The Five Most Important Trends Impacting the ITAD Market

Recycle

In my last blog post, I provided a high level summary of key findings from the recent market research study we conducted for Arrow Electronics on the topic of IT Asset Disposition Trends.   Now that I’ve piqued your interest, I thought I’d share five important data points from the survey results:

  1. 9 out of 10 companies in 2014 have a formal end-of-life ITAD strategy
  2. Nearly 2 out of 3 companies surveyed choose to have a 3rd party service provider manage their end-of-life assets
  3. The most important factors in selecting a 3rd party service provider are adoption of compliance standards, well documented chain of custody, and high quality reporting
  4. 95% of companies feel that R2 and/or e-Stewards are the most important environmental standards related to ITAD
  5. Nearly 9 out of 10 companies feel that R2 and e-Stewards should be combined into a single standard

 

These findings validate the fact the ITAD has gained increased attention among not only IT Managers but C-suite executives as well.  However, these findings reveal that most companies do not view ITAD as a core competency.  Instead they choose to outsource it to 3rd Party Service providers.  This explains the increased level of competition within the ITAD market as more and more companies enter this space.  It is not just start-up specialized ITAD vendors that are pursing this opportunity but well established IT Service providers and distributors like Arrow Electronics who view ITAD as a natural extension of their product and service offerings.

Given the large playing field of competitors, end-customers are becoming increasingly selective about who they choose to conduct business with.  Among the most important factors are compliance standards, documented chain of custody, and IT reporting and analytics.  It is interesting that while R2 and e-Stewards are perceived as the most important environmental standards, an overwhelming majority of end-customers believe that they should be combined into one, single standard. This suggests that these standards are used interchangeably by end-customers.  Possessing one or both of these industry standards is simply not enough for an ITAD service provider to differentiate itself in the marketplace. While many companies can lay claim to a well-documented chain of custody and superior reporting capabilities, we believe that its additional industry standards such as RIOS, ADISA, NIST, and knowledge of best practices to minimize risk, reduce waste, and maximize recovery values that set one ITAD vendor apart from one another.  If you haven’t read the Arrow IT Asset Disposition Trends Report, we suggest you obtain a copy, click here.    To discuss the implications of this report on your company or business, feel free to schedule a free 30-minute strategy session with us today.

A Strategic Analysis of ITAD Trends

ITAD

The data is now in from our large scale market survey conducted on behalf of Arrow Electronics on the subject of IT Asset Disposition (ITAD) trends.  The results validate a popularly held view among IT industry practitioners that ITAD considerations continue to be a top concern for all size companies.   In fact, knowledge of ITAD best practices continues to evolve and improve among C-suite and IT Executives.  However, as one might expect the issues and concerns between the two groups vary somewhat.

Our research also indicates that all companies, regardless of size, are more likely today than in the past to budget for the ITAD process.  In addition, corporations are becoming more aware of penalties arising from improper disposal of IT assets, which has led to an increased implementation of formal ITAD strategies.  While the most important factors for creating an ITAD strategy have remained the same over the last few years (data security concerns, commitment to “Green” business practices, and mitigating legal and financial risks), companies are far less likely to apply their ITAD strategy outside of North America.  It is also clear that companies who have developed a formal end-of-life ITAD strategy are far more likely to have an ITAD provider handle their IT assets when compared with companies who do not have a formal ITAD strategy.

Companies using a 3rd party service provider to manage their end-of-life IT assets are currently very satisfied with their providers.  When choosing these providers, ISO industry certifications are particularly important, with R2 and e-Stewards being the most important environmental standards.  Due to their equal level of importance and credibility, most companies feel that R2 and e-Stewards should be combined into one standard.

While most companies have a data security policy regarding their end-of-life assets, data security concerns are still prevalent.  Data security concerns are particularly high among companies with a formal ITAD strategy as well as companies who use 3rd party service providers.  Most companies use multiple tactics to alleviate data security concerns, which includes using 3rd party service providers.  However, with nearly 2 out of 3 companies selecting a method such as “Delete the file directory on the hard drive” which does not fully eliminate the potential for data security breaches, there remains some uncertainty as to which methods are truly effective.

With most companies adopting a BYOD policy that allows employees to bring at least one device to work, there has been a dramatic increase in the implementation of policies to ensure that company data on BYOD devices is secure during active use.  The vast majority of companies are also implementing policies to ensure that company data on BYOD devices is eradicated once those devices are no longer active on the company network.

Corporate social responsibility/sustainability has also become increasingly important, with approximately 93% of companies expected to have a program in place by the end of 2015.  Companies who currently have a corporate social responsibility/sustainability program in place typically report their program’s progress in their annual report and/or other forms of corporate communication, both public and private.

