Journal of Cleaner Production 11 (2003) 445–458 www.cleanerproduction.net Product recovery with some byte: an overview of management challenges and environmental consequences in reverse manufacturing for the computer industry Charles David White a,∗, Eric Masanet b, Christine Meisner Rosen c, Sara L. Beckman c b a Energy and Resources Group, University of California, Berkeley, CA 94720-3050, USA Department of Mechanical Engineering, University of California, Berkeley, CA 94720-1740, USA c Haas School of Business, University of California, Berkeley, CA 94720-1900, USA Accepted 10 May 2002 Abstract Estimates vary about the rate at which end-of-life computer products have been piling up, but the total population of spent computers is likely to reach into the hundreds of millions. To tackle this mounting solid and hazardous waste problem, policy and business entrepreneurs are promoting product recovery as an environmentally preferable alternative to disposal, and product recovery infrastructure and strategy has begun to develop in recent decades. However, despite some real and theoretical developments in the field, current literature lacks an overall description of the recovery process capable of capturing the essence of end-of-life management challenges for complex, rapidly obsolete, high-tech products like computers and electronics. The absence of this broad frame of reference presents a problem for managers trying to integrate environmentally sound choices into planning and management. Using case research from the computer and electronics industry, in this paper we present a generalized overview of product recovery. The purpose of this paper is two-fold: to describe the recovery of computers as a step-by-step process, and to frame an environmental research agenda for recovery management. With an eye toward generalizing the growing and diversifying practices in reverse manufacturing, we use our description from the computer and electronics industry to highlight broad challenges that managers confront at each stage of the process and to identify environmental dimensions of product recovery management decisions that require additional research. 2002 Elsevier Science Ltd. All rights reserved. Keywords: Product recovery; Computer; Reverse manufacturing; Demanufacturing; Remanufacturing; Design for environment; Environmental management 1. Introduction In the course of examining the reverse manufacturing infrastructure for computer products, we met with a manager, whom we will call Kate, at a small, socially responsible business in a large metropolitan city. Kate is aware of the growing attention paid to businesses like hers in the popular press1 and knows that, although the number of desktop computers clustered in attics and back offices is not known, the estimated population of obsolete equipment is already in the hundreds of millions [1,2]. With concerns about electronics waste mounting almost as rapidly as spent computers are piling up, Kate recognizes that modern consumption patterns and the ubiquity of electronic equipment are creating a large 1 ∗ Corresponding author. E-mail address: cdwhite@socrates.berkeley.edu (C.D. White). Recent examples include ‘Drowning in e-Waste’ by Henry Norr in the San Francisco Chronicle (May 27, 2001, page E1), ‘Computer Overload’ by Jack Naudi in the Grand Rapid Press (March 11, 2001, page B1), and ‘Computer meltdown’ by L. Rapaport in the San Jose Mercury News (April 18, 2000, page 1F). 0959-6526/02/$ - see front matter. 2002 Elsevier Science Ltd. All rights reserved. doi:10.1016/S0959-6526(02)00066-5 446 C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 solid waste problem and that many people are looking, hopefully, to reverse manufacturing2 as a solution. Kate owns and operates one of an increasing number of companies emerging to recover assets from end-oflife equipment. Like the other seven small and large computer recovery businesses we visited, Kate struggles with the challenges common to recovering obsolete products: locating and collecting spent products, adjusting to the extreme heterogeneity in the computers she encounters, evaluating which assets are valuable and cost-effective to recover, determining how to disassemble computers and sort computer assets efficiently, and establishing and maintaining market relationships to sell her wares. Reflecting its origins in recovery and resale of computer chips from telecommunications equipment, Kate’s firm focuses on brokering reusable computer products. On the surface, this approach to product recovery is consistent with the literature on reverse manufacturing, which tends to emphasize operational aspects of remanufacturing products—that is, locating end-of-life equipment, refurbishing their cores, and reselling the intact products. However, a more detailed examination of Kate’s experience and that of the other computer recovery businesses we visited reveals a different story. Because most end-of-life computers contain obsolete technologies and outdated architectures, products enter the reverse manufacturing business with little reusable potential. As a result, instead of focusing on recovering and rebuilding product cores, most computer recovery businesses engage in demanufacturing computers—that is, disassembling products and atomizing assets to divert waste and recapture value wherever practicable. Taken in composite, these computer recovery operations illuminate the difference between remanufacturing (refurbishment-oriented) and demanufacturing (recycling-oriented) as complementary reverse manufacturing strategies. The commonality is that both involve a whole host of operational choices, such as which products to collect, how to organize the shop floor, or which markets to seek for selling process outputs. Like Kate, businesses and governments alike have recognized that recovery offers advantages over disposal’s drain on natural and financial resources, and they are considering infrastructure to recover spent products. Drivers include the desire to profit from retrieving and reselling still-