OEMs are beginning to see the strategic value of incentivized post-consumer trade-in and take-back programs, a reality that is feeding momentum for Reverse Supply Chain Management (RSCM). As recently as earlier this year, many leading OEMs didn't want to talk about these programs in terms of Corporate Social Responsibility (CSR). Many OEMs didn't want to invest in programs because they were satisfied with meeting the basic minimum requirements.
However, that's changing, and it's changing rapidly. I've experienced that change first hand in my role at Li Tong Group (LTG), which partners with OEMs to build back-end systems that support successful trade-in and take-back programs.
The key to the popularity of these programs among consumers is that they give credit for old devices that can be applied to new ones. If an OEM offers an incentivized program, owners of mobile phones that are about to become obsolete can trade their phone in for credit toward the new model.
This benefits the OEM in a couple of significant ways. First, it helps focus the consumer's attention on devices offered by that particular OEM rather than competitors. If a consumer can apply the value of the phone he's using today toward the phone he wants to use tomorrow he is far less likely to check out what other vendors are offerings.
Another major benefit is that an incentivized take-back program serves as a great way to prevent devices from being sold into the emerging markets that are strategically important for the OEM. Skillfully executed take-back programs help keep the devices out of the unofficial channels that often cannibalize the OEM's new products.
In the work we've done with OEMs to build and maintain quality trade-in programs, the popularity among consumers has been staggering. In fact, the volume is 10 to 20 times higher than that experienced by programs that do not offer an incentive.
The high volume is one of the reasons I think it's wise for OEMs to work with a reputable organization to develop the program that's best suited for their needs.
The OEMs that work with a partner don't have to worry about managing multiple vendors, countries, and regions. They can leverage a solution that's established and standardized across the globe. That means the results in Asia, Europe, North America, and elsewhere are the same.
Further, an organization focused on reverse supply chain can build the breadth and depth of engineering expertise that maximizes the value being extracted from technologies that are traded in by consumers. Further, an experienced service provider can offer the OEMs a range of services that supports their development pipeline. If a mobile phone company is innovating in the area of smart watches, for example, our engineering staff possesses the expertise required to ensure that the supply chain network for both areas are being managed as efficiently as possible.
Another major benefit of working with an organization built on engineering expertise is that the OEMs can assure their consumers that any and all data remaining on the devices they trade in is being disposed of completely and permanently.
Finally, the top tier reverse logistics have established an economy of scale. In addition to handling costly things that fulfill the basic requirements an experienced provider can offer the extras, like CSR and compliance at no extra cost.
That capability, along with the others, has helped transform Post-Consumer Recycling (PCR) from a headache for OEMs into a strategic imperative.