now have laws governing e-waste.
The challenges of reverse logistics are hardly news to the
industry, however. Major electronics OEMs and their retailers have long understood the need for a safe, responsible,
and effective system for managing returns. Such programs
are important from both a regulatory compliance and
social responsibility standpoint, of course. Beyond that,
careful and aggressive management of the process enables
companies to turn trash into cash, reselling some products
and recovering valuable parts and materials from others—
essentially, capturing value rather than producing waste.
“Years ago, manufacturers did not look at returns man-
agement from a recovery standpoint, but as a cost of doing
business,” says Joseph King, a vice president at ModusLink
Corp., an international third-party logistics and supply
chain services company. “We’ve seen a much greater focus
on trying to minimize losses, improve recovery, and ensure
that practices are environmentally responsible.”
ing certificates of destruction for goods sent into the waste
stream, down to the serial number level.
A JOB FOR PROFESSIONALS
But how do you go about setting up a safe, responsible, and
effective system for recycling and managing e-waste? Rogers
says it begins with the people. “The first thing you need to
do is spend time with someone who understands this stuff
and where it’s going,” he says. It’s also important to understand that with recycling and sustainability initiatives,
you’re in it for the long haul, Rogers adds. “This is not just
a short-term problem. You need to do this well,” he says.
Rogers recommends that any company that must deal
with electronics returns devote at least one employee to the
problem. He suggests choosing an engineer who is familiar
with design and understands the complex mix of components, chemicals, and minerals in today’s electronics.
Whether they maintain in-house expertise or not, many
companies opt to partner with a qualified expert. There are
a number of third-party logistics service providers (3PLs)
that specialize in returns management. These 3PLs not only
will handle tasks like refurbishment, disassembly, recycling,
and disposal on behalf of their clients, but they’ll do it in a
way that complies with the customer’s own business rules,
says Mike Baker, vice president of business development for
Genco ATC, a third-party logistics company that specializes
in product life-cycle logistics.
Providers say an important part of their job is establishing systems that carefully track goods from the shipping
facility through final disposal. That’s partly to ensure that
customers receive the full benefit of the resale of any goods
or components, and partly to ensure that all materials are
handled responsibly throughout the reverse supply chain.
“We track every device by serial number and a customer
compliance code,” says King of ModusLink.
Chad Burke, director of supply chain excellence for Ryder
System Inc., also underlines the importance of maintaining
a strict chain of custody for every product and commodity
from receipt to ultimate disposition. That includes requir-
BACK ON THE MARKET
Whether a shipper opts for the DIY approach or contracts
with an expert, the recovery and disposal process will follow
the same basic pattern. When goods come into the facility,
says King, the initial step is “triage,” that is, determining the
best way to handle each product.
Burke warns that this involves more than an at-a-glance
assessment of the incoming items. Ryder, for example, goes
through an extensive testing and disposition process for
products returned to facilities it manages for clients, including a functional and cosmetic evaluation to determine
whether a product is worth refurbishment or repair. As part
of that process, it compares the estimated resale value with
the cost of getting it to market.
Burke notes that as much as 50 to 75 percent of the electronics goods returned to manufacturers have nothing
functionally wrong with them, and that as much as 70 to 80
percent of their value can be recovered in resale. But to
recapture that value, you have to act quickly, he warns.
Given the short life cycle of many of today’s consumer electronics products, getting refurbished goods back on the
market right away is imperative.
Many of the products that come back through the reverse
logistics chain can be resold nearly as is, or with some refurbishment. But there’s one step that can’t be skipped: The
party responsible for refurbishment must scrub every last
bit of the previous owner’s data from the device before it is
returned to the market.
“One of the programs we’re seeing explode is trade-ins
for handsets, tabletop computers, and laptops,” King says.
“The big thing there is data wiping. There’s a lot of liability
around that.”
PARTS HARVESTING
Products that don’t make the cut then go through an exten-
sive process to recover as much value as possible from com-
ponents—circuit boards, power supply, plastics, ferrous
metals, copper or aluminum, chemicals, and minerals—
what King calls “parts harvesting.”
This isn’t just a matter of squeezing every last penny from
returns. It’s also about conserving minerals that are crucial
to electronics manufacturing but are becoming increasing-
ly difficult to obtain. For example, China has imposed
export restrictions on rare earths used in high-tech prod-
ucts. While a significant proportion of electronics manu-
facturing takes place in China, mitigating the issue to some
degree, manufacturers are nonetheless concerned about
access to that important source of supply.
Further limiting the availability of materials needed for
manufacturing is the recent crackdown on the use of “
conflict minerals”—minerals that come from areas associated
with conflict or human rights abuses, such as the Congo. In
