Waste Not, Want Not

Sustainability in the supply chain pays off
Apr 10, 2015 2:00 PM ET
Campaign: Thought Leadership

Ken Rankin | UPS

Now, more than ever, sustainable business practices underpin the efforts of global high-tech and electronics companies interested in bolstering their bottom lines and preparing for the future.

Indeed, one of the most important sustainability questions facing the high-tech industry today relates to product lifecycles and end-of-life product retirement. Often, traditional product lifecycle plans follow a point-A-to-point-B model in which companies make products, consumers use them, and the products enter waste streams.

Against this backdrop, sustainability has become a pillar of the so-called “circular economy,” which aims to minimize waste in the manufacturing process and throughout the lifecycle of consumer products.

This is a tall order, considering that relatively few electronics are recycled. Data from the United States and the European Union show that the vast majority of mobile phones at the end of their lives eventually end up in landfills or are unaccounted for.

That’s a lot of gadgets and a significant opportunity to improve the management of the product lifecycle. A 2014 market forecast from ABI Research predicts the number of wireless connected devices will reach 40.9 billion in 2020.

Clearly, waste in the high-tech lifecycle represents a formidable environmental challenge. It’s also a regrettable missed business opportunity, but it’s one that companies still can seize.

US high-tech manufacturers already enjoy robust trade in second-hand mobile devices and other consumer electronic equipment. In 2011, the US exported $1.5 billion worth of used electronic products for refurbishment or recycling.

As Toni Sacconaghi of research firm Sanford C. Bernstein told Forbes in a 2013 article: “…the used smartphone market is poised to explode.” Sacconaghi estimated at the time that the market would grow from 53 million to 257 million units by 2018.

A Look at the Numbers

One of the greatest barriers to fully realizing the vision of a circular economy is creating the right logistics networks to support it. UPS’s fourth annual edition of the Change in the (Supply) Chain survey explores how executives in the high-tech industry approach product lifecycle management.

The survey shows that, while 59% of high-tech companies see themselves as “market leaders” when it comes to product innovation, only 40% of the executives who responded said they saw themselves as market leaders in managing product retirement and end-of-life extension.

Only 34% classified themselves as market leaders in reverse logistics, which represents a significant opportunity for improvement and growth.

Driving Long-Term Value

Increasingly, the financial community is waking up to this reality as well. Wall Street heavyweights continue to add their names to a growing list of investment houses exploring sustainability in their investing strategies.

Morgan Stanley, for example, launched the MS Institute for Sustainable Investing late last year. Such innovative investment approaches are gaining appeal on Wall Street and beyond among investors who put a premium on sustainability.

These are the investors who believe good corporate sustainability practices can drive long-term value.

Establishing Customer Credibility

Another incentive for manufacturers to adhere to sound sustainability practices is that customers prefer it.

A 2013 Cone Communications/Echo Global CSR Study says consumers increasingly “want to be engaged in making change, and they’ll respond to corporate calls to actions — but only if they feel real impact will result. To rally their support, companies must clearly communicate impact and progress in a traditional mix of channels.”

This is especially true of consumers from the Millennial Generation, which comprises people born from the late 1980s to the early 2000s. Progress-minded manufacturers know this, and they are working harder to establish credibility with these consumers.

Honing Talent

Finally, companies — especially those in the high-tech manufacturing industry — know that in order to attract and retain top employee talent, they must demonstrate a commitment to sustainable business practices that ensure a better world for future generations.

A 2013 article from the Stanford Social Innovation Review titled “Honing talent through sustainability” says that “with top talent in short supply throughout much of the world and in most industries, employee attitudes about sustainable business practices are compelling more companies to take the issue seriously.”

There are many important reasons for high-tech companies and their partners to make sustainability a prominent and meaningful part of their business plans. Obviously, the potential efficiencies are irresistible, and it’s good business to capture them. But just as important, we know that investors, consumers, and employees increasingly demand it.

Simply put: the world is watching.


Ken Rankin is Director of Marketing for the High-tech segment at UPS.

This article first appeared on November 10, 2014 on EBN.