OEMs Leverage Shorter Product Lifespans to Increase Bottom Lines

As the tech and telecomm industries continue to evolve, we are seeing a dramatic shift in the behavior of its primary consumers: Mobile Internet consumers are using more data than ever before. This increasing data usage has fueled consumer demand for faster speeds that, in turn, creates more demand for newer, faster devices. This shift in consumer behavior has shortened the lifespans of personal tech products and increased the speed of the telecoms network upgrade cycle.

On average, the typical lifespan of a mobile device can vary between three to five years. Consumers, however, choose to change or upgrade their products after using them for a year and a half, even if the devices are still highly functional. This has led to a significant increase in product trade-ins and aftermarket refurbishment/third party refurbishing businesses. 

Leveraging Shorter Product Lifecycles Through RSCM

Just five years ago, a product that had finished its lifespan automatically became waste. That was a liability for OEMs as they are partially responsible for recycling their own products due to corporate social responsibility (CSR) initiatives and other environmental regulations. Today, OEMs see opportunity: Instead of letting second-hand products flood the market and cannibalize their primary market, OEMs are using a process called closed-loop reverse supply chain management (RSCM) to leverage the shortened product lifespan and build long-standing relationships with customers, improve sustainability and increase bottom lines.  

As the reverse supply chain manager for the world's largest tech OEMs, LTG manages every aspect of the reverse logistics process for its clients, starting with a product's point of return from the end user, such as take-back or trade-in programs for unwanted devices, to the re-manufacturing and re-deployment of components. Trade-in platforms are becoming more common and effective. The program LTG manages on behalf of Microsoft in Hong Kong, for example, allows consumers to easily apply the value of their old technology toward new purchases at Microsoft's online store. 

LTG has more than 20 facilities around the globe that specialize in the process of removing products like phones, laptops, and televisions from the market and repurposing the components into next-generation devices and other products in a smarter, more environmentally friendly way.  Known as closed-loop reverse supply chain management, the process gives parts and components a second life by removing them from devices that have been discarded and then using them in devices that are being manufactured. Applying reverse logistics processes dramatically increases the value of obsolete devices for OEMs while at the same time, significantly reduces the volume of components being discarded or returned to their raw material state.  Here's the basics of the process:

Main Stages of the Product Lifecycle in the Reverse Supply Chain

  1. Consumer Take-back and Trade-in Programs: The first stage in the RSCM process is to develop effective methods for taking products back from consumers. OEMs are launching their own take-back and trade-in services to promote new product sales and also boost their CSR image.
  2. Reverse Logistics: This stageoptimizes and increases the efficiency of aftermarket processes for a device, such as pick-up, collection, transportation, and warehousing.  
  3. Data Sanitization: At this stage of the reverse supply chain the erasure, degaussing and physical destruction of data occur both onsite and offsite. Removing data safely and securely is a critical stage in the RSCM process that protects the product's primary user's privacy and data-security.
  4. Testing/Refurbishing: Throughout this stage, components are tested to determine their value for harvesting and repaired, if necessary, for use in the remanufacturing process.  
  5. Parts harvesting and Repurposing : For LTG, the most important stage is parts harvesting and enabling component-level reuse and repurposing. This requires high level of product knowledge and technical sophistication; once achieved, it can significantly prolong the lifecycle of the BOM (bill of materials) of the device and allow maximum reduction of the overall carbon footprint.
  6. Remarketing and Resell: In this stage,OEMs bring refurbished and new devices built with harvested components back to market, or the harvested components are repurposed for alternative application (i.e. using the LCD module harvested from a tablet to make the touch panel control of a home entertainment system.)
  7. Recycling and Reclamation: The final stage returns those components and devices to their raw material state, only if they cannot be repurposed or reused in the previous steps of the reverse lifecycle.

One of the main challenges for OEMs is to enable the same standardized service around the globe. Since OEMs' markets are global, they need to ensure the products moving through the reverse supply chain are handled and treated according to the same standards, while also complying with local laws and regulations. One of the best ways to achieve both goals is to engage with a RSCM service provider that has global coverage and facilities that maintain the same service standard for quality, security and compliance to the extent that both platform development and management capability are as strong as its technical processing capability worldwide.

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