The Case for Outsourcing Asset Recovery

For manufacturers, extracting value from used electronics, whether that entails reselling, repairing, or recycling items in consumer or business-to-business markets, is not one of their core competencies. Many companies are coming to the conclusion that there's only so much they can do internally to address the challenge of asset recovery. In these instances, it may be best to seek an outside expert to peform key processes related to asset recovery.

The logistics of these operations can be quite complex, and a third-party logistics service provider (3PL) offers deep logistics expertise and freight networks that are specifically geared to asset recovery processes. Operational complexity extends to the types of activities that make up a recovery service, such as repairing electronic devices. A 3PL that provides asset recovery services can partner with external specialists to carry out this work as needed.

Moreover, an independent logistics specialist is likely to develop a more efficient and cost-effective supply chain solution than, say, a contract manufacturer. That's because the latter often require product to be returned only to their facilities, even when it may be less costly and speedier to set up receiving centers in other locations.

One important concern that often tips the decision toward outsourcing is that of objectivity. Large contract manufacturers, which tend to operate on extremely thin margins and are geared toward maximizing output, might not be the best parties to identify quality issues in the production phase. Nor are they necessarily the ideal judges of where a defective item should be repaired. A 3PL rarely has a stake in the product itself. As a result, they most likely will have a higher level of objectivity when it comes to making decisions and addressing issues.

At the end of the day, the insource vs. outsource debate, always seems to circle back to one important factor: the need for process integration. There's no lack of qualified service providers in discrete areas such as transportation, warehousing, and product configuration. The trick lies in bringing all of those pieces together, to fashion a smoothly running supply chain in both directions. In all cases, the manufacturer and distributor are seeking to minimize inventories, which tend to build up wherever multiple, disaggregated partners are involved. At the same time, they're determined to maintain a high level of customer service – which, after all, is the primary rationale for an effective reverse supply chain.

Once achieved, this process integration helps all parties involved gain a greater understanding of the role this optimization of assets plays in a circular economy. The circular economy concept has been gaining a lot of momentum in recent years and promises to significantly change the way we look at product lifecycles and resources. Rather than today's linear economic model of “take, make, dispose,” the circular economy seeks to rebuild capital by offering a restorative and regenerative model that promotes designing out wastes, building resilience through diversity and utilizing renewable sources. 

As the growth of the circular economic model, along with regulatory, environmental, and economic factors, brings reverse logistics to the forefront, it becomes even more vital that this essential link in the chain be handled by an expert who can oversee the entire process. Whether that party resides inside or outside the company will depend on a host of factors that are unique to each manufacturer. But one thing seems certain: by paying proper attention to asset recovery and reverse logistics, high-tech and electronics companies can better cope with issues such as growing customer expectations, shrinking product lifecycles, intensifying cost pressures, regulatory compliance, and heightened environmental awareness.

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