eWaste: Is Recycling a Value-add EMS?

Electronics manufacturers differentiate themselves in the marketplace and for contract customers with value-added services, traditionally design, final assembly and ship, or quality testing. As end of life (EOL) management gains importance — poor EOL control takes on a specter similar to that of an in-field recall — EMS providers and OEMs are considering recycling and environmental programs when signing contracts.

Ted Gardham, director, sales and business development for EMS provider Elcoteq, notes a 10× increase in OEM interest in electronics recycling. “This will spike coming out of the recession, as environmental programs will meet government and consumer demand,” he adds. A recent survey of manufacturers by the Society of Manufacturing Engineers (SME) reveals that nearly 20% have been asked to provide “environmental footprint” information to their OEM. As far as end markets go, Celestica’s Mike Andrade, senior VP and GM, North America, notes that while consumer demand/awareness and non-government organizations (NGO) pressure has led consumer electronics manufacturers to be the first companies heavily focused on green, other electronics companies such as those in the server, storage, and communications space are quickly catching up. Regional differences are also prominent. For European OEMs in particular, electronics recycling is an expected service, not necessarily a value-add. Therefore, the quality of your recycling program is evaluated against peers’. Elcoteq partners with Li Tong, a recycling company based in Hong Kong. I’ll cover the various recycling models, and what to look for when partnering with a dedicated recycler, in next week’s segment.

For an EMS provider managing the EOL process, traceability on the back end mirrors the look of a front-end supply chain. Customers are demanding this level of visibility to avoid damaging PR after botched recycling jobs and also to closely monitor costs and resources. The damage poor disposal does to a brand is yet to be fully understood, but the EMS providers I spoke with all saw it as comparable to a product recall: bad press, negative brand recognition, and a destroyed EMS/OEM relationship. Kimball Electronics pays special attention to the recycling of cathode ray tubes (CRTs) due to the high lead content, and cold cathode fluorescent tubes used in LCD displays. Celestica also focuses on data protection when products they manufactured enter the waste stream.

“A recycling strategy is not a stand-alone,” notes Andrade of Celestica. Design for the environment (DfE), modular products that can be upgraded rather than replaced, use of less toxic materials in product build, and limiting the transport involved in the supply chain are all environmental initiatives that should be promoted along with EOL disposal. An environmental management service was a “natural outgrowth of RoHS” for Celestica. The knowledge that EMS providers have built up through lean initiatives is easily transferable to environmental programs, such as eliminating waste (this time, carbon or energy waste) in operations. “A lot of suppliers need to understand that implementing lean to green practices can also help with the bottom line by eliminating waste,” says Mark C. Tomlinson, executive director and general manager of SME. The Society runs the Lean to Green Manufacturing Conference, September 28 to 30 in Austin, TX.

Reduce, re-use, recycle programs are consistently cited by OEMs as a service either expected or desired from their contract electronics manufacturing partners. Environmental initiatives are on many OEMs’ roadmaps, though it will not become a buying criterion for a few more years, Andrade says. “It’s clear that being a green manufacturer will be the entrance fee for suppliers in the years to come,” agrees Tomlinson, SME. Since OEMs face internal and outside pressure to implement green initiatives, they are turning to those partners with a demonstrable skill at managing supply chains, tracing multiple products through multiple use stages, and controlling costs. In many ways, the supply chain overhaul that started with RoHS ideally prepared EMS providers to take this next step and add EOL to their offerings. Once you have a sound, functional system in place, be sure to promote your program and the benefits it can provide for the customer. If you are competing in a market where the other EMS providers also have green programs, note the differentiators in your system, whether that be global reach, monetary returns, data protection, etc. Avoid “green washing,” where the client doesn’t get any tangible data on the benefits of your environmental program.

In the next segment of this eWaste series, I’ll look at different electronics recycling business models and the reverse supply chains involved. Finally, we’ll examine the environmental program one OEM implemented, and how they involved the internal workforce in shaping their green initiatives.

Meredith Courtemanche, managing editor

Miss the first post? Read it here: eWaste: Turning the EOL Burden into Profitable Revenue Streams

eWaste: Turning the EOL Burden into Profitable Revenue Streams

What does a garden pot have to do with your electronics assembly operations? In fact, you may have manufactured it, or parts of it. This pot, created by TerraCycle Inc., is a composite of 100% electronics waste (e-waste) like circuit boards and computer parts. Directives like RoHS and WEEE were implemented with the idea that less-toxic electronics would be more easily recycled into the consumer and industrial cultures. Recyclable electronics are the focus of many new product introductions (NPIs), primarily in the consumer electronics segment.

In several upcoming segments, I’ll explore the OEM demand for end of life (EOL) management, how suppliers are meeting this demand, what the “reverse supply chain” looks like, pitfalls of bad recycling strategies, and different electronics recycling business models, with the help of top EMS providers like Elcoteq and Celestica, electronics recyclers like Li Tong, and others involved in this growing industry. Let’s start with top 10 do’s and don’ts of electronics recycling, provided by Pamela J. Gordon, president, Technology Forecasters Inc. and TFI Environment. Pam contributes regularly to TFI’s blog, which often has an environment-conscious take on electronics manufacturing. Here are her Do’s and Don’ts for electronics recycling.

EOL Do
1. Before you even think about recycling, design solutions for your customers with minimal hardware — substantially (e.g., 50%+ by weight) or even completely (e.g., software on existing hardware platforms) reduce hardware. After all, your customers are buying “hardware,” they’re buying a means to meet their needs. (The EMS providers interviewed for this series on eWaste agree — the first step in EOL management is designing for it.)

2. “Postpone recycling” by designing products and your business model for reuse. Your products can live useful lives again and again with upgrades (especially via net-based software) and efficient refurbishing. Consider a leasing model.

3. Collect products that your customers are no longer using, and mine them for hard-to-find and/or valuable parts for refurbished units. Reap hundreds of thousands or millions of dollars savings. (Look for more on this Do in our recycling models segment.)

4. Design your products also for high-value recycling. Train engineers in design-for-environment (DfE) principles, including easy-to-disassemble modules for reuse and materials that are worth something.

5. Minimize the cost and environmental burden of product collection; design “reverse logistics” according to minimal distance traveled and lowest carbon emissions.

EOL Don’t
1. Don’t assume that the photos you’ve seen of unsafe “casual” recycling in under-regulated regions are exaggerated; this practice really is as bad for human and environmental health as it looks.

2. Don’t use a recycler that does not offer proof of where and how your products were recycled; the product has your name on it and publicity is given to brands whose companies irresponsibly recycle products. (Those interviewed all agree — no matter who is at fault, when photos show up of dumped electronics, only your brand is visible.)

3. Don’t wait until the end of your product’s design/manufacturing cycle before creating a reverse-logistics and recycling plan; design products for high-value recycling. (This is where the expertise of EMS providers can really make a difference, as they have done this before.)

4. Don’t think that no one wants products at the end of their first use; second- and third-hand sales are multimillion-dollar businesses for someone; it may as well be for your company than a broker.

5. Don’t choose a recycler that outsources the recycling to some unknown-to-you entity. See the first “don’t” above.

In coming weeks, you’ll see more interviews, with information on allocating resources to provide recycling as a service, how to promote this service with clients, how to select a recycling partner or run the program in-house, and the impact of EOL management.

Meredith Courtemanche, managing editor