Why giving used gadgets ‘a new lease of life’ could be great for business
It’s been suggested that consumers’ apparent interest in sustainability does not necessarily lead to action. However, the growing market for refurbished and second-hand mobile phones would seem to say something different.
As consumer pressure to be ‘green’ increases, electronics firms are reviewing the advantages of recycling and remanufacturing. Supply chain decision-makers need to help them keep natural resources in circulation; they can also extend each product’s life in ways that maximise its value.
Here are four areas to think about to create a ‘greener’ supply chain, protecting your profits, your reputation and the planet.
1. What happens to unwanted electronic devices?
The recycling rate for consumer electronics is relatively low, with consumers generally keeping old products or throwing them away. Only around one-fifth of e-waste is recycled, despite the amount of discarded electronic and electrical products reaching 50 million tonnes. Meanwhile, the American electronics marketplace uSell says that 68% of respondents to its survey have kept old electronic devices for two years or more without using them.
Although uSell and other commenters blame ‘gadget hoarding’, the reasons for keeping products are probably more complex. One possible reason is fear over data security and the need for thorough data deletion after disposal. (Such services are available, although not always widely known about by consumers.) Other possible reasons are handing devices on to family members or keeping them ‘just in case’ – despite the speed of depreciation and the need for software updates to keep devices working efficiently.
Some consumers believe that certain items are simply too small to make recycling worthwhile. That’s far from true. It’s claimed that one ton of cellphones contains 80 times as much gold as you’d find in a goldmine. This represents a significant waste of precious – and reclaimable – resources.
E-waste can also contain toxic materials such as lead and mercury; these need to be disposed of properly but often end up in landfill. In addition, discarded devices are sometimes sent to developing countries that are not equipped to handle them.
2. Hope on the horizon: a growing ‘second-hand’ market
For many years, recycling and re-use was the reserve of a small minority, adopting a socially conscious lifestyle often outside of the mainstream. In recent years, the tide has started to turn. According to a 2018 report by Persistence Market Research, “there has been a significant rise in the adoption of used and refurbished mobile phones”.
When it comes to mobile phones, it’s clear how second-hand products could satisfy commercial demand. Product prices continue to rise, but second-hand devices offer a way to get desired features at a reduced cost. Persistence Market Research also points to ‘price-sensitive customers’ in emerging economies and a “growing .. dependence on gadgets” in developing regions.
It is difficult to obtain figures for the uptake of other secondhand devices, but sales of new mobile phones now outstrip those of laptops and PCs. Here, it seems there is less demand. Tablet sales have also declined for all makers except Apple and Huawei.
Most importantly for supply chain managers, the used/refurbished mobile phone market is described as ‘highly unorganised’. This means there could be plenty of challenges to contend with, but significant new opportunities. Some of the technology that could ease the burden is already in existence: Apple, for example, unveiled a robot that can disassemble iPhones, separate parts and retrieve certain components in 2018.
3. Sustainability by design
The consumer technology industry has previously been criticised for ‘planned obsolescence’, products with a limited life-span so that consumers will have to replace them. This is understandably unpopular with consumers, who object to being forced to spend more. The increasing threat to our planet is another reason to take a dim view of such practices.
Consumers are also more likely to trust recycled devices if they buy them from OEMs, which has encouraged some firms to take more of an interest in recycling and remanufacture. However, many sellers are still focussed on selling the latest products.
At Unipart, we work to help firms avoid the need for returns and repairs. For example, we can feed information from diagnostics on products back upstream, such as into product development, enabling firms to plan waste (and cost) reduction from the outset.
Want to know more about reverse logistics? Read our blog on Why returns spell success for the consumer technology industry.
Electronics firms are also realising that sustainability begins in the product development phase, and their influence can be far-reaching. In June 2019, Google announced its ‘Circular Google’ initiative: a commitment to reducing waste, including ‘designing out’ waste and pollutants.
‘Circular Google’ also includes remanufacturing as well as encouraging product re-use. Google already uses remanufactured machines and re-sells components it can’t use. Remanufacturing means rebuilding a product with new components, achieving the same quality as a new product. Interest is growing because, as the Conseil Européen de Remanufacture explains, “since remanufacturing preserves most of the physical product, it avoids using the energy associated with material extraction, refining, melting and manufacturing.” It can also use less energy than recycling.
However, there may be another developing threat to sustainability. The ‘Amazon Effect’ has lead to consumers getting used to short delivery times at low cost; this means a large-scale increase in last-mile delivery to individual homes. It’s possible that a similar effect could result from greater personalisation of electronics products. Recently, a new colour matching system was announced that could offer gadgets with customised colours in short lead times. Such personalisation is exciting for consumers and brands, but it could place renewed pressure on the supply chain – especially once adopted at scale. Equally, the resulting rise in individual deliveries could negatively offset the ‘green’ progress made by increased recycling, remanufacturing and re-use.
4. The role of the consumer
Although consumers seem to be open to the idea of recycling, there are two significant ways to affect their role in the process. One is to encourage them to take action; the second is to remove impediments. It has to be both possible and easy to recycle.
Indian start-up Recykal is one example of a company that is capitalising on the business potential of recycling. Recykal takes a technological approach, providing a variety of solutions to encourage sustainability. These include an app that helps partners “to run consumer awareness campaigns [and] custom take-back programs ..” and “a digital marketplace for instant trading of recyclables.” There is also a platform to help brands track their compliance targets.
Recykal works with major corporations including Walmart and Honda. It has already succeeded in diverting 26,000 metric tons of recyclables, including e-waste, away from landfill. This achievement is yet another signal to the supply chain industry that commitment and creativity in new areas could bear fruit. In India, waste management is described as ‘informal’ and lacking innovation, yet its worth is valued at £11 billion.
Why sustainable supply chains are the future
The pace of industrialisation in Asia and South America and the potential for blockchain use are two reasons for predicted growth in reverse logistics. Crucially, increasing understanding of this tool means a change in attitude – seeing it as a means to recover value, rather than simply transporting waste.
Alongside increased recycling, re-use and remanufacturing, reverse logistics points to a hunger to keep value in the chain of existing products. Fast, efficient returns – or avoiding returns at all – can combat the speed of depreciation in popular electronics products. Recycling and re-use mean less waste for the supply chain to deal with and a second life for precious resources. Remanufacturing prevents the waste of resources (including energy) spent in the original manufacture. Each activity is not just important for sustainability but can cut costs and protect profits for manufacturers and sellers.
Looking at sustainability also highlights a common theme: a lack of existing ‘sustainable’ infrastructure in parts of the supply chain. This is highlighted by activities such as sending dangerous materials to countries ill-equipped to handle them, and by the perceived lack of organisation in the secondhand mobile phone market. This presents new and interesting opportunities. Not only are there potential points to organise, streamline and improve but also untapped areas for growth.
A more sustainable outlook highlights the vital importance of an expertly run supply chain. As the trend for ‘greener’ practices takes hold (and not before time), firms are finding that it is possible to meet consumer demand. Not only that, but new thinking can lead to business gains – less waste, cost savings, greater efficiency and satisfied customers too.
Did you find this interesting? Read more articles like this on our Supply Chain Insights page.