Reduce, reuse, remanufacture

Beyond maintaining machinery or repairing broken parts, MRO professionals can play a key role in driving a circular economy, helping to shape more dynamic and responsive supply chains —specifically reverse supply chains that support remanufacturing. From parts recovery and reverse logistics to standards and tracking systems, building a mature, responsive remanufacturing supply chain is key to transforming one-off sustainability wins into long-term systemic change that promotes a circular economy. For the MRO sector, this means rethinking how components are sourced, stored and circulated, not just to extend asset life, but to close the loop on material use. “North American manufacturers spend roughly $160 billion [per year] on MRO parts. Ultimately, 30 per cent of that is never going to be used,” notes Taha Zinifi, co-founder and chief product officer of Amplio, which helps companies offload their surplus inventory and redeploy them to organizations in need of those materials. This business model supports a circular economy, where unused MRO components could be resold to OEMs or remanufacturing companies and repurposed to rebuild or refurbish a product or piece of equipment. It’s an emerging solution to an industry that has historically been plagued by millions, if not billions, of dollars’ worth of component parts and excess inventory sitting idly in warehouses and incurring a significant amount of money in storage costs. “We know that for manufacturers, it’s really hard to predict maintenance and to optimize procurement. So those enterprises always end up overpurchasing. And those parts that are never going to be used are going to sit on a shelf for 5, 10,15 years,” Zinifi explained. And when the cost of maintaining unused inventory is no longer sustainable, they eventually end up as waste material — often bound for landfills. But this “waste” doesn’t necessarily have to go to waste, according to Zinifi. Through reverse supply chains, where customers (buyers of MRO parts, for example) become suppliers to remanufacturers by selling their inventory of unused parts. A case for remanufacturing Remanufacturing, or the process of restoring end-of-life industrial equipment or machinery to like-new or better condition, is not a new concept. In fact, it is heavily used in industries, such as automotive, transportation and aerospace, to extend or renew product lifecycles for cost-effective operations and waste reduction. CN Rail’s locomotive modernization program, for instance, uses remanufacturing to enhance its fleet and extend its lifecycle. In July 2023, CN tapped Pittsburgh-based Wabtec to modernize 60 locomotives from its existing railroad fleet. “Remanufacturing goes back, generally, to Henry Ford,” says Michael Thurston, technical director and research faculty with the Golisano Institute for Sustainability at Rochester Institute of Technology in Rochester, New York. “He started remanufacturing components for servicing automobiles. So, it has a pretty long history in the United States.” Remanufacturing has both economic and sustainability benefits, including waste material conservation, waste reduction and energy savings. It also supports approximately 180,000 full-time jobs in the U.S. alone, and more than 450,000 jobs globally, according to data from the Remanufacturing Industries Council. The sector largely benefits the local workforce, says Thurston. “Those jobs tend to be local, as products and components manufactured in other countries are typically remanufactured in the country or region where they are used.” Some big names in the heavy equipment industry today, including Caterpillar, John Deere and Case New Holland, are also the leading remanufacturing providers in North America. Historically, the biggest driver for remanufacturing has been cost-reduction — rather than sustainability — especially for large, expensive equipment. The cost of remanufacturing and restoring old equipment to its original state, if not better, is 25 to 30 per cent less than a new purchase, according to Thurston. The same is true for OEMs. “Typically, companies like John Deere and Caterpillar that are remanufacturing those products, they have better margins on the remanufactured product than they would have selling a new product,” he adds. While sustainability is not a significant driver for the remanufacturing landscape, it is a positive unintended consequence, where materials that would have ended up in landfills are given a new lease on life because it is more economical to do so. “Larger organizations have sort of viewed the opportunity of a circular economy from an efficiency point of view, and adopted that as just a part of smart business processes,” says Raphael Lopoukhine, director of strategic initiatives at Circular Economy Leadership Canada (CELC), a not-for-profit advocacy group working to accelerate Canada’s transition to a circular economy through industry and government collaboration. Supply chain dilemma For the most part, large manufacturers have remanufacturing systems and internal supply chains built into their processes that allow them to reuse, repurpose and refurbish parts of their products across their organization. Montreal-based aircraft manufacturer Bombardier is an example. During “aircraft teardowns,” the company recovers and refurbishes repairable components to extend their lifecycle and reduce waste. Aircraft interiors are also recycled and repurposed rather than discarded, says Matthew Nicholls, senior advisor, public relations and communications at Bombardier. “Through our certified pre-owned aircraft sales offerings, we provide customers with access to high-quality, refurbished aircraft — supporting circular economy principles while maintaining Bombardier’s standards of excellence,” Nicholls added.

