Thinking in reverse - Transportation Series; electronics recycling

Recycling Today, Oct, 2003 by Anthony Coia

What to do with obsolete electronic equipment has grown as an issue as Americans continue to show an endless desire to use these devices at home and at work.

The answer for both organizations and individuals is increasingly to recycle the equipment in order to salvage parts or materials. An important part of the recycling process is the movement of these finished goods from the point of disposal through the recycling channels--a process known as reverse logistics.

Shippers can reduce their costs by developing a greater understanding of logistics and how it relates to recycling.

GETTING IN THE LOOP. Forward logistics is a value-adding process in which manufactured goods move from the point of production to the end user, and the cost is passed onto the consumer. However, companies often view reverse logistics as strictly an unallocated expense.

This perspective inhibits the user from seeing the broader picture and perhaps taking advantage of efficiencies in transportation, warehousing and other aspects of logistics, say some observers.

Among the goals of the parties involved in recycling computers, cell phones, televisions and other equipment that makes up the electronic scrap stream is to make their logistics systems as efficient is possible.

One challenge to reverse logistics in electronics is a shortage of shredding centers, which tends to raise transportation costs. Another is a cost allocation issue common to recyclers in other industries; although the value is different, it will likely cost the same amount to ship different obsolete electronics items whether they are destined for a remarketing center or to a shredding center.

ASSIGNING ROLES. Some electronics recycling companies also act as middle managers in the reverse logistics process. One such recycler is Reclamere Inc., based in Tyrone, Pa. The company specializes in providing a variety of end-of-life services for electronic equipment, such as computers, network infrastructure gear and telecommunications equipment, for medium-sized companies. Says Vice President of Technology and Logistics Angie Keating, "Mid-tier companies usually do not have loading docks, packaging materials or staff to handle recycling themselves. This is a labor-intensive process."

Reclamere provides services related to many parts of the recycling chain, including valuing old equipment for potential recycling; making detailed inventory lists; storage and redeployment; and refurbishing and resale.

A typical scenario involves Reclamere sending staff to an office to pack up and remove equipment. Keating says that one of the main logistics challenges for Reclamere is the cost of transportation. "In rural Pennsylvania, the freight lanes are not the best. Another challenge is the bulkiness of the equipment," she continues. "Computers are odd shaped when it comes to stacking. [Another challenge] is the less organized storage of our customers that we encounter, which complicates the process. Hospitals, banks or other organizations do not always have warehouses for storage of used equipment," she says.

Understanding the nuts and bolts of logistics can help all parties involved in recycling improve their efficiency levels. Bob Glavin, president and CEO of United Recycling Services Inc., an electronics recycler based in West Chicago, III., says that with less than truckload (LTL) shipments, the cost of freight is a factor. "The customer always pays freight," he notes. "Those with less volume may hold their goods in order to consolidate them with other shippers' freight. They know that they can get better rates this way, but a lot of customers do not want to hold their goods. If they have five pallets now and in two months would have 5-1/2 pallets, they do not see the point of waiting," he says.

In addition to transportation, warehousing is one of United Recycling's services that may also be an important consideration for shippers. For example, a major retailer can send its shipments to United Recycling, which would accumulate them and process them once per month or once per quarter, says Glavin.

For some customers, these services include parts harvesting, in which United Recycling will remove a CD-ROM or Pentium chip, and also rebuild and repackage the equipment. Glavin says that his main logistics challenges are warehousing, packaging, parts removal and managing inventory. "Inventory control is the single most complex aspect. We must keep a sophisticated inventory management system," he says.

Keating says there is an education process associated with electronics recycling and that it is part of Reclamere's job to make customers aware of the steps involved. "Most shippers do not grasp the concept of reverse logistics sufficiently. The people in charge are often IT (information technology) professionals who have no experience with shipping or materials managers. Even materials managers (who deal with logistics) tend to view used computers as a commodity without considering the shipping requirements of different components," she says.