The cloud is having a significant impact on the purchase of IT assets, with a majority of companies purchasing more assets to support the cloud.  Some of these additional assets purchased likely include tablets, whose use continues to increase.  As a result, ITAD practices and policies will continue a critical topic among C-suite executives and ITAD Managers.

Details of our survey results can be found in the Arrow IT Asset Disposition Trends Report. To obtain a copy, click here.

Reducing E-Waste: Good for Marketing and The Bottom Line

e-waste

According to the EPA, over 2.5 million tons of electronic waste are produced each year, making it the fastest growing form of waste in the US. Electronic waste, or “e-waste,” is defined as discarded electronics, including but not limited to computers, mobile phones, and TV sets. This also includes used electronics being processed through the Reverse Logistics supply chain that are being salvaged, recycled, resold, or disposed of.

Improper disposal of e-waste is a very real challenge facing the manufacturing and consumer electronics industry today. E-waste is considered not only hazardous to the environment but also to the human population: electronics’ components typically contain lead, a neurotoxin, and cadmium, which is a carcinogen that can cause lung damage and kidney failure. Hazardous waste may also leak toxins like mercury, beryllium, and arsenic into the ground and water. In large amounts, especially in landfills, these discarded parts have proven to be highly unsafe. 

Though a growing number of states have enacted laws to manage the disposal of e-waste, the United States does not have a federal system it adheres to like that of the European Union, for example. By law, any manufacturer in the EU is held responsible for its own safe disposal and must follow a “green design” initiative for electronics design (meaning that there are limits to the amount of lead, mercury, and other harmful toxins that can be present in these devices). There’s also a system referred to as “take-back”, which requires manufacturers to implement e-waste collection and disposal infrastructure. Here in the USA, there’s a lot of pressure on businesses to to implement strict policies for reducing E-Waste in their Reverse Logistics processes and carefully monitor their own progress. But it’s to their benefit to do so. Not only do sustainability programs have a huge impact on a business’s bottom line, but, in general, people want to do business with a “greener” company nowadays. It’s good for marketing and makes perfect sense financially. But it can be difficult for businesses to individually streamline optimal solutions. 

A great example of the way businesses are cracking down on e-waste and developing innovative new solutions is Sprint’s phone recycling program. Their sustainability efforts have  saved them over $1 billion in excess costs through design, recycling responsibility, and maximizing a device’s useful life; at least 70% of Sprint’s electronics will meet Sprint’s meticulously detailed environmental criteria by the year 2017. They also put a great deal of emphasis on their refurbished devices to ensure high quality and long life so they don’t end up back in the reverse supply chain. Their brand has now become synonymous with “green design” among industry insiders, which has boosted their image and sales.

Sprint’s Buyback program is a great model for the ways a consumer electronics business can reduce e-waste and significantly cut costs. Sprint will accept any used mobile device, even if it’s from a different carrier and in less than perfect condition, and offers its customers up to $300 per device. A great deal of these old phones can be refurbished and updated, so Sprint tests and sorts each one accordingly. A lot of these refurbished phones are sold overseas where the older models are in higher demand. The devices Sprint cannot refurbish and resell are either salvaged or sent to 3rd party recycling vendors who harvest raw materials from the devices, like metal and plastic, to be repurposed for a huge variety of other products. 

One of the many ways the Blumberg Advisory Groups helps businesses with their Reverse Logistics Management is in the department of e-waste reduction. Visit our site to learn more about the Reverse Logistics services we offer, especially if you’re looking towards a more promising, greener future for your business. Remember: environmental consciousness doesn’t have to feel like a burden, especially in this day and age, when it can only serve to boost your company’s potential even further.

Reverse Logistics Sustainability 201: Green is Lean

As I mentioned in my previous post, the “Greenification” of Reverse Logistics is a critical opportunity. While going green traditionally was viewed as an expensive transition with little ROI, today the tides have turned quite a bit. Currently, green initiatives can be seen as wholly beneficial – saving time, money, and the environment in one fell swoop.

I want to discuss how implementing green processes in reverse logistics can in fact create a tighter, leaner, and more cost-effective reverse pathway. In fact, going green has tangible benefits for many key areas of the reverse logistics process, including the following three.

Returns Prevention and Reducing NFF

Studies indicate that consumers would rather do business with a “green” company, but that they aren’t willing to pay significantly more money for that benefit. As I mentioned in my previous post offering possible solutions for No Fault Found, one potential solution could be to improve the returns process by including the consumer more – something that is often neglected by retailers who would prefer to limit customer involvement as much as possible for fear of aggravating them and sacrificing customer satisfaction. I posited that a little disclosure might go a long way, tapping into consumers’ sympathies by indicating reasons why certain information was necessary.

