In the world of electronics and high-tech products, the days of “segmented thinking” are over. Now manufacturers are recognizing that to maximize a product's worth, they have to adopt an end-to-end approach that focuses on a product's lifetime value. This means first, treating each individual item as an asset, and second, identifying and leveraging opportunities to generate revenue throughout a product's existence.
Asset recovery is becoming increasingly important as a way to maximize the lifetime value of electronics and other high-tech products—not just for obsolete or end-of-life items, but also for any product, part, component, or material that is no longer wanted by the customer. There are a number of ways to do this, including repairing damaged products, refurbishing/upgrading out-of-date items for resale or redeployment, and recycling discarded or unusable products to extract value from the materials used in manufacturing them.
The opportunities to capture more revenue from high-tech products are rapidly growing. One reason is that product life cycles are getting shorter, and both consumers and businesses acquire new products and discard the old at a faster rate than in the past. Another is that the sharp rise of e-commerce is fueling the growth of product returns. In a Consumer Electronics Association study of product returns, around 22% of adult online shoppers in the U.S. reported that they had returned some type of consumer electronic device or accessory in 2014. About half of these returns resulted in an exchange for the same product or brand.
Paths to recovery
How can companies extract the greatest value from returned items? One option is to screen them for faults, and then repair and/or resell them where possible. Another way is to recycle old devices—a product stream known as e-waste.
Companies can also recover business-grade products and equipment, such as network infrastructure, when buyers upgrade to newer technology. These can be sold in business markets, to smaller businesses, or in some overseas markets where having the “latest and greatest” equipment is not a priority.
But extracting monetary value from used high-tech products is not the only incentive for developing efficient recovery processes. In the case of e-waste, for example, scrapped electronics contain precious materials such as rare earth metals and minerals that are in short supply and are subject to price volatility.
Solutions for complex challenges
Recovering the value of high-tech assets is by no means straightforward. The reverse supply chains for these products are highly complex. Companies must be able to assess the value of a diverse portfolio of products that arrive damaged, faulty, or obsolete. Each type of product—whether it is destined for resale, redeployment, or recycling—requires a specific set of logistics processes. There are bureaucratic complexities to deal with as well; complying with the terms of various warranty agreements, for instance.
There are challenges, but there also are solutions. Allowing for end-of-life issues in product designs is one approach. Making products easier to disassemble, for example, would streamline the recovery process. Manufacturers could also make returns services or exchange opportunities for end-of-life items part of their product offerings. High-tech companies also have the option of outsourcing the management of their reverse supply chains to third-party logistics providers (3PLs).
In the second blog post in this three-part series, we will look at how to effectively manage asset recovery, including the basic elements of this critical activity and best practices.