Rebuild Operating Models: Profitability, Investment and Scale (Masters' thesis)

Rebuild Operating Models: Profitability, Investment and Scale (Masters' thesis)

Functional area: Onsite or Remote: Hybrid Country/Region: Eu City: Örebro

Location

Örebro, Orebro County, Europe / Middle East / Africa, 70191 Company name: Epiroc Rock Drills AB A fact-based comparison of the current rebuild model and a vertically integrated model.

Want to accelerate the transformation towards a more sustainable future?

At Epiroc, your thesis is more than an academic project. It's an opportunity to contribute to innovations that help make mining and construction safer, more productive, and more sustainable.

Working alongside experienced colleagues, you'll be part of a collaborative and inclusive environment where ideas are encouraged, and learning never stops. This is your chance to turn knowledge into impact while growing both professionally and personally.

Functional area: Marketing Recruiting manager: Maria Tutumlu, Global Product Line Manager Circular Services

Education background: Mechanical Engineering / Industrial Engineering / Business and Administration The ideal candidate has an interest in:

• Circular economy
• Sustainability
• Mining and industrial equipment
• Service business development
• Business transformation

Level of thesis project: Master Thesis.

Number of students in the project: Preferably two students.

Background: Rebuilds support Circular Services by extending equipment life and creating customer value through productivity and lower total cost of ownership. The immediate business need is not a broad ecosystem description, but a decision-ready comparison of alternative ways to execute rebuilds. The study will test whether greater vertical integration can improve profitability and competitiveness, and under which machine, location and volume conditions it is economically justified. The work should support decisions for both Epiroc and mixed-fleet rebuild opportunities.

Project setup and student differentiation Preferably two students working as one thesis team, with clearly differentiated and interdependent workstreams:

Workstream 1:

• Phase 1: Value-chain and profitability model
• Primary focus: Map the bill of material and rebuild process for selected machine models. Quantify purchased, subcontracted, repaired and assembled content, costs, revenue, margin and value capture under each operating model.
• Distict output: Validated cost and profitability model by machine and process step.

Workstream 2:

• Phase 2: Capability, investment and scale model
• Primary focus: Define facilities, equipment, tooling, competence, test capability, working capital and ramp-up requirements. Calculate break-even volume, ROI and sensitivity to utilization, labor cost and subcontracting. Investment case, minimum viable volume and site/model decision criteria.
• Distict output: Investment case, minimum viable volume and site/model decision criteria.

Mission

Model 1: Current / hybrid rebuild model

• Purchase a significant share of new parts and assemblies.
• Subcontract a large portion of specialist repair and rebuild activity.
• Repair selected components internally where capability exists.
• Complete final assembly, testing and quality assurance in-house.
• Model 2: Vertically integrated model
• Model 2: Vertically integrated model
• Perform substantially more component repair, machining, rebuild and assembly in-house.
• Purchase only where internal manufacture or repair is not feasible or economical.
• Subcontract primarily clearly defined specialist activities, with engine rebuild as the initial reference case.
• Operate as a one-stop rebuild facility capable of supporting Epiroc and selected mixed-fleet machines.
• The final definitions must be validated with internal stakeholders before modelling. The thesis must document all inclusions, exclusions and assumptions so the comparison remains transparent and reusable.

Machine and case scope

• Select 1-2 representative machine models per product line with sufficient bill of material, cost and rebuild-history data.
• Include at least one Epiroc machine and, if reliable data is available, one mixed-fleet case.
• For each machine, trace the overall machine bill of material downward to major systems and high-value components.
• Prioritize components that materially influence total rebuild cost, margin, lead time or investment needs.
• Use one or more actual completed rebuilds to validate assumptions where data quality permits.

Research questions:

The thesis should seek to answer questions such as:

1. How does the end-to-end value chain differ between the current/hybrid model and the vertically integrated model for the selected machines?
2. For each model, what is purchased new, repaired in-house, manufactured in-house, subcontracted and finally assembled or tested in-house?
3. What are the total rebuild cost, gross profit, contribution margin and value retained internally under each model?
4. Which components or process steps create the largest difference in profitability, lead time, quality risk and working-capital exposure?
5. What facilities, equipment, tooling, skills, certifications, test capability and supplier support are required for each model?
6. What initial and recurring investments are required, and what minimum annual rebuild volume or utilization level supports an acceptable payback and ROI?
7. How sensitive is the result to labor cost, component recovery rate, subcontractor pricing, utilization, warranty provision, logistics and machine mix?
8. Under what conditions should Epiroc use the current model, increase selective in-house capability, or establish a more vertically integrated rebuild operation?

Scope: The study is expected to include:

A. BOM-to-value mapping

• Create a structured make/buy/repair/subcontract map for each selected machine.
• Link major BOM (Bill of material) items and process steps to quantity, sourcing route, labor hours, material cost, subcontract cost, logistics and lead time.
• Identify core and reusable components, expected recovery rates and major uncertainty drivers.

B. Profitability comparison

• Build comparable machine-level profit-and-loss views for both operating models.
• Separate material, internal labor, overhead, subcontracting, freight, warranty and rework assumptions.
• Show value capture by process step and quantify margin improvement or deterioration.
• Avoid double counting transfer prices, internal mark-ups or shared overhead.

C. Investment and capacity case

• Estimate CAPEX for equipment, tooling, test stands, facility adaptation and digital/quality systems.
• Estimate ramp-up cost, competence development, working capital and recurring fixed cost.
• Model practical capacity, bottlenecks, utilization and annual throughput.
• Calculate break-even volume, payback period and ROI using an agreed internal financial method.

D. Sensitivity and risk

• Run scenarios for machine volume and mix, labor rates, recovery yield, exchange rates, supplier pricing, utilization and warranty/rework.
• Identify operational, technical, commercial, quality, legal and cross-border constraints that may change the preferred model.
• State data gaps and confidence level for each major conclusion.

Methodology:

The student is expected to use a combination of:

• Literature review on remanufacturing, vertical integration and make-or-buy decisions.
• Internal interviews with rebuild, engineering, sourcing, finance, operations, sales and quality stakeholders.
• BOM, cost, labor, supplier and historical rebuild-data analysis.
• Process mapping and activity-based cost modelling.
• Site or virtual workshop observations where practical.
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