The implementation of green initiatives is the perfect time to put those ideas into practice. Recall that consumers would rather do business with a company they perceive to be environmentally conscious. Customers are looking for businesses that are attempting to lessen their carbon footprint, and are sympathetic to the need to eliminate wasteful practices. Reduction of NFF returns is possible if there are consumer incentives involved in returns policies.Preventing returns has obvious benefits to the reverse supply chain, including lessening the burden of excess volume.

Logistics

Some of the ways businesses can optimize their reverse logistics pathways are actually the same ways to go green. Relocation of warehouses and repair depots can help significantly cut down on time spent in transport, fuel consumption, and carbon emissions. One centralized regional location can reduce fuel consumption, cutting costs while improving the impact on the environment.

Additional beneficial areas include customer satisfaction (locations closer to customers enable expedited service and returns) and improved turnaround time. Faster resolution to problems promotes customer satisfaction.

Repair, Reuse, or Liquidate

When an item is traveling along the inbound pathway, some major decisions need to be made. The OEM needs to consider the revenue potential of selling items as repaired or refurbished units or disassembling them for scrap.

Disassembling items can yield an abundance of usable parts, which can be saved to eliminate the time and money it takes to repair future distressed products. A good strategy must be implemented to address the usability of parts, forecast need for spare parts, and determine the necessary treatment for those parts to be used most efficiently.

Of course, this optimized efficiency of parts contributes to a lessening of eWaste. Discarding less useful parts immediately and saving the most useful ones helps to reduce the amount spent on finding the necessary parts for repairing/refurbishing later products. As an added benefit, lower parts inventory improves warehouse energy use and emissions.

Companies have a unique opportunity now to optimize their Reverse Logistics pathways. Supporting initiatives to “go green” means bringing new efficient practices and cost savings to a much-needed facet of business.

To learn innovative ways to optimize your Reverse Logistics pathway, talk with the experts at Blumberg Advisory Group.

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Reverse Logistics Sustainability 101: Greenification

In an ideal scenario, retailers and manufacturers would only experience the outbound pathway of a product. In the real world, the inbound pathway is a major component of business, and optimizing your reverse logistics pathways can result in massive resource savings.

Environmental awareness is nothing new for the manufacturing industry: factories are notoriously seen as polluters, and even the most conscious manufacturing processes consume resources. In the past, environmentally-conscious procedures were taken on as a burden – resulting either from external motivation (requirements imposed by new regulations) or internal ones (feeling a sense of obligation to helping, or at least not hurting, the environment). “Greening” was cost-prohibitive, and often didn’t provide much benefit from a productivity standpoint…until now.

The tides have changed. Currently, “going green” has just as many internal, operational benefits as it does external, societal ones. In fact, it is no longer seen as a burden, but instead as a potential competitive advantage. Green processes that were once exorbitantly cost-prohibitive to implement are now cost-effective, and their benefits are far-reaching. An improved community standing is an intangible result, but the money you’ll save and productivity you’ll reap are very real indeed.

This isn’t the first time I’ve mentioned how the reverse logistics pathway is one that’s ripe for optimization. But sometimes, the route to optimizing can be difficult to choose. Which processes will you focus on? What is the most lucrative change you can make? How much will it cost to implement X, and how much will it save you – and how long will it take for those savings to come in? Which of your most-used processes is contributing least to your productivity?

Market research is still key in making those decisions. Clear, accurate, and relevant data is and always will be critical for making the right choices. But the choices are still abundant, and still difficult to select. If you narrow your sights by deciding to focus on “greening” your processes, you make the specific pathways easier to choose.

The design and operation of supply chains has traditionally been based on economic impact: what will cost the least to operate and cause the most profitability? Even technological advances take a back seat, because their expense is often outweighed, at least in the short term, by the money they’ll save. But environmentally conscious procedures are different. Implementing green practices in your supply chain can improve the quality and reliability of products, improve your operational productivity, cut costs via energy efficiency, and improve the overall performance of your products. Clearly, this offers rippling effects like less returns, easier fault diagnosis of those returns, and major cost savings down the line.

Manufacturing and transport are the biggest contributors to waste, pollution, ecological disruption, and depletion of resources. This means it’s the perfect focus for sustainability. With such great opportunities for improvement, choosing the “greenification” of your reverse logistics pathway could give you a huge competitive advantage – economically and socially – and help to improve your standing for the long term.

To learn more about optimizing your reverse logistics pathway, visit Blumberg Advisory Group. With years of experience working with OEMs, retailers, 3PSPs and more, Michael Blumberg is your best choice for comprehensive analysis and a strategic solution.

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