October 13, 2009
green logistics | Recycling: Waste to Gold

"Waste to gold" programs get greener

"Waste to gold" programs get greener

In the past, companies formulated their recycling strategies with more thought to cost than to environmental impact. That's starting to change.

By Mark B. Solomon

Is it possible to help the environment just by watching television?

Maybe, if it's a set that's gained a new lease on life through the efforts of ModusLink PTS Aftermarket. The company, a subsidiary of Waltham, Mass.-based global supply chain management firm ModusLink Global Solutions Inc., takes ownership of television sets whose screens are so badly damaged that repairing them would be cost-prohibitive. The company removes circuit boards and other usable parts and transplants them into other defective sets that have intact screens. The rest of the original set is then broken down into glass, plastic, and metal and sent to recycling plants that meet the ISO 14001 international standards for environmental management.

The process not only extends the service life of hundreds of TVs, but also reduces the number of defective sets that end up being shipped to landfills, says Joe King, ModusLink's vice president, sales and marketing.

The ModusLink program is just a small part of a sea change taking place in the supply chain management world. For the first time, companies are getting serious about the environmental implications of their recycling efforts—and with good reason. The right program can yield greater efficiencies, improved profitability, and the goodwill that comes with being seen as a good corporate citizen. The wrong approach can lead to higher costs, reduced productivity, increased legal exposure, and a tarnished image that takes years to overcome.

There could be a significant payoff for doing recycling right. According to ABI Research, more than 100 million older phone handsets worldwide will be recycled for reuse by 2012, generating about $3 billion in revenue. In the United States, only 18 percent of the estimated 2.25 million tons of old electronic products—cell phones, TVs, and computer equipment—were recycled in 2007, the latest year for which data were available from the Environmental Protection Agency. The rest were disposed of, mostly in landfills, the EPA says.

By moving reusable parts into the recycling process at the proper time, companies can reclaim base metals and other components that can then be used for repair and refurbishment. This saves on the cost of buying new parts and is also good environmental practice, experts say. "Overall lower inventories decrease the impact of warehouse energy use and emissions, and bring back some value through reclamation of usable materials," consultants Kevin Steele and Emily Rodriguez wrote in an article that appeared in Reverse Logistics magazine in the summer of 2008.

ModusLink says it maintains a parts bank that customers can access to procure electronically refurbished boards. The idea, according to King, is to create an economic incentive to repair and refurbish rather than having to decide between buying new parts or disposing of the product altogether. King says the parts bank can help extend a product's service life by up to six months, which keeps product out of landfills during that period.

Stay in control
Many businesses are likely to find green recycling a foreign concept. In the past, companies often outsourced their recycling programs with little consideration of their environmental impact and with scant oversight of their vendors. However, as industry becomes more environmentally conscious, green considerations are moving front and center in recycling strategies. And while companies still rely heavily on third parties to manage their recycling, the global nature of inventory-reuse initiatives will likely mean the advent of tighter vendor controls.

Web networking giant Cisco Systems Inc. manages at least two tiers of audits, with Cisco auditing its suppliers, who, in turn, audit their vendors. In some instances, the audit is drilled down to a third level, with the supplier's supplier auditing its vendors. The increased vendor scrutiny is critical to ensuring Cisco's recycling procedures are being followed even when material ends up in emerging markets that may lack robust recycling solutions, says Bob Anderson, Cisco's global operations and value recovery manager, customer operations.

"Our largest challenge is closing the loop with second or third owners to help them take ownership of the process," Anderson says. To those who cannot, Cisco offers a "takeback" program, where it directly accepts returns and pays for their shipping. Anderson says the program has been successfully rolled out in Europe and is gaining popularity in the United States.

For Cisco and others, data control is paramount. "Our advice to companies is to outsource the process but keep control of the data," says Warren Sumner, general manager, enterprise software group for Take Supply Chain (formerly ClearOrbit Corp.), a company that develops software to optimize the handling of recyclables. "Your data are your eyes and ears. You can't outsource the process and the data."

Sumner says predicting product failures and forecasting parts needs can be difficult, as is determining whether products should be recycled for reuse or disposal. Many companies, by default, direct all products to a third-party service provider for handling. But that may not be the most cost-effective use of the inventory, says Sumner. Nor is it likely to be the greenest alternative, he says. As Sumner explains, the third-party route can lead to higher greenhouse gas emissions because it increases the potential for double handling of parts from the third party to a warehouse. Intuitive software programs can be invaluable in helping companies improve their forecasting and in painting an accurate picture of how goods should be disposed of, he adds.

Different strokes
Green recycling takes different forms. Furniture retailer Rooms To Go, whose recycling initiatives were reported in these pages late last year ("from trash to cash," November 2008), has expanded its program to cover most of its 100 stores as well as its distribution centers. John Zapata, the company's senior vice president of distribution, says employees at each store sort the recyclables and place them in an enclosed shed. There, they are picked up by one of the company's trucks and transported to the closest distribution center, where they are then added to the overall waste stream. As much as 98 percent of each store's refuse is recyclable, Zapata says.

Zapata says Rooms To Go has halved its stores' hauling expense by eliminating the need for trash containers and for once- or twice-weekly pickups by the municipal refuse companies in each city. In addition, Rooms To Go has cut by at least half the amount of trash its stores were dumping in landfills, and reduced carbon emissions by reducing unnecessary trash pickups, he says. The runs by Rooms To Go's own drivers are considered carbon-neutral, Zapata says, because the trucks have to make the trips between the stores and DCs anyway. The only capital expenditure was a $950 per-store cost for each metal shed, he says.

Then there's the tried-and-true strategy of appealing to the basic human desire for material possessions. Less-than-truckload carrier Averitt Express, which operates 100 terminals nationwide, held a three-month contest from November 2008 to January 2009 to reward employees whose terminals reduced their level of consumption of water, paper, motor fuel, and electricity over the same period a year ago. Employees from each terminal that met the objective were eligible to win a 2008 Mercedes-Benz hybrid vehicle, with the second prize being 10 gasoline gift cards each valued at $500.

And the results? Brad Brown, Averitt's marketing and communications leader, says, "Any investments we made in incentives were paid for many times over, not only in hard cost savings over the three-month program but also in increased awareness internally about the need to eliminate waste."

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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