Some of the best little surprises in New England where I live occur with the change of seasons. Instinctively searching the pockets of a jacket I haven’t worn or needed for months, I often experience the unmistakable feeling of money. Unrolling the forgotten stash, I find a wad of ones, a five, maybe a ten and perhaps even a twenty, and think to myself how I could have overlooked this wellspring languishing in my closet.
For companies that optimize their reverse logistics process with a reuse strategy, this undeniable sense of endowment can be amplified – exponentially. By this I mean millions of ones, fives, tens and twenties. Yet when it comes to implementing new business models to achieve greater financial gain from assets banished to closets and warehouses, it can be difficult to define just whose responsibility it is.
In the quest to minimize e-waste, many companies have moved to appoint chief sustainability executives, yet continue to have them function in silos apart from core operating teams. This makes it difficult – if not impossible – to drive the sort of measurable change that reduces waste in a meaningful way and adds pennies to the EPS.
If other sectors are anything like the telecommunications industry, you could argue that no one is directly charged with the responsibility or “problem” of maximizing the lifecycle and revenue potential of valuable, excess and decommissioned material lying in wait. While organizations may choose to recycle, few have the insight required to reuse, enabling them to generate millions in cost avoidance and revenue. The following examples highlight this point.
Rethinking Your Strategy
In the case of a large Norwegian mobile operator that my company does business with, their reuse initiative was driven not by supply chain directors, logistics, tech services or even their progressive sustainability team. It was led by finance. Why? As the company sought bids on the disposition of 9,000 operational base stations displaced by their network upgrade, top financial officers found routine RFP responses to melt them down or sell off parts less than satisfying from an ROI perspective.
So that’s it, they wondered? After all, the base stations were still completely functional, some of them not yet fully depreciated. It became clear to management that creating visibility for these assets coming out of service, available for reuse across the organization and within other networks, would enable them to not only multiply their financial gain, but reduce risk and advance the company’s commitment to sustainability and the environment.
They achieved this by simply aggregating and “socializing” inventory data online as items were received back into their warehouse from urban perches, suburban centers and far-flung mountainsides. Cross-referencing demand lists, the operator’s buyers and supply managers could easily re-factor the most critical material back into the service chain as replacements and spares (instead of buying new), and resell marketable items no longer needed.
The results exceeded expectations. In the first few months alone, the operator’s reuse initiative delivered millions in savings repurposing what they already own, generated nearly $1M in resale revenues, significantly reduced waste, and outpaced the financial returns otherwise achieved by simply recycling 1.5 tons of scrap. In fact, in reuse alone, they doubled the payback they would have received had they selected one of the other bids. It’s a business case so compelling that Norway’s leading financial daily, Dagen Naeringsliv, featured it in a recent two-page story.
The Courage to Be First
As I began this by noting the thrill of recovering lost income, the amount of residual material sitting in warehouses and items merely sold off for scrap is a growing reality. For most organizations, as little as five percent of the material in the reverse logistics process is ever reused. Cisco found themselves faced with this situation more than a decade ago, and today supports ten successful reuse and recycling programs, making it everyone’s responsibility to extend product lifecycles and optimize asset ROI.
In the case of Cisco, they invested the resources of time and money over many years to achieve great success with their reuse program, and as a result now recoup tens of millions annually. Today scalable software-enabled services exist for very little cost that help executives get started with reuse programs in hours and days, not months or years. As highlighted by the examples I provided, reuse can be one of the most compelling ways to convert a cost center into a profit generator.
As business leaders continue to reduce their environmental footprint, they should also rethink the economic models in which they operate. The bottom line is that reuse is a huge business opportunity that can no longer go unnoticed, reminding me to check my jackets before retiring them for the summer.
Trade Wings’ Chief Executive Officer and Founder Todd Adelman is passionate about driving business model innovation within the Telecom industry. With more than 20 years of supply chain and asset management experience, Todd leads a number of strategic initiatives designed to establish Trade Wings as a trusted authority on the development and implementation of reuse optimization strategies for network assets.