The challenges faced in the reverse logistics of automotive cores: lessons from co-creation with stakeholders.

Abstract

This paper presents the results of two co-creation sessions with stakeholders in the automotive aftermarket. The sessions were instigated as part of the EU project ReCiPSS to develop a new service to simplify the reverse logistics of automotive cores purposed for remanufacturing. Remanufacturing car parts is a longstanding practice within the automotive aftermarket. Over the last fifty years a mature, but also highly complex, market has developed. The reverse logistics of these cores substantially increases the complexity and costs of the remanufacturing process due to the fact that they are repeatedly shipped, handled, (re)identified and (re)assessed for quality and their remanufacturability by different actors within the supply chain. This is due to the fact that most cores are returned along the exact same route that the (remanufactured) replacement part took in the forward logistics, using a so called ‘surcharge’ or ‘deposit’ system. Core broker networks are used to fill in the gaps where not enough cores are coming in through the surcharge system. Together, this forms a complicated network. The current setup has benefits, e.g. with regards to customer relationships and higher return rates, but also provides the necessary challenges. To identify these benefits and challenges, as well as the needs of different stakeholders within the supply chain, a series of co-creation sessions were held with different actors. This paper presents the results of two sessions. This first was with a wholesaler, the second with several core brokers and a service provider. New insights were gained on the landscape of reverse logistics of automotive cores and the challenges different stakeholders are facing. These are presented in the paper in graphic overviews. Challenges include a lack of transparency and traceability leading to distrust, poor identification possibilities of cores, as well as threats from cheap infill and copies. With these results, new value propositions for the different stakeholders were developed. These were used to design and pilot an online platform together with a single service provider. The platform aims to benefit the different stakeholders while simultaneously reducing the complexity of the reverse logistics by identifying and evaluating cores only once before being directly shipped to their final destination. The paper concludes by highlighting the opportunities and challenges that the remanufacturing market is facing, based on the insights gathered from different stakeholders, and the implications for the future of the remanufacturing industry and policy.