Jim Loughran took up the helm at e2e in November last year, bringing with him more than 30 years’ experience in technology industries operating in the finance, manufacturing and pharmaceutical sectors. Here, I Love Claims (ILC) asks him about his future strategies around digitalisation, environmentalism, and an increasingly volatile market, and how e2e is managing and overcoming the skills crisis impacting the sector.
Can you explain how digitalisation is helping you optimise the salvage/recycling process?
Digital transformation is the process of using digital technologies to create or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.
What we’ve experienced as a society in the last two years would have taken eight or maybe 10 years to achieve under normal circumstances. The digitalisation of the workplace in order to enable remote and hybrid working has been happening slowly for many years, but the pandemic forced the accelerated adoption of these new working models. Necessity drives us to accept new ways of doing things. It is how we adapt quickly in times of crisis, that determines who will survive and thrive.
To me, the key to the long-term success of any business is the attitude to change and the ability to adapt. This is the key learning that I bring with me from the technology industry where product lifecycles are sub three years, new entrants to the market appear monthly and global domination of a sector can occur well within five years.
The pandemic has seen working from home become the new norm and consumers have embraced digitalisation in many new areas of their lives. This extends to their management of a motor claim and their expectations of a swift, seamless and frictionless service. We are using technology to optimise the salvage and recycling process both for our insurer clients and their policyholders. Our members are investing in digitalisation to manage their warehousing and distribution networks which is proving beneficial to our reclaimed parts business, enabling us to efficiently identify the right parts at the right time, helping to reduce motor claims life cycles.
Development continues to ensure provision of seamless supply chains and we look towards the embracing and adoption of evolving technologies, such as AI and machine learning to provide further benefits in these areas.
Can you offer us an insight into the e2e network, and how you ensure it has the flexibility to adjust to changing markets and volumes?
e2e is the UK’s only salvage and automotive recycling network, offering more scale and reach than any other provider in the industry. The network is made up of progressive automotive recyclers with 50 accredited Authorised Treatment Facilities, compliant with Environment Agency requirements, positioned throughout the country. We are unique in that we offer a national service underpinned with local knowledge. There are over 480 purpose-built recovery vehicles in the e2e fleet and our member sites can house over 30,000 vehicles in safe and secure storage. e2e recovers over 500,000 vehicles per year on behalf of our clients and depollutes and dismantles over 300,000.
Financial stability comes from an annual combined turnover of over £300million and combined people resources sit at over 1,500. The figures evidence our scale. Where we differ from the large corporate entities that operate in our marketplace is our agility. We don’t have to answer to shareholders. We have a board of directors who represent the membership and are entrusted with decision making that serves the network. This means we can be highly reactive to market forces and proactively create commercial opportunities.
Flexibility is achieved through the application of rigorous service standards against which every member is audited to ensure performance consistency across the network. This enables the network to flex its resources according to market need and draft in additional support in the event of regional claims surges for example as a result of flooding and weather-related incidents.
Recent announcements have underlined the pressures some within the salvage market are feeling; how is e2e continuing to thrive in such a competitive environment?
The beauty of a network lies in its inherent resilience, flexibility and agility. Its power is derived from the constituent elements, but it becomes much more than the sum of those parts. If one element is lost or damaged, the network will survive, heal and continue to thrive. This is true in biological, neurological and technological networks, and in business. It’s the essence of e2e’s success.
Whilst there are undoubtedly pressures linked to reduced claims volumes and rising costs driven by increases in the price of fuel and energy; we see positive opportunities in the current marketplace. e2e is thriving because it can offer its clients choices. The network has the ability to remarket vehicles or to dismantle them and recycle their parts for re-use.
Commercial arrangements, tailored to client needs, are designed with both options in mind. We are pleased to report that our auction is delivering strong returns for clients, as the shortage of used vehicle stocks drives up values.
