A NEW ERA – Circular economy and the European automotive industry
Circular economy is the future of the European automotive industry – the initiative Ce:Versa plans to use reverse logistics to make the automotive sector more sustainable, while simultaneously reducing costs for all parties involved.
The European automotive industry is one of the largest contributors to climate change and environmental pollution: Roughly nine percent of global CO₂ emissions are produced by the automotive sector. In addition to road traffic, which generates ca. 740 million metric tons of CO₂ each year, automotive manufacturing consumes tremendous resources and is responsible for massive greenhouse-gas emissions. For example, the manufacture of an average passenger car requires ca. 70 metric tons of material, particularly resources like metals and petroleum, while the manufacture of a single compact car alone produces roughly four metric tons of CO₂; that doesn’t count the greenhouse-gas emissions and resource consumption from its operating fluids and replacement parts. All told, the industry generates a tremendous amount of waste, both in connection with manufacturing and from service and repairs.
Europe-wide platform for more circular economy in the automotive industry
By creating a European platform for the reconditioning of automotive components, Ce:Versa – a new project consortium that brings together Kühne Logistics University, Circularity e.V. and Encory GmbH – is working to promote circular economy in the automotive industry. Its vision: a European alliance for more circular economy in the supply chain between automakers, component manufacturers and logistics firms. In a shared reverse supply chain, the collection, screening, inspection and sale of automotive components for reconditioning and recycling is to be organized sector-wide and be available to all automakers and component manufacturers. This will pave the way for substantial cost savings, not to mention conserving valuable resources in the European cycle. Reverse logistics, when pursued jointly, holds considerable potential to reduce “Scope 3” CO₂ emissions, i.e., indirect emissions along the supply chain.
Untapped potential for upscaling remanufacturing limits circular economy
Today, the potential for reconditioning used automotive components (“remanufacturing”) is severely limited, primarily because every automaker uses its own reverse supply chain: Every firm organizes and operates its own collection, sorting, logistics, storage and remanufacturing of used automotive components, including individual logistics and remanufacturing processes, IT and deposit systems, service providers, warehouses and much more. As a result, the potential for upscaling remanufacturing is still quite limited – and countless components that could actually be returned to the material flow aren’t reconditioned, simply becoming waste. The corresponding potential cost savings go to waste with them.
Central characteristics allow individualized participation
To allow as many firms as possible to take part in a jointly organized reverse supply chain, it has to deliver at least the same – or ideally, better – performance than manufacturers’ individual systems. For example, all parties involved should enjoy full transparency on the whereabouts and current processing status of their components at all times. In addition, high data security is essential, since few firms are eager to share sensitive information. And despite being jointly organized, the supply chain should leave some leeway for individualization, so that e.g. participating firms can continue to use their own deposit system and/or set their own deposit prices. This also applies e.g. to the quality of their remanufactured components and the time and place of their resale.
A proven consortium bringing together research and practice
Ce:Versa is backed by a project consortium that brings together the strengths of partners from the academic world and practice regarding circular economy. As a neutral partner, KLU provides academic support. Encory, a circular-solutions provider for the automotive industry, contributes its sector-specific knowhow, while Do-Tank Circularity brings its experience in supporting firms’ circular-economy transformations to the table, not to mention its process design expertise.
Industry collaboration to design the platform
Establishing such a collaborative, Europe-wide reverse logistics platform can only succeed when there is sufficient motivation and demand in the industry. Moreover, its concrete form must match the industry’s needs. Accordingly, in the current preliminary stage of development, the Ce:Versa project consortium’s goal is to initiate dialogues with interested firms, so as to jointly assess the chances of creating a joint reverse supply chain platform and define the platform’s essential characteristics. In this regard, there will be a workshop with a curated selection of automakers, component manufacturers and logistics firms on September 26, 2023 on the Kühne Logistics University campus in Hamburg. Interested firms are encouraged to contact Prof. Dr. Johannes Meuer.
This article was originally published in forum Nachhaltig Wirtschaften, issue 03/2023.
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