The Introduction of the Industrial Circular Economy
The problem of industrial waste has been a long debated topic since the industrial revolution. While the advances in technology have enabled a higher standard of living for us, the amount of waste created from manufacturing, transporting and ultimately disposing of products, machinery and equipment no longer used has sparked global concern on the negative impacts on future generations. In the US alone, It is estimated that each year, 7.6 billion tonnes of industrial waste is generated. As the industry continues to grow, it is clear that a solution is needed to ensure sustainable growth to drive resource usage efficiency and decrease environmental impact.
These concerns have helped elevate the concept of the industrial circular economy, rooted in sustainability and resource efficiency, to the forefront of many global environmental discussions Unlike the traditional linear supply chain model of production and consumption, where resources are extracted, used, and then disposed of as waste, the circular economy aims to minimize waste and maximize the value of resources by keeping them in use for as long as possible.
The fundamental principles of the industrial circular economy is about redesigning systems and processes to promote the reuse, refurbishment, recycling, and remanufacturing of products and materials. This approach aims to close the loop on resource flows, reducing the extraction of raw materials and minimizing environmental impacts.
How the Used Industrial Equipment Market Powers the Industrial Circular Economy
At the heart of the industrial circular economy is the used industrial equipment market, which drives the resale, reuse and refurbishment of second-hand machinery and tools. Behind the scenes of manufacturing plants, construction sites, and warehouses, a vast ecosystem thrives on the buying and selling of used industrial equipment. From heavy machinery like excavators and dozers to precision instruments and specialized tools like CNC machines and lathes to every day plant support equipment like forklifts and pallet jacks, almost every industrial sector has its own second-hand market, where pre-owned, surplus and obsolete equipment are bought and sold. This market offers an alternative way for businesses to source critical machinery needed for operations. With rapid technology advancements, companies are constantly upgrading, leaving a surplus of high-quality, pre-owned equipment that ends up being under-utilized in the organization. This channel enables businesses to find sustainable channels to reduce their surplus equipment, while generating a fair recovery amount and freeing up space. Buyers, on the other hand, benefit from significant cost savings and access to quality equipment that they may not otherwise have access to. This reuse of industrial equipment further contributes to eco-conscious practices to help provide a more sustainable future.
Despite all the obvious benefits, the used industrial equipment market has operated as a silent powerhouse in the global economy. Even with its substantial size and influence, this market often operates under the radar, overshadowed by the glamor of new technologies and products.
One of the primary reasons for the discrete nature of this market is its reliance on traditional offline channels. While online platforms have gained traction in recent years, many transactions still occur through established networks, in- person auctions, and specialized brokers. This offline presence makes it harder to track purchases and activities and understate the importance of how traditional brokers and dealers play an important role in facilitating these transactions.
Although not as much of an issue now, another reason is the perceived stigma attached to used industrial equipment. Some businesses may hesitate to publicly acknowledge they use second-hand machinery, fearing implications about reliability or technological obsolescence. However, experienced operators recognize the value offered by well-maintained, cost-effective used equipment, which can deliver comparable performance to newer alternatives at a much lower price.
The Critical Role of Equipment Resellers in the Industrial Circular Economy
One of the key players within the used industrial equipment market are resellers. They form the backbone of the market by facilitating the exchange of used industrial equipment between buyers and sellers. This helps efficiently redistribute surplus or underutilized equipment to where it's needed most, enabling other businesses to optimize their operations and resource allocation.
Their services include but are not limited to:
- Market valuations of equipment and machinery
- Equipment inspections
- Pricing negotiations
- Logistics
- Post sale and paperwork management (invoicing, taxes and payment collections)
These resellers possess in-depth market knowledge, and cultivate trust and transparency in the market to foster long-term relationships built on reliability and integrity. Their expertise not only expedites transactions but also minimizes risks associated with purchasing used machinery. Ultimately, the involvement of equipment resellers enhances efficiency, reduces costs, and fuels the continuous flow of industrial equipment, making them indispensable partners in this dynamic market landscape.
How Equipment Resellers Are Powering the Industrial Circular Economy
- Most manufacturing organizations will hold some level of surplus capital assets or parts from ongoing operations. At some point, inventory levels get bloated or there is simply not enough space to store all the assets within their facility. These organizations must find a way to properly dispose of these assets, even if they are still in working condition. In many cases, businesses will send these assets to a scrap yard or landfill. However, organizations that understand the power and value of the second market and the critical role of equipment resellers will often partner with these resellers to find a better way to dispose of these assets. Resellers will purchase the surplus equipment from the business to resell to their own network of industrial buyers. This helps the organization claim back precious storage space, while being able to avoid sending the equipment to landfills. This ultimately reduces waste and contributes to a more sustainable and greener future.
- When equipment resellers purchase surplus equipment from businesses, they usually will not resell the equipment as is. There is often an established process to refurbish, recondition or repair the equipment to help improve performance and extend the asset’s life.
- When equipment resellers put reconditioned industrial equipment back on the market, they are giving an opportunity for small businesses to access this equipment and get on a somewhat even playing field with their larger competitors. And since these smaller businesses likely have ongoing relationships with these equipment resellers for their continued operational needs, it gives these small businesses the ability to purchase equipment from a trusted source to minimize their risks.
Customer Spotlight: NRI Industrial and Creating Sustainable Business Operations
NRI Industrial is an equipment reseller, whose mission is to promote the growth of a sustainable and efficient global industrial supply chain. With operations in North America and overseas, they process over 1.2 million industrial parts and equipment every year. NRI has been a long time customer and partner of Aucto’s, leveraging the Aucto Marketplace to buy and sell used industrial equipment and machinery.
