WHAT IS REVERSE LOGISTICS?
Much of the infrastructure today is designed specifically for the logistics of bringing cargos from one end to another. But, reverse logistics, which is simply reversing the flow of cargo, poses significant challenges.
Reverse Logistics often go hand-in-hand with the development of recycling. But, the value proposition of reverse logistics expands further than just the scope of recycling.
Reverse Logistics is also spoken in one breath with “Sustainable Supply Chain Management”, which deems this final stage of logistics a “Closing of the Loop” in the supply chain. It is a strategy utilized by companies to recover materials from sold goods to increase overall sustainability.
Reverse Logistics scrupulous process of planning, implementing and controlling the backward flow of raw materials, in-process inventory, packaging, and finished goods, from manufacturing, distribution or use point of proper disposal.
The key challenge is that, in all cases, the products sold are not “returned” homogenous, whereas the products sold at the beginning, is homogenous. What we meant by that is that all products after either reaching the end of its useful life or returned for reasons unforeseen, do not come back to the manufacturer in the same condition.
Assembly is markedly easier than disassembly. In the case of electronic waste recycling, it goes through the tedious process of sorting, separating and cleaning in order to return to the root of the supply chain.
And this is where companies struggle, to place a value of reusing and recycling waste with reverse logistics instead of the cheaper alternative of using fresh raw materials.
In this blog post, we will see how reverse logistics systems have developed in the area of E-Waste Management. A problem area that is a growing concern for not just reducing the effects of E-Waste, but sustaining the supply-ability of electronics raw materials.
Looking into the E-waste management should shed some light on the difficulties in recycling and reverse logistics.
WHY IS ELECTRONIC WASTE BAD?
The Waste Electrical and Electronic Equipment (WEEE) is a pandemic.
Take smartphones for example, in 2019, 3.2 billion people are using smartphones, roughly 45% of the people in the world. All of the 3.2 billion smartphones are destined to be waste products between 3 to 5 years.
Smartphone waste is an amalgamation of inorganic compounds that are hazardous.
|Printed Circuit Board (PCB)||Copper, Gold, Lead, Nickle, Zinc, Beryllium, Tantanium|
|Liquid Crystal Display (LCD)||Mercury, Plastic, Glass|
|Battery||Nickle Metal, Lithium-Ion, Nickle Cadmium, Lead Acid|
Mercury, lead, cadmium, nickel, antimony, arsenic and chromium, if not dealt properly, is poisonous. Under federal regulation, in most cases, WEEE is considered as hazardous waste.
There are countless accounts that detail the failure of the industry as a whole to properly address WEEE management. There is just not much regulatory will from the developed nations to move the needle to change what has become the norm of unethical waste management.
One of the most prominent non-profit organizations in this area is the Basel Action Network (BAN), which heads the spear in attacking and shedding light on the toxic trade of E-waste and, coincidentally, shipbreaking, which we discussed at length in the article here.
Countless international scandals on hazardous waste trafficking shocked the world into forcing the Basel Convention (1989), ratification on a global scale, however, is mixed.
68 Countries did not ratify the latest ban amendments, the United States, the shining example of modern democracy, chose not to be apart of it.
Central Africa Nation, regions of southeast Asia and nations near the Bay of Bengal did not join the bandwagon as well.
Consequentially, these countries have become the world’s dumpsite for E-waste.
Unregulated landfills, open burning and acid wash are the result of the disproportionate number of countries ratifying the Basel Ban.
BASEL ACTION NETWORK
Although the situation is dire, there are some positive shifts in a global initiative to be better recyclers.
For example, Kenya recently will ban the import of used electronics starting in 2020. This will inevitably make the unethical WEEE dumping more difficult.
In 2018, China also shook the world by announcing its own ban for the importation of foreign waste, including WEEE. Until recently, China has not only been the “manufacturer of the world”, but also the “world’s dumpsite”.
As producers of electronics such as Apple, Samsung, and HP feel the scope of their sub-par waste management systems get smaller and smaller, they will definitely lobby for a laxer approach in the definition of waste.
Despite that, the Basel Convention is slowly getting to grips to uproot the deep systemic pollutions. As we mentioned earlier, of the 36 the Organization of Economic Co-operation and Development (OECD) nations, only the United States has yet to ratify the Basel Ban.
