VALTRA, a tractor manufacturer, has found ways of generating new growth from service-based business models typical of the circular economy by providing maintenance services across Europe. As part of this concept, Valtra has developed so-called remanufacturing services. They have resulted in new business and given important insights into product development and quality assurance.
In Valtra’s Reman service, an old component, say a gearbox, is remanufactured to the extent that it is equivalent to a new product. The operating model is based on exchange: when buying a remanufactured product, the customer returns the old component to Valtra.
To build up the service business, it has been necessary to adopt new ways of thinking and doing things within the company. Initially, there were fears that the new service business would eat into the profits of other operations because remanufactured products are cheaper than new ones. However, the doubts within the company were quickly dispelled. People realised that the new service business made it possible to offer customers better, more diversified services more quickly and the business proved profitable
- In terms of quality, the remanufactured product is just as good as a new one because it is assembled and tested in the same way as a new product. What is more, the price is only 60–70% of that of a new product and the delivery time is shorter.
- Not surprisingly, the demand for remanufactured products has grown substantially and the concept is being extended to new product categories. Besides the customer, the environment also benefits from this: remanufacturing uses about 85% less energy compared to what is required to make a new product.
- Remanufacturing process provides also valuable feedback to product development, and sometimes product design has been modified due to feedback from remanufacturing team.
There are considerable challenges to the remanufacture of spare parts:
- In some cases, old engine parts are considered as waste, which does not allow remanufacture of parts that otherwise could have been used again.
Jari Luoma-Aho, Marketing Manager, Valtra Parts
+358 20 455 0578