft Standard

Revised draft Standard submitted to ANSI for approval and publication in Standard Action.

Proposed final draft Standard submitted to ANSI for approval.

RIC AMERICAN STANDARD APPROVED.

RIC, an American Standards Developer recognized by the American National Standards Institute (“ANSI”), initiated the multi-year process to develop an American Standard for remanufacturing in 2014.

• In 2014, the Remanufacturing Industries Council (“RIC”) initiated the multi-year process to develop an American National Standard.

• On February 2, 2017, ANSI approved RIC’s proposed Standard for remanufacturing.

• The Standard serves as a baseline for additional standards for specific remanufacturing products and product groups.

• As the developer of the Standard, RIC is responsible for maintaining and interpreting the Standard, monitoring and reviewing developments related to the Standard and, as necessary, considering possible revisions or modifications of the Standard

• Defines process of remanufacturing

• Provides a benchmark for the process of remanufacturing

• Establishes specifications that characterize the remanufacturing process

• Differentiates remanufacturing from other practices

Parts are inspected/tested

Parts are repaired or replaced as needed

Product is reassembled

Product reenters supply chain

Unusable Core is

recycled.

Process of Remanufacturing

Not remanufacturable

Remanufacturable

No

Core is evaluated for remanufacturability

Core is inspected

Product is inspected and performance verified

Product is coated/ finished

Core is disassembled

Core is cleanedCore is inspected

and verified

Parts replaced as needed

Core is collected/acquired and returned for remanufacturing

Product is manufactured

Product reaches end of use cycle

Core requires disassembly?

• Remanufacturing - a comprehensive and rigorous industrial process by which a previously sold, leased, used, worn or non-functional product or part is returned to a “like-new” or “better-than-new” condition, from both a quality and performance perspective, through a controlled, reproducible and sustainable process

• Core – A worn, failed, or end-of-use part, assembly, or product of a branded or Original Equipment Manufacturer product that is retained with the objective of restoring or improving its original functionality through remanufacturing, or for use as a source of parts for a remanufactured product. A core may have already been placed on the market and used, been damaged after production but before sale, or been subject to an extended shelf life. During reverse logistics, a core is protected, handled and identified for remanufacturing to avoid damage and to preserve its value. A core is not waste or scrap and is not intended to be reused before being remanufactured.

• Part – The smallest, indivisible unit of a remanufactured product; individual parts may be combined or connected together to create a subassembly, assembly, system, or remanufactured product.

• Technical specifications – A collection of product documents that provide a detailed description of technical requirements, with specific acceptance criteria, and form the basis for the design, development and production processes of a product and ensure that a remanufactured product delivers a performance and service life functionally equivalent to that of a new product.

• If a remanufacturer conforms to the Standard, the remanufacturer may mark or label the remanufactured product to certify that the product conforms to the Standard.

• A remanufacturer may engage a third party to certify conformance or self-certify.

International ISO Standard

• Global Reman Industry Size, Industry Sector

• Current Challenges

• Why International Standard?

• Lessons Learned from ANSI implementation

• Current activities

• Timeline

• Next Steps

Source: United States International Trade Commission, 2012European Remanufacturing Market Study, 2015

2017 Estimation by Xiong

Global Remanufacturing: $140B

US Remanufacturing: $100B

Employment: 500,000

Xiong, W. Global Remanufacturing Overview, Experience and Lessons, China Industry Review, 2, 2017

Remanufacturing Status

13.04

6.217.77

5.791.46

1.39

2.68 0.65 3.97

US Remanufacturing in Dollars (Billions)

Aerospace Automotive HDOR

Machinery Medical Devices Retreaded Tyres

IT Products Consumer Products All other

12.4

7.4

4.1

1

13.1

0.7

Europe Remanufacturing (Euros)

Aerospace Automotive HDOR Machinery

Medical Devices IT Products All other

Remanufactured Automotive Aftermarket: Reman Market Size by Region, Global, 2015 and 2022

Note: The base year is 2015. Source: Frost & Sullivan

Remanufactured Automotive Aftermarket: Reman Market Share by Region, Global, 2015 and 2022

2015 2022

RegionTotal AM CAGR

RemanCAGR

Global 4.9% 6.6%

NA 2.5% 3.7%

W Eu 2.2% 8.0%

E Eu 2.5% 8.6%

S America 5.1% 12.3%

China 14.7% 15.0%

ROW 4% 6.3%

Note: CAGR = compound annual growth rate

Note: NA = North America (US+Canada+Mexico)SA = South America (Brazil,+Argentina+Others)ROW = rest of world (Rest of Asia-Pacific+Africa)

2015 2022CAGR

(2015-22)

Global Market Size

$32B $50 B 6.6%

Remanufactured parts growth to total aftermarket parts growth ratio will be highest in Europe and South America

Light Duty Remanufacturing Market Size

Comparison of US and Indian Reman Environments: Case study on Mobile handsetsCreate awareness for higher income groups to accept remanufacturing as an option. Needs quality assurance for remanufacturing.

