In 2016, a team of established automotive industry insiders from Finland set out to find a new and radical solution to tackle the waste left over by end-of-life vehicles, as well as develop a solution for selling and re-using these parts. Using cutting-edge technology and fresh ideas, Green Source and Gateway made a breakthrough in enhancing the identification of parts used in cars and developed a next generation platform for linking supply with demand.
Huge economic and ecological potential
In Finland alone, the annual total automotive spare parts business represents over 1 billion euros, of which recycled spare parts today holds less than 50M€. Digitalization will enable a massive increase in sales, with an estimated opportunity to recycle 10 000 000 spare parts. Green Source has now set its sights on global markets with its solution, where 80 million+ new cars are produced every year. At the same time, almost as many cars will reach the end of their life cycle.
Even more importantly, the platform has great environmental potential. Veli-Matti Jalonen, one of the founders of Green Source, explains: “Circular Economy is a system in which resource input and waste, emission, and energy leakage are minimized. This is something we should be striving for. Currently, cars and their components just flow through our hands and end up as waste somewhere. This is not sustainable for our planet.” says Veli-Matti. “The automotive industry produces an enormous amount of waste, but also offers great possibilities for recycling. People and societies are waking up to this.”
Identification and supply of used car parts
The automotive industry is under pressure from governments to recycle more. At the same time, there is increasing customer demand on recycled spare parts (salvage), but the market is fragmented, and the operators are lacking common approaches. Veli-Matti, who has practically lived at his family’s car disassembly plant since he was 3 years old, identifies one key aspect that remains a challenge. “Disassembling and repairing cars used to be simple. Everyone knew that parts from a 1.6 Ford Escort would fit a Taunus” he explains. “Now all new cars are customized by the customers and have multiple variations. To identify parts, you must go to the level of individual, unique cars instead of just its make and mark. There are 10k parts in a modern car and it’s almost impossible to know the parts of the car unless you get specific information from the manufacturer. There are up to 2k parts that could be re-used and identification of these parts plays a crucial role.”
This is where Gateway has stepped in with their automotive industry expertise. By combining different data sources it’s been possible to develop part number-based system that has dramatically increased the identification accuracy. As a result, much bigger portion of the disassembled parts can now be offered for re-use.
In order to take advantage of the identification system, a new distribution platform is needed. Currently there is very little supply of used car parts and the sellers and potential buyers are not meeting. Buying and using used parts requires a lot of effort and knowledge, also on the part of the customer. It is difficult to know what part exactly fits. “Our mission is to connect the parts suppliers and potential buyers,” explains Jukka Mildh, one of the founders, and an active participant in the Formula 1 scene. “What we offer is a platform that acts as a link between suppliers and potential buyers. The parts can physically be located anywhere. They do not need to be in a central warehouse. They do not even need to be disassembled from the vehicle yet.”
Many different operators will benefit from the new platform. “Independent smaller companies will now get access to parts they didn’t before. Insurance companies are extremely interested in recycling end-of-life vehicles. They have calculated 20% savings when increasing usage of recycled spare parts for the damage-repair process,” explains Timo Yli-Salomäki, member of the founding trio and one of most respected, executive level car business experts in Finland.
Co-operation, vision and future
The co-operation between Gateway and Green Source has enabled the vision to become reality. Veli-Matti says: “Gateway Finland has played a crucial role. You couldn’t achieve something like this with just anyone. When we started we scanned different options, but Gateway – with their automotive experience, solutions and innovative team – felt like the best option. They have delivered, and I also feel we share the same vision.” Anssi Seppänen from Gateway Finland has also enjoyed working with Green Source: “This is not just about trying to cut 0.1% of costs or something. Instead they are transforming the whole industry. This is how I see the automotive industry should take advantage of the possibilities offered by digital transformation.”
Next up is taking the platform to real-world customers, and Jukka Mildh is excited at the prospect: “We’re aiming at the Nordics first, but this is a solution for the global market. It is web-based after all.” Veli-Matti agrees: “This is a clear example of how digital transformation can change the whole marketplace. At the same time, good things can be achieved for the environment – the ultimate goal and vision of Green Source is that there will be no waste from end-of-life vehicles!”
Timo Yli-Salomäki, Green Source International Ltd. timo.yli-salomaki(at)greensource.fi +358 40 59 58 215
Jukka Mildh, Green Source International Ltd. jukka.mildh(at)greensource.fi