Backed by two German industry giants, a relatively new European reman player is about to embark on its most challenging international initiative so far – the creation of a nationwide reverse logistics network in China. The move is aimed at significantly strengthening the company’s role as a global force in remanufacturing.
To be launched in November, Encory’s new ReLife Point organisation, based in the Greater Beijing area, will handle parts returns from five regional distribution centers, collecting cores from more than 600 Chinese outlets. From the outset, its 5,000 sq.m. ReLife Point warehouse south of Beijing has the capacity to sort 400,000 parts per year. These will either be recycled in an environmentally safe way or forwarded to selected partners for remanufacture.
“The key goals are maximizing process productivity and overall transparency of the entire supply chain network and identifying parts for remanufacturing,” explained Jochen Trommer, Encory Director of Business Development.
Developed as a joint venture between car manufacturing giant BMW Group and ALBA Group, one of the world’s largest recycling companies, Encory is already responsible for handling core logistics on behalf of BMW. It is currently linked to depots in 30 countries worldwide, where it manages reverse logistics and customs responsibilities. The move into the Chinese market is Encory’s largest effort in an individual market to date.
“Encory optimizes the reverse logistics processes in order to increase core returns and the availability of reman parts,” Trommer told Reman World. “Besides our offers in the remanufacturing sector, Encory cooperates with BMW with respect to warranty and claims management issues. At the same time, Encory operates a used parts business where we identify and select the best possible quality parts in order to supply BMW with premium used parts. We also offer consulting services for product management in order to identify further portfolio potential.”
The joint effort by BMW and Berlin-based ALBA and its Interseroh subsidiary commenced in 2016 when BMW decided to examine the opportunities for strengthening its reman portfolio. The search led to ALBA with whom the carmaker already cooperated on some Take-Back Systems and reverse logistics management.
“Given their experience in the development and operation of Take-Back Systems and managing reverse logistics suppliers, BMW and ALBA Group were a good match,” Hanno Grosseschmidt, General Manager of Encory explained. “That’s what we’re building on now.”
Encory’s Chinese business model does not vary much from that of other markets and countries. It includes technical analysis of reverse logistics markets to identify bottlenecks and potential improvements, development of efficient collection, sorting and recycling processes, establishing regional sorting Encory ReLife Points warehouses for processing return flows, and integrating software and business intelligence applications.
“Having looked at this in some detail, we can offer and implement benefits for our partners and customers, such as cost & lead time reductions, faster processing times, resulting in faster pay-outs to dealers, and easy-to-use dealer front end IT solutions,” Trommer said. “Our system allows for continuous KPI tracking and customized reporting which ensures transparent steering processes. Parts not suitable for remanufacturing will be recycled in a secure and environmentally friendly manner.“
Based in Unterschleissheim outside Munich in BMW’s home state of Bavaria, the 50/50 BMW-ALBA partnership currently employs a staff of 70 engineers, IT specialists and commercial staff. Once fully developed, ENCORY expects to operate core collection points and liaise with selected remanufacturers across the world.
Summerized Grosseschmidt and Trommer: “China is not the beginning. We have already left the beginning behind. It is a very large step into our future.”
With the BMW, Mini and Rolls Royce brands, the BMW Group is the world’s leading maker of premium-branded cars. In 2018, the BMW Group produced around 2.5 million cars and 165,000 motorbikes. Its annual revenues totaled 97 billion euros. The Group employs 134,000 people in 140 countries.
The ALBA Group is one of the leading recycling and environmental services companies and raw material providers worldwide. It operates with its two brands, ALBA and Interseroh, within Germany, Europa and Asia. In 2018, its divisions generated an annual turnover of 2.1 billion euros and employed a staff of more than 8,000 employees. In 2017 alone, ALBA Group saved almost 4.1 million tonnes of greenhouse gases compared to primary production and about 30.2 million tonnes of primary raw materials through its recycling activities.