Establish quality standards for remanufacturing.

Critical Success Factors

USA India Solution

Product recovery process

Matured process. Service provider retail stores recover the phones from end consumers for remanufacturing.

Rudimentary. Most end users do not return the phones.

Establish incentives for returns and recover phones from end users.

Consumer acceptanceof remanufactured products

Consumers in all income sectors are open to remanufactured phones as replacement devices.

Only lower income groups are interested in remanufactured phones

Create awareness for higher income groups to accept remanufacturing as a option. Needs more than just awareness. Needs quality assurance for reman.

OEM responsibility OEM works with service providers to recover phones and remanufacture them

Most OEM’s not responsibleafter it is initially dispatched from their locations.

OEM’s not taking ownership can lead to brand erosion when 3rd party remfrs seize the oppty

Quality assurance Quality is guaranteed and is sold as a certified like new replacement device

No quality guarantees from the OEM

Establish quality certification for remanufacturing.

Source: Rathore et al. (2011) and Subramoniam et al. (2010)

Region Trade Laws Core Logistics Business Barriers

No trade restrictions Lower core logistics barriersMarket understands value proposition of remanufacturers, and so is widely accepted. Intense competition in market

No legislative barriers within the Euro Union (Schengen zone)

No core procurement, management, or logistics issues

Competition is generally intense, but regional and country specific.

Legislations prohibit export of used parts or cores

Once remanufactured parts are sold into Russia, cores are not returned due to the lack of collection programs.

Currently, no global remanufacturer has a remanufacturing base in Russia; no major plans known

Strict government mandate prohibits the import of remanufactured parts and export of cores or used parts.

Core logistics is not a problem, but there is a need to educate the aftermarket on proper core management practices

Legislation discourages global remanufacturers from setting up factories.

Legislations prohibit import of remanufactured parts and/or cores into China; remanufactured parts cannot be used for warranty replacements

Core logistics awareness remains low

Difficult to do business without a local partner

Legislations prohibit the import of cores or used parts into Brazil

The aftermarket does not understand the core procurement process

Global remanufacturers are setting up operations because the country is migrating away from repair/rebuild components to higher-quality remanufactured parts

Global Legislative Landscape and Ease of Remanufacturing

Source: Frost & Sullivan

Benefits/impacts

Industry and commerce – large industry Reman industry and commerce will grow with a mutually agreed set of standards. Reman departments from well-established OEM’s will see standardization across their global organization. Also work across geographic regions will be easier.

Industry and commerce – SMEs Where OEMs have a strong brand to fuel consumer confidence, SMEs will benefit from a standard definition of reman to provide confidence to their customers.

Government A global standard will lead to supportive legislation, better trade and increased domestic employment.

Consumers Consumers will have a better chance to get affordable, good quality products with publicized expectations

Labour Increased reman will provide more domestic labor opportunities even during recession times

Academic and research bodies Increased research potential from an established international standard. Ability to share best practices based on an agreed standard.

Standards application businesses The proposed standard will supplement existing standards, which will enable Standards application businesses to offer additional services to their clients.

Non-governmental organizations Increased clarity on the definition and process of remanufacturing will help these organizations to advance their missions.

Why International Standard?

Current Reman Process Challenges

• Lack of awareness of the process of remanufacturing

• Perception of core as “second hand parts”Value of the core not clearly defined. Cores are raw

materials for reman and need to be protected.

• Control non-conforming productsNo formal policy or regulation

• Verification of conformance with the standardAbsence of regulation of reman standards and liability

Goal

• Develop an international standard for a common set of standard processes acceptable to industry sectors globally for remanufacturing

Lessons Learned from ANSI Implementation

• Multiple reman definitions/terminologies across industries in the USA

• Foundation for additional standards (Example: PEARL standard)

• Promotes discussion of mutual concerns (Core management, Cross border reman)

Current Activities

• Initiated the international standard process

• Agreed on a project committee vs. technical committee

• Review with ANSI in progress

ISO Standard for RemanufacturingTimeline

July2017

RIC fills out form for approval of an ISO project committee

Initial draft developed and approved within RIC. Approved draft send to ANSI.

August 2017

September 2017

Draft received back from ANSI with recommendations

October2017

Form officially submitted to ANSI

November 2017

ANSI Conducts broad publiccomment on the proposal

January2018

Approval by AIC

May 2018

Ballot approved by ISO members. TMB approves project.

RIC, an American Standards Developer recognized by the American National Standards Institute (“ANSI”), initiated the multi-year process to develop an ISO standard for remanufacturing in 2017.

September 2018

Work starts on project to be completed in 2-3 years.

Questions?

Don Chenevert, Jr.Deputy General Counsel

SRC Holdings Corporation417-575-8336

dchenevert@srcholdsings.com

Dr. Ramesh SubramoniamChair, Trade & Policy Committee

Remanufacturing Industries Council248-515-0861

subramoniamramesh@yahoo.com

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