Organizations that have established some form of circularity within their product or equipment lifecycles make up most of the current landscape for remanufacturing processes. It’s the external, inter-organizational collaboration that has yet to mature. In general, there is no established or standardized system for buying and selling “waste” materials that can be repurposed for remanufactured products. It’s a gap that needs to be addressed from the systems and regulatory level, CELC’s Lopoukhine says. “We’re working with the government to help them understand and develop a framework for accounting for the socio-economic benefits of a circular economy,” he explains. “When it comes to waste products, there’s just not really a built-up infrastructure that creates a functioning system of supply and demand that you would find in a traditional linear business with an integrated supply chain.” It’s a huge gap that Amplio is aiming to address using data and AI to help organizations find efficiencies in and generate revenue from their excess MRO inventory, says its co-founder Zinifi. “What we envision is a world where you have a dynamic disposition process, where every month you’re cycling through your inventory and making sure that the parts that you don’t think you’re going to use, you get them out of your warehouse, you get them to Amplio, and you generate revenue on a monthly basis, based on that surplus. And as time goes, we sell those items to smaller manufacturers that are happy to buy those parts at a heavy discount,” he explains. Tariffs and trade wars Geopolitical factors and recent global market trends are also creating a business case for stronger domestic circular supply chains. The threat of tariffs and counter-tariffs, and China’s increasing restrictions on exports of critical minerals, are sending shockwaves through the global value chain as companies face higher import costs. “The geopolitical tension with China is going to make it harder and harder to actually source those (new) components,” Zinifi says. “And then on the other side, from a remanufacturing (perspective), what we’re seeing is that the cost to do that keeps going down.” As the world transitions to a low-carbon economy, industry reports all point to a looming supply crunch for nearly all the critical minerals needed to support this global transition. The International Energy Agency’s (IEA) 2025 Global Critical Minerals Outlook reports lithium demand rose nearly 30 per cent in 2024, while nickel, cobalt, graphite and rare earths saw a six to eight per cent increase in demand in the same year. Fulfilling this growing demand means new mines would have to be built or existing ones expanded to produce these resources. Establishing domestic remanufacturing supply chains can help ease the pressure on mines to produce more raw materials. The IEA estimates recycling could potentially reduce global demand for copper, nickel, lithium and cobalt by 10 to 30 per cent by 2040. In Canada, a circular economy is recognized as an important component of the country’s Critical Minerals Strategy. The 2024 Canadian Critical Minerals Strategy Annual Report states, “Recycling critical minerals not only helps manage waste such as used computers and EV batteries, it can also contribute to meeting Canada’s growing demand for those minerals – potentially lessening the number of new mines we need and increasing the security of our supply.” Changing mindset For remanufacturing to become an integral part of a circular economy, a change in mindset is needed, from product development and procurement to inventory management. And technology is enabling this shift. AI-driven data analytics are empowering organizations to have better insights into and drive value from their MRO inventory. Technology advancements are also enabling the emergence of ‘design-for-remanufacture’ product development approach, developing and engineering products that are easily and effectively remanufactured at the end of their initial use cycle. Organizations are now beginning to recognize the value in their MRO inventory, resulting in a circular-oriented approach to procurement and product lifecycle management, says Zinifi. But more than a shift in enterprise mindset, policy changes are also necessary. “Keeping that [MRO parts] surplus within North America should be incentivized,” Zinifi suggests. “If there’s any way we can create financial incentives for organizations to basically free that surplus that’s stuck in their warehouse, because that creates an influx of really good and cheap equipment that other manufacturers can purchase.”