The company has developed strong connections with both its buyers, who see them as a reliable go-to source for used industrial equipment, and sellers, who trust in them to help provide a responsible recovery process for their assets, to give their surplus equipment a second life. These relationships have enabled NRI to thrive on a sustainable business model that is critical in contributing to the circular economy.
When we shared we wanted to create an article around the industrial circular economy and sustainable business practices, NRI was eager to share some of the work they’ve been doing to play their part.
Q: Sustainability is a core part of NRI’s business. Why is this so important for the company?
A: The concept of sustainability is embedded in our mission and we try to incorporate different facets of it throughout our business. At the core of it, we are providing an opportunity for our buyers to have access to equipment and parts, critical for their business, that may not have been available to them through traditional channels. Equally as important, we are helping our enterprise clients develop a sustainable business model of their own and giving them the chance to recover capital on surplus equipment, while reducing negative environmental impacts. Our sellers look to us to help solve a problem, and it means a lot to us to be able to do this for them, while addressing such alarming global issues. Without equipment resellers, a lot of used industrial equipment would be sent to land fills and we are proud to be able to offer our selling customer a different solution.
The ability to create value for both sets of customers, while reducing waste and helping pave the way for a better future gives us all here meaning to our work. I think many of us in the industry have operated off of a traditional model for so long, but we are in an exciting time where innovation and looking at the business in a different perspective is going to help us grow, while building a more sustainable future.
Q: Besides having a sustainable business model, what other specific sustainability initiatives is NRI working on?
A: We’ve got a few initiatives we are currently tracking closely:
- A Part For A Tree Initiative - We’ve been very motivated to get as many parts, machinery and equipment into our ecosystem. This is because we plant a tree for every part, we move in a transaction. Last year, we planted approximately 56,000 tree seedlings.
- Eco Friendly Hosting - We’ve transitioned from managing our technology infrastructure in house to migrating over to Amazon AWS for their commitment to using 100% renewable energy.
- Net Zero Operations - We also encourage sustainable practices within our own operations such as reducing the use of paper, and procuring only energy efficient technology and equipment.
Q: What are NRI’s future sustainability plans?
A: We want to continue to promote the growth of a sustainable and efficient global industrial supply chain. To do this, we are looking to work with more companies on their asset recovery strategies and give more used industrial machinery and parts the chance of a second life. We are always looking for innovative ways to help our buyers find the best equipment possible, while enabling our sellers to have access to channels that promote extending the life of their assets.
We want to continue on the momentum we’ve built and drive more sustainable practices within our company. We’ve started the ‘A Part For A Tree’ initiative in 2022 and have been increasing the number of trees we’ve been planting year over year. We’d love to break our record each year and plant more!
We believe we can all play a part in reducing waste and creating sustainable practices within our business. All this can help shift the traditional views of equipment resellers to transform this industry and create new ways to do better business.
The Future of Sustainability and Equipment Resellers
The industry is changing. Beyond the value that equipment resellers and dealers such as NRI are bringing through ongoing operations, many organizations are now starting to see how forging partnerships with these resellers to create sustainable programs will also add value back to their own business.
For example, global Original Equipment Manufacturers (OEMs) are increasingly recognizing the value of partnering with equipment resellers or dealers to establish refurbished programs. These collaborations not only caters to growing environmental concerns by promoting the reuse of machinery but also offer benefits for both the OEM and the equipment dealer.
These refurbished programs represent a strategic avenue to extend the lifecycle of their products while maintaining brand integrity. By leveraging their expertise in product design and engineering, OEMs can ensure that refurbished equipment meets quality standards comparable to new machinery. Moreover, these programs enable OEMs to tap into secondary markets and expand their customer base, driving revenue growth and fostering long-term customer relationships.
On the other hand, equipment dealers stand to gain from such partnerships through access to OEM-provided resources, including technical support, spare parts, and training. This collaboration enhances the credibility of dealers in the eyes of customers, bolstering their reputation as trusted providers of high-quality, certified refurbished equipment. Additionally, dealers can capitalize on the established brand recognition of OEMs to attract more customers and differentiate themselves in a competitive market.
Examples of OEM Refurbished Programs
- Apple partners with authorized resellers and refurbishers to sell certified refurbished iPhones, iPads, MacBooks, and other Apple products. These refurbished devices undergo rigorous testing, come with a warranty, and are sold at a discounted price compared to new products.
- Dell partners with authorized refurbishers to offer certified refurbished laptops, desktops, servers, and other IT equipment. These refurbished products go through a comprehensive refurbishment process, including testing, cleaning, and restoring to like-new condition, and are sold through Dell's outlet store and authorized partners.
- Cisco partners with authorized refurbishers and resellers to offer certified refurbished networking equipment, such as routers, switches, and security appliances. These refurbished products go through testing and refurbishment to ensure they meet Cisco's quality and reliability standards.
- John Deere partners with authorized dealers to offer certified pre-owned agricultural and construction equipment. These refurbished machines are inspected, serviced, and tested by certified technicians to ensure they meet John Deere's performance and reliability standards.
Equipment resellers or dealers have always played a great role in sustainability through connecting pre-owned equipment to relevant buyers to enable an industrial circular economy and a more sustainable future. We’ve also seen a great example of companies like NRI who are going beyond to create sustainable initiatives within their own organization to break the traditional expectations of equipment resellers. Finally, large global organizations like OEMs, who create and sell billions of dollars of equipment and machinery, are seeing the benefits of establishing formal relationships with equipment dealers to extend the lifecycle of their products and reduce waste. Together, these changes will help redefine the role equipment resellers play in furthering the industrial circular economy to build better business practices and a more sustainable future.
