Every year, 1.5 million old, but working, computers are disposed of in landfill sites. Now, an impending EU directive could mean these and other discarded equipment enjoy a more useful future.

Here in the UK, the Waste Electrical and Electronic Equipment (WEEE) directive comes into force in August this year. Under WEEE, manufacturers will be obliged to manage and pay for the collection and disposal of goods they sell, free of charge to the consumer. Current legislation requires that collection, treatment and financing systems should be in place by September 2005.

In essence, WEEE aims to bar the dumping of any electrical and electronic devices in landfill sites, enforcing the recycling of parts from PCs, printers, keyboards and monitors. Its ultimate objective, alongside the Restriction of Hazardous Substances (ROHS) Directives, is to set collection, recycling and recovery targets for all types of electrical products.

Although the general UK framework has been agreed for WEEE, namely that the producer has ultimate responsibility for disposing of waste, the finer details have yet to be fully defined. With industry and government attempting to come to an agreement on a number of issues, including who pays for ‘orphaned’ and historical waste, consultations are still ongoing.

Shaping up
Ultimately, WEEE aims to improve the environmental performance of all operators involved in the life cycle of electrical and electronic equipment, and to encourage end-of-life management, eco-design and extended producer responsibility. WEEE defines a ‘producer’ as any organisation that manufacturers or resells branded product, or imports or exports product.

So what is the likely impact of this legislation? The WEEE Directive obliges
vendors and manufacturers to take back obsolete equipment on a one-for-one basis. With large corporates upgrading IT systems every three years, there will be an anticipated 315 million obsolete computers worldwide by 2004. With end users becoming responsible for the disposal of waste that vendors will not take back, corporates will either have to obtain a waste management licence or find a licensed disposal company. ‘It’s going to be an administrative headache for companies,’ warns Gartner analyst Meike Escherich. ‘The DTI will levy heft fines on businesses that fail to comply.’

So how is the industry responding to this significant opportunity? Environmental regulations are a huge product lifecycle management (PLM) problem for high-tech manufacturers. Research by analysts AMR confirms that whilst most manufacturers acknowledge that WEEE will impact business processes, only a minority have begun to collect the data required for WEEE compliance from supply chain partners and most lack the functionality or systems to manage and use this data appropriately.

Ultimately, manufacturers will need to track product data from design through to end-of-life, incorporating engineering, sourcing, supply chain management, service, aftermarket and international trade updates to support WEEE requirements. There may also be a necessity to provide rebates to suppliers for goods returned.

Support for this whole process will have to come from supply chain vendors, third-party logistics companies and managed service suppliers. For products with long lifecycles, manufacturers will need to track repair and upgrade histories to support regulatory guidelines and proper end-of-life processing. Equipment upgrades will make component and module suppliers directly responsible under the guidelines. Currently, most service lifecycle or order management systems are incapable of tracking this information.

Falling short
Most manufacturers lack a master product database to support WEEE compliance reporting and many are still not undertaking the necessary planning and prioritisation on products in design phase today, which will be subject to the new processes by 2005. For companies manufacturing consumer products, product recovery and disassembly costs are a significant issue and the whole area of reverse logistics presents a major challenge for all manufacturers.

Even more astounding is the apparent inertia that is endemic across the industry; AMR analyst Nigel Montgomery confirms that few supply chain vendors have grasped the concept of how the WEEE initiative can actually give them an advantage over competitors. It’s an opinion supported by Julian Mosquera, director of LCP Consulting.

‘The lack of awareness and preparation across the industry is truly startling,’ he says. ‘It’s naive to believe that lack of definition on the finer points of the legislation justifies holding off from developing solutions now,’ he continues. ‘Forward-thinking manufacturers are already working with supply chain partners, reverse logistics and disposal experts to identify means to consolidate volumes and recover value through reclamation and spares recycling.’

Some progressive manufacturers are already making steps forward in this area. The European Recycling Platform (ERP) created by Braun, Electrolux, HP and Sony has already announced plans to operate a pan-European compliance scheme for the recycling of electrical and electronic equipment. By pooling volumes and procuring recycling services at a European level, these four companies expect to reduce annual recycling costs by millions of euros.

The ERP has defined its mission as ensuring cost-effective implementation of the WEEE directive through innovative waste management strategies, including the creation of a common logistics interface to ensure that competitive take-back schemes can operate. ‘We wish to ensure that take-back services and waste collection become as efficient as possible in the interests of consumers, the environment and industry,’ says Hans Korfmacher of Braun, chairman of the ERP.

Commercial necessity
‘There is now a commercial necessity for manufacturers to incorporate an end-of-life strategy into every aspect of corporate planning, from product design through to service and decommissioning,’ says Julian Mosquera. ‘If managed correctly, this can be a source of increased revenue, better margins and improved customer satisfaction, raising the corporate image as eco-friendly, whilst staying ahead of the competition.’

The opportunities presented by the re-use of components for alternative purposes, reclamation of base materials for smelting, refurbishment to return stock to a graded level, and re-manufacture are still not being recognised by many manufacturers, believes Mosquera.

‘A minority of forward-thinking manufacturers and distributors are working together to develop mutually beneficial schemes in which they share responsibility for managing the returns process and take a share in recaptured revenues,’ he confirms.

IBM has already reaped benefits from operating a proactive approach to the issue. Its Global Asset Recovery System (GARS) centralises all secondary channels of sale into one exchange and operates 22 locations around the world solely to refurbish, dismantle or de-manufacture products.

In 2002, IBM processed 33.5 metric tons of equipment and through de-manufacturing retained 96 per cent of materials, including packaging. Demand is tracked on a worldwide basis and inventory is sold through an IBM web-based Private Trading Exchange (PTX), IBM e-commerce sites and commercial online auction sites. In essence, IBM has seen the value in the business of asset recovery and disposal and GARS consistently contributes to IBM’s bottom line.

While some manufacturers continue to lobby the government, concerned about the cost of their new-found responsibilities, John Dalton, commercial director of ServiceSource Europe, confirms that he views the changes as an evolution of core business: ‘In many cases there are opportunities to turn the new legislation to commercial advantage - enabling manufacturers to offset part of their investment costs through outsourced recycling activities,’ he says. ‘We view our role as enabling service chain suppliers to work together to intelligently identify equipment that is worth de-manufacturing for parts, to help offset the costs for those who have to foot the bill.’

For the moment, the industry is at a turning point. It is clear that there are opportunities for logistics, recycling and service companies to expand into a new and profitable business streams. For those who continue to prevaricate, it may be a case of too little, too late.

Useful UK government/DTI reference URLs:
http://www.dti.gov.uk/sustainability/weee/index.htm - consultation paper and directives
http://www.letsrecycle.com - to follow progress of WEEE legislation in UK
http://164.36.164.20/sustainability/downloads/weee.pdf - DTI factsheet on WEEE