Green parts: better for the planet, better for business
Today, industrial businesses buy high-spec spare parts for their machinery, leave many of them on a warehouse shelf for years, and then send them to a landfill. Such an approach is wasteful and unsustainable: this article by Ben Findlay, CEO and Co-Founder of Machine Compare Marketplace considers his company does to offer a circular model to the industry.
Electronics manufacturing facilities, like those across every industry, inevitably build up a healthy stock of spare parts for their machines. This makes sense, as the cost of buying and storing these spare parts is far cheaper than the costs associated with an unplanned outage.
As a result, an average small or mid-sized facility typically holds inventory worth £250,000. Globally, this amounts to many billions of dollars worth of parts. While they’re important to have on hand, many of these parts will never be used: consider that a facility may see enough reliability from its machines to not warrant such components, or the project that they’re needed for may simply come to an end before the facility has exhausted its supply of replacements.
The logical assumption is that these parts should remain factory-sealed (in which case new components could be sold on to see use in another facility) but this is rarely the case. In fact, due to an underdeveloped secondary market, most of these parts are simply disposed of when the facility no longer has use for them.
It’s also important to understand that these parts aren’t unique to a given facility: much of the stock is bearings, belts and gears, power supplies, motors, and other common building blocks of industrial machinery across sectors.
A better, greener solution
The current approach is bad for everyone: manufacturers are losing money on valuable parts and there is a huge amount of waste. As the global economy faces greater pressure for sustainable practices – and listed companies are required to adhere to additional ESG (environmental, social and governance) guidelines – it’s clear that this model needs to change.
As someone who has worked with machines in the paper and packaging industries for two decades, I was shocked that expensive, unopened machine parts were routinely discarded. Selling on these spare parts would reduce the amount that go to waste – that’s why my late brother, Eric, and I co-founded Marketplace.
A more circular approach is also better for businesses. Whereas factory staff may once have disposed of unused components (this process may, at best, be free, but it’s more likely that managers will have to pay for the privilege) they can now sell them to recoup a significant portion of their initial spending. Correspondingly, those in need of parts have an alternative to buying from the source: they can buy parts that are identical in quality to new ones at a reduced price. It is a case of rewarding people for doing the sustainable thing.
Driven by data
The factory-to-storage-to-landfill model has become the default, and it’s fair to ask why. After all, the spare parts that can be found in any facility’s warehouse are plentiful and of high quality.
The answer is that, until recently, there has been a serious lack of data. When it comes to replacement parts, similar isn’t good enough: components such as bearings come in countless dimensions, materials, alloy compositions, loading capacities and more, and finding an exact match to the design specification is crucial.
Unfortunately, detailed information on the parts often gets lost over time, as inventory managers only keep the data that is useful for their needs. When it’s time to sell, a secondary buyer may request different types of information about the component, but this data tends to be long gone by this point. If the buyer, for instance, needs to know the internal diameter of a bearing, but the seller has only kept the part number, outer diameter, and original manufacturer, they can’t reasonably make the purchase.
The major development behind Marketplace is the ability to enrich data by combining the listing provided by the seller with the specifications from the original supplier. When Marketplace identifies a component with the same key attributes, such as part number and product description, the system cross-populates the data to fill in the blanks, effectively producing a detailed listing.
A further consideration when purchasing parts from another facility is the identity of the seller. Maintaining robust seller profiles and only listing products from sellers that Marketplace has qualified means that buyers can be confident that they are legitimate.
Maintaining seller data also enables businesses to shop for spares exclusively within their own industry. Some facilities may prefer to buy from others in their sector, as they know they have applied the same level of procurement and quality standards as they themselves would.
Integrating data into the process also unlocks new opportunities for ESG reporting. Producing machine parts – from mining to transport – can be energy and material-intensive. Manufacturers have increasingly worked to log this information in Environmental Product Declarations (EPDs). These enable businesses further up the chain to accurately account for their carbon emissions. Marketplace preserves this data and we are working towards enabling businesses to calculate the CO2 savings associated with purchasing already-produced parts – ‘green spares’ – rather than new ones.
Staying ahead of shortages
One final pair of issues to consider are lead time and quantity, as buyers often need a consignment of a specific size within a tight timeframe. If they want to use green spares, for price or environmental reasons, they may risk losing economies of scale or receiving only partial orders.
To address these issues, Marketplace has developed a solution where it maintains a stock of brand-new parts to supplement orders of green parts. This enables the order to go through on time, the buyer gets what they need from a single source, and using some green spares is better than buying the entire order factory-new.
The crucial circular model
Ultimately, Machine Compare Marketplace aims to establish the sustainable exchange and use of green parts. We’ll look back at today’s solution and wonder why anyone ever thought throwing away perfectly good parts made sense.