At the same time, clients have also become increasingly interested in accessing e2e’s stocks of over five million quality graded, warranty assured reclaimed parts – the largest in the UK and delivering savings of circa 70% on retail prices. Economic uncertainty, supply chain delays, rising motor repair costs, heightened environmental awareness and improved education around the safety, quality and governance linked to reclaimed parts, have all led to significantly increased demand. We are seeing growing insurer appetite to undertake pilots and proof of concept exercises, recognising the benefits to be gained from reduced claim costs, the ability to offer their policyholder a choice – many of whom wish to avoid a total loss situation and keep their vehicle on the road – and the means of driving a sustainable motor claims agenda, supporting their ESG strategies.
How are you keeping pace with technology, both in-car and more generally?
The UK car parc is changing rapidly. Innovative new entrants to the personal transport market will continue to accelerate the evolution of the segment.
If we look at how vehicles are powered, we are now seeing EVs in total loss claims increasing in frequency, correlating with the increased numbers on the road. Some manufacturers are focusing on hydrogen fuel cells which may see vehicles powered in this way as another future viable option for motorists. And of course, we have the trials of autonomous vehicles underway in some regions.
In-car technology can also be seen to continue to evolve. Unsurprisingly, ‘Intelligent’ vehicles equipped with technologies like assisted parking, lane management and headlight and rain sensors are increasingly commonplace in the total loss arena, where the cost of repair, due to the in-car technology, tips the scales to uneconomically viable.
The challenge for the salvage and automotive recycling industry is to have the right knowledge and specialisms in place, underpinned by the development of training, competency and standards within the sector.
At e2e a significant benefit of the network model is the ability to share best practice and learning as new vehicle technologies emerge. We collaborate with industry bodies such as the Vehicle Recyclers’ Association [VRA] and Thatcham to ensure we are both up to date and horizon scanning. Guidance is disseminated to members and as necessary standards are developed and form part of the Membership Agreement.
Are you able to provide an insight into e2e’s environmental strategy, and how you aim to meet increasingly stringent targets?
Automotive recycling is fundamentally grounded in sustainability and as an industry, we are well placed to support the UK’s net-zero ambitions. Our network members are recycling up to 98% of the individual salvage vehicles that they process and can deliver a localised circular economy from the salvage vehicles they collect and the reclaimed parts they dismantle, quality grade and supply with warranties. This is one of the benefits of having members positioned across all regions of the UK.
Many of our members are already making great strides in their individual business goals to reduce their carbon footprints. This includes a range of initiatives from solar-powered lighting, rainwater harvesting, logistics and route planning to reduce mileage for their recovery fleets, battery-powered parts delivery vehicles and recycled packaging materials for reclaimed parts.
Bringing these efforts together under a single network umbrella is the natural next step. e2e is currently in discussions with several Environmental Social & Governance (ESG) consultancies in order to select a suitable partner to help guide our e2e ESG strategy to the next level of evolution. Minimum member standards for ESG will be designed and implemented as part of the project. These standards will form part of the Membership Agreement and members will be regularly audited against them.
Do you see the demographic of the workforce within the salvage sector evolving in the coming years, and if so, why?
Yes. Previously, the historical ‘scrapyard’ image of the salvage sector was not conducive to professional and broad-based talent acquisition. It has taken some time to shake that image and work must continue to position salvage and automotive recycling as a professional service and influential stakeholder in the automotive industry.
Years of investment and evolution sees today’s automotive recyclers operating as professional organisations with corporate infrastructures, investing in the latest technology and business processes.
e2e continues to collaborate with industry bodies and champion salvage and automotive recycling as a professional, strategic partnership alongside loss adjusters and legal services in the insurance supply chain. The VRA has made great strides forward in generating an industry voice, not least with the development of Certification to the UK Standard for Reclaimed Parts, in association with eBay.
This year sees the introduction of the UK Vehicle Recycling Excellence Awards, a platform for the industry to showcase its services and innovation. Our network members continue to educate consumers and work with their regional colleges to ensure students understand the opportunities presented by a career in automotive recycling and to develop apprenticeships.
Interest in recycling in all its guises, linked to environmental concerns, is at an all-time high and as an industry, we can capitalise on that. Perhaps too I represent an example of the changing demographic, making a career change after 30-plus years in the IT industry to become CEO of an automotive recycling network. I was excited by what the industry represents and e2e’s network strategy and the associated business opportunities. I’m sure I’m not the first and I definitely won’t be the last.
This article was originally published at www.iloveclaims.com