Reverse Logistics -The case of e-waste

Reverse Logistics -The case of e-waste Tage Skjøtt-Larsen Department of Operations Management Copenhagen Business School Fremtidens hållbara transport- och logistiksystem i Öresundsregionen Malmö – 1. April 2008

Agenda • Why do we care? • E-waste – a ticking bomb • Challenges of reverse logistics • WEEE Directive and WEEE System in Denmark • Options for improvement • Conclusions

Why Do We Care? • Global warming, Carbon emissions • International regulation and legislation • Brand reputation (NIKE, H&M, ICA) • Stakeholders’s increasing awareness • Energy and commodity prices • Potential value creation in reverse supply chain

E-Waste – a ticking bomb • UN estimates that 20-50 mill. tons of e-waste are generated worldwide each year. Less than 20% captured by recycling programs • In 2007 about 1,1 bill mobile phones were sold worldwide – 50% of the world’s population (6,6 bill) has a mobile phone • EU produce every year 8,7 mill. tons of e-waste. Large export to Asia and Africa – in spite of the OECD and EU Ban of export of e-waste

Circuit boards - lead & cadmium CRT Monitor - lead & barium Flat screen displays - mercury Printed circuit boards, cables, plastic casing - brominated flame retardants, PVC for insulation Cadmium in rechargeable batteries What Is in a Computer?

Every year, hundreds of thousands of outdated TVs, computers and mobile phones are dumped in landfills or burned in smelters. Thousands more are exported, often illegally, from the Europe, US, Japan and other industrialised countries, to Asia and Africa. There, workers at scrap yards, some of whom are children, are exposed to a cocktail of toxic chemicals and poisons.

Eliminated the use of CRTs in 2006 • Complied worldwide with RoHS in 2006 • Plans to eliminate the use of PVC and BFRs in 2008 • Recycled 10% af the weight of their e-waste in 2006 • Expect to recycle 30% of the product weight in 2010 • In iMac is used aluminum, stainless steel and • high-grade plastics • Apple’s iPod has free recycling programs to Apple retail • stores worldwide (10% discount on a new iPod)

Dell’s Zero-Carbon Initiative 2007 • Reduce Dell’s carbon emission by 15% by 2012 • Primary suppliers have to report carbon emission data quarterly • Partnering with customers to build the ”greenest PC on the planet” • Expanding the company’s carbon-offsetting program ”Plant a Tree for Me” • Dell plans to set an environmental standard for the ”technology industry”

Xerox Copiers Xerox has saved millions over the years by remanufacturing both copy machines and toner cartridges. Xerox supports its remanufacturing efforts with its leasing sales arrangements. Instead of selling the product outright, Xerox will maintain the machine, so the customer does not have to replace it as needed.Reclaimed copiers are inspected and go right back onto the new-build assembly line. The only reason Xerox wouldn't remanufacture a product is if the technology was simply too old to be useful anymore.

Key issues in reverse supply chains • Forecasting og control of timing, quantity and quality • Design for environment, disassembling & remanufacturing • Organizing collection systems • Info-systems for reverse flows of products/materials • Inspection, evaluation, disposition • Recycling of components, materials, refurbishing of products (in-house, third-party, partnerships) • Create secondary markets for refurbished and recovered products and components (avoid cannibalization of new products)

WEEE-System - Denmark • Manufacturers/distributors of electrical and electronic equipment shall from 2006: • Establish and finance return systems for their products at the end of the product life cycle • Establish and finance arrangements to utilize the scrap • Keep account of the e-waste • Mark the products with a carbage can with a cross over and deliver information about recycling and treatment (from August 2005)

Return systems for WEEE Treatment facilities End-users waste From trade & industry Producers and Producer schemes Municipal Collection schemes Municipal Collection sites Citizens waste From households Non-specific product waste stream Specific product waste stream

Options for improvement • Implementation of WEEE directive in different speeds in EU • Compliance with 27 different national legislation – no pan-European solution • Collective schemes prevent learning from quality defects – no closed-loop supply chain • No incentives to increase rate of return – fee related to market share not to return rate or life-cycle

Consumers’ disposal of e-waste • Consumer behaviour - a life in the fast lane: • Reduced ”lifetime” of electronic equipment (typical replacement time for mobile phones is 1-2 years) • Logistics infrastructure: • Lack of knowledge of disposal alternatives • Need for easier access to disposal of e-waste • Change of consumers’ attitudes: • More incentives to increase rate of return

Conclusions • We create products, processes, supply chains business models without much consideration of the reverse supply chains. • Environmental costs are not fully internalized in product price. • The return process should be an integrated part of SCM • Lack of performance measures on return flow ( lead-times, return procentage, quality af returned products, forecast uncertainty) • Use technology to obtain speed and lower costs in the return system (e.g. ”data-loggers”, ICT, RFID)

Reverse Logistics -The case of e-waste