Global environmental regulations are continuing to put pressure on electronics OEMs to plan for their products' end-of-life. The collection, recycling, and disposal of electronics goods represents a lucrative opportunity for companies that are willing to manage these responsibilities on a global scale.
To date, the world's largest electronics distributors -- Arrow Electronics Inc. (NYSE: ARW) and Avnet Inc. (NYSE: AVT) -- have stepped up to the plate. In 2010, Arrow Electronics began investing in the after-market through the acquisitions of Converge and Verical Inc. In 2011, it launched three brands of after-market service companies: Converge, ReSolve, and Intechra; collectively focusing on both IT asset disposition and electronics components. Arrow company executives shared the potential of the electronics after-market with analysts today during its annual Investor Day. To say it is a multibillion-dollar opportunity still falls short.
IDC analyst Joseph Pucciarelli provided a backdrop for Arrow's after-market business. According to IDC, the IT asset disposition (ITAD) market is made up of three main segments: lifecycle disposition services, IT used equipment, and recycling. Lifecycle disposition's value is estimated at $3.7 billion; used equipment, $298 billion; and recycling, $13 billion. Arrow sees a $24 billion addressable market in which it believes it can leverage its core distribution assets.
Through acquisition, Arrow already has eight locations in the US for the processing of equipment and six in Europe. In addition to these, Arrow has sales locations in many local markets through its Enterprise Computing Services (ECS) division. With minimal incremental investment, Arrow was able to leverage an ECS location in France to also provide after-market services, executives said.
Handling physical equipment is only a small part of the demand Arrow is seeing in this business, according to Ernie Keith, Arrow's vice president for global operations and services. Before any type of computing equipment can be resold into the market, Keith said during Arrow's live Webcast, data has to be wiped clean from the system. This time-consuming and labor-intensive process is something OEMs and resellers are anxious to outsource. Arrow's ability to collect, consolidate, and process this equipment is a considerable value proposition for OEMs, executives said. Additionally, since this is a service -- rather than a hardware sale -- it is a highly profitable opportunity for the distributor.
Arrow ECS already resells equipment from brands such as HP, IBM, and EMC, and lifecycle management is becoming an increasing part of manufacturers' concerns. "OEMs are always looking to return a functional product to the market or to harvest valuable parts," Keith says. "The centerpiece of our [after-market] effort is to bring both trust and quality to the partnership. If we can't recycle usable equipment, then we do everything we can to ensure that anything leftover that makes it into the ground is 100 percent compliant with environmental regulations."
Arrow estimates it has already kept about 50,000 tons of e-waste out of landfills.
Hi Ashish: It's a good idea, but I don't think distrbutors will get involved. Rather, waste disposal companies could create a reverese logistics business where they remove stuff from landfills and send it back for recycling. For distrbution, it would be good PR, just not with their target customers.
Readers pointed out that iit is not just developing nations that are in the market for refurbed products.I completely agree. Among the types of IT equipment mentioned by Arrow execs are display models of equipment and demo models that can be resold. Another interesting point: in many consumer goods, if the cellophane that wraps the product is broken, that is the point where it is considered used. Even though it might be sold as 'refurbed' it is brand-new equipment. Schools are one customer base I can think of that would benefit from discounted, 'used' equipment.
This is wonderful concept. It is very effective and it works very well in developing country. This is also helpful to environment and it generates good employment.
Its good to see that Arrow is planning a Great part in protecting the environment(by Keeping 50000 Tons of E-waste out of landfills).
But what are they doing withe E-Waste that is already in Landfills today?
Can they not colloborate with some of the Biggest States (like California,New York,etc) who are desperate to raise revenue by any means possible;to arrange for proper/safer collection of Discarded E-Waste that can then be sorted and integrated back into the Arrow Supply Chain?
Are there any other companies doing this today?
I remember reading somewhere that the Two countries that recycle most of the Waste that goes into their landfills are India ,Singapore,Germany and the UK.The US fell somewhere close to the bottom on this metric because its blessed with plenty of space(for landfills).
@nimantha: I think the answer is use it with the old technology. There is still a fairly robust market for used and refurbed equipment. I hesitate to describe this market as "developing nations," but my impression is that there are regions in the world where the latest technology is not affordable or even necessary. If companies not only supply refurbed equipment but also support it (and that is key) I think there's a lot of life yet in so-called "obsolete" IT.
Yes recycling is a good option but there are limitation in old technology and some items are not even compatible to merge with the new technology. So how to address such a scenario ?
I agree that OEMs are skeptical about asset reclamation and they should be. The reason I believe that distrbution can play a role here is they have "skin in the game." Distributors resell branded products and it is in their best interests to preserve the brand. If they re-introduce shoddy or non-functioning products back into the marekt, it harms the distributor and the supplier. The supplier could "fire" the distributor. So it is in distrbutors' best interest to make sure something works and if it doesn't, make sure it is destoryed in a responsible manner.
Those who do this recycling of e-waste can aslo find that 50% of the e-waste can be put to use after data clean up and sprucing up the products for with minor repair to be sold to the third world market at prices much lower than the prices of the stae of art products.
Many of the e-waste is generated from the products which are fully functional but are termed obsolete because of the onsalught of the more advanced products. Like all those mobile phones without touch pad are termed obsolete , or all those CRT TVs have become obsolete because of on salught of cheap LCD TVs and so on.
The world wide distributors like Arrow and Avnet should definitely see this angle of the recycling business.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
To save this item to your list of favorite EBN content so you can find it later in your Profile page, click the "Save It" button next to the item.
If you found this interesting or useful, please use the links to the services below to share it with other readers. You will need a free account with each service to share an item via that service.
Tweet This