Once the United State has properly shifted sentiments and recognizes that environmental pollution is a global issue that requires every nation to participate, they will be the leading example for other nations to follow.
UNDERSTANDING REVERSE LOGISTICS
It is important to point out that reverse logistics, is actually the same as logistics. The key difference is that the producers are the final destination of the supply chain instead of the customers.
This is why recycling is synonymous with reverse logistics, where the start of the logistic chain is the consumers.
It helps to picture reverse logistics this way.
Producers go to lengths and spend enormous amounts of money in sourcing for raw materials such as petroleum, lithium, gold, copper, etc…
We have countless years of research and development for more effective mining techniques or more effective sourcing techniques. Even Google is jumping in the bandwagon by using Artificial Intelligence to predict the most likely places for untapped oil reserves.
Now, picture instead, that raw materials are so vast, that consumers regularly produce it and dumps it daily.
Trash, in this case, becomes the raw material, and companies that see that value will invest in research and development for the effective extraction of those raw materials.
The New York Times reports that: –
The gold in the world’s e-waste alone equals more than a tenth of the gold mined globally each year. And yet much of this treasure is simply reburied in landfills.New York Times
THE KEY COMPONENTS OF REVERSE LOGISTICS
Reverse Logistics, in this view, is similar to any form of logistics.
To emphasize, reverse logistics is also similar in concept for waste management and other industries.
The key components of reverse logistics are: –
This is where the logistics service provider has the biggest influence over. As mentioned earlier, the source of the raw material comes from the consumers.
To date, Japan and the EU are leading by example with strict legislation on E-Waste disposal.
For Japan’s Home Appliance Recycling Law, the consumers pay the transportation and collection costs, in addition to a recycling fee too. Whereas the retailers are obligated to collect and transport the home appliances at the End of Life and the manufacturers are obligated to recycle the appliances.
Japan also has strict regulations on waste collectors and transporters in order to curb illegal disposal and burying of E-waste.
This model shares the cost and responsibility of waste collection across consumers, retailers, and manufacturers.
Categorization is where the E-Waste is sorted to different categories base on it’s underlying material and processing requirement.
This is a particularly complex process because different forms of waste require different techniques of sorting. Compounded by the fact that E-waste does not come homogenized, the process of sorting is both expensive and labor-intensive.
This is also the reason why developed nations choose to export their waste to developing nations, in order to capitalize on their slack regulations and cheap labor.
Categorization is also an industry-specific process. For E-waste management there are many methods to recover pure metal.
Electrometallurgy – An electromechanical process to recover various metals from various types of waste.
Pyrometallurgy – smelting waste to a certain temperature to recover metals from waste
HOW CAN WE IMPROVE ON THE STATE OF REVERSE LOGISTICS?
Overall speaking, we are improving, but we have much more to do.
From the perspective of logistics service providers, it is important to improve our acceptance of rules and regulations. The EU Waste Legislation has frameworks specifying under what circumstances the shipment of waste can be permitted.
We also need to educate ourselves by knowing the distinction between hazardous waste and non-hazardous waste. Many times logistics services providers are colluding with unethical manufacturers in mishandling, and misdeclaring the waste when exporting and importing. Hence, logistics service providers are part of the problem too.
Moreover, we have to be diligent in separating ethical recyclers from the unethical ones. Frequently, shipments are transported with logistics providers having little or no knowledge of the cargo transported, apart from what has been declared by the exporters.
From a regulatory perspective, it is a tight balance between mandatory regulation and voluntary initiative. To explain, Japan is successful in the recycling E-waste as they impose mandatory rules and regulations to guide the population. Many countries have also banned the import of waste, cutting the problem from its root as we mentioned earlier.
It is also important that the consumers are on board as well, voluntarily. Hence, governments can play a role in making recycling easier by providing incentives for those companies looking to serve in the recycling sector.
This is why regulations can improve e-waste management by being stricter and at the same time provide more incentives for people to voluntarily recycle.
From a manufacturer’s perspective, they have to be more invested in the research and development of their products. Simply by making the product design more bio-degradable, or more conducive to recycling can be very beneficial for all parties.
Multinational companies that dominate the market in their respective field can dictate the market behavior with their corporate social responsibility efforts too.
Having a shorter transportation cycle by erecting more recycling centers for its own product, or even extending the electronic life cycle of their product can help with the problem as well.