Managing Reverse Logistics, Recycling, and Sustainability in the US

reverse-logisticsThis post looks at the pressing issues of electronic waste and at the environmental and financial costs of recycling this growing mountain of obsolete computers, displays and peripherals. It suggests that a wider adoption of reverse logistics more generally in the electronics industry may help to manage the end of life process. This is a growing problem, even though the size of electronics keeps shrinking the sheer volumes continue to grow as these devices become ever more ubiquitous.

by Kimberly Knickle, Practice Director, IDC Manufacturing Insights, where she is responsible for research and analysis of business and IT issues related to the asset-oriented value chain. Follow Kimberly on Twitter @kimknickle

Just recently, IDC’s David Daoud released a report on the staggering weight of PCs and related devices and accessories recycled in the United States in 2010. (For Earth Day, IDC has posted a free version of this document with registration.) The total weight amounted to about 8 lb per capita or a total weight of 2.5 billion pounds in 2010 (2,506,659,212lb). We’re talking about PCs (about 44% of the total), PC displays (27%), multifunction peripherals (about 15%), and the remainder primarily from mobile phone devices, x86 servers, digital cameras, non-enterprise storage, keyboards, mice, and cables.

I take this as a very good sign. David commented in his research that the electronics recycling industry in the United States is beginning to make progress, but challenges remain. The electronics recycling sector is highly fragmented market and lacks sufficient oversight. (Learn more about how IDC is working to improve the process and see the attached figure).

Not surprisingly, one of the biggest challenges centers on the slow rate of change of current recycling practices, though enterprises are definitely improving faster than home consumers and small businesses. With our expectations at IDC that the recycling industry is likely to grow in importance and scope both as an economic activity and as a guarantor of proper environmental stewardship, it’s worth thinking about this from a supply chain perspective:

What are the environmental and financial costs of recycling specifically and reverse logistics more generally in the electronics industry?

My first reaction upon reading David’s research was – that’s a lot of weight to carry around. If the industry is so fragmented, odds are it’s not being done efficiently. We already know it’s not always processed in compliance (Think WEEE in Europe and similar legislation in the U.S.). And while recycling is good for the environment, we have to think about the environmental costs of the entire process, especially in the supply chain from a transportation and logistics perspective if those goods add up to a serious amount of freight. There are a few more factors to consider:

• The amount of electronics items recycled will increase over time
• The size and weight of those goods will probably decrease over time
• The increasing clockspeed of the high tech industry means that product lifecycles are compressing over time
• The range of items that include embedded electronics is increasing

Basically, the decreasing size of most existing electronics is not enough to offset the growth of items that will need to be recycled and enter the reverse logistics stream.

As a result, the electronics recycling industry is not the only segment facing the challenges of increasing their recycling and improving the efficiency and compliance of their reverse logistics processes [See: In Supply Chain Logistics Management, There’s a Reverse Gear–and It’s Green–Part 1]. We expect these factors are going to impact how companies use 3PLs (Third party logistics providers), like FedEx and UPS.

In fact, both FedEx and UPS provide reverse logistics services today. While I’m sure that both companies would point to customer service advantages that result from using their services, I think it’s also important to consider the compliance, sustainability, and general efficiency benefits.

How is your company managing recycling and reverse logistics? I’d like to hear what you’re doing today and what you expect to do next.

To read about the related subject of embodied energy see our related post: “Embodied Energy, a Measure of Sustainability“.

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© 2011, Kimberly Knickle. All rights reserved. Do not republish.

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Author: Kimberly Knickle (1 Articles)

As a practice director for IDC Manufacturing Insights, Kimberly Knickle is responsible for research and analysis of business and IT issues related to the asset-oriented value chain (AOVC), which includes manufacturers in chemicals, pulp & paper, metals, and downstream oil & gas. In addition, she manages the Emerging Agenda practice area, which focuses on hot topics that are rapidly becoming critical priorities for manufacturers such as environmental sustainability; RFID, sensors and M2M; and establishing presence in emerging markets. Ms. Knickle also supports research in the supply chain and the consumer packaged goods industry.Ms. Knickle regularly contributes to the sustainability blog on the IDC Manufacturing Insights Community (http://idc-insights-community.com/manufacturing) and tweets (@kimknickle) about business and IT issues relevant to asset-oriented manufacturers, as well as sustainability, RFID, and more. Ms. Knickle is a highly regarded source for the news media on IT issues in business, with coverage from BusinessWeek, ComputerWorld, and Information Week.

  • http://www.elmgroup.com Lawrence Heim

    A new issue and COST that will need to be evaluated in depth is how the US Conflict Minerals Law (passed in 2010 as part of the Dodd-Frank Act) will impact e-waste recycling. The law – and the soon-to-be-promulgated SEC regulations – will affect the entire supply chain for products containing tin (i.e., solder), tantalum (frequently in capacitors and other passive components), tungsten (commonly used as the counterweight on cellphone vibrator motors) and gold (used in electronics for its antioxidation properties). E-waste recyclers will be subject to supply chain traceability due diligence, disclosure and auditing requirements – placed on them by either the SEC directly or through customer demands. Updated information on news and solutions is available at http://elmconsultinggroup.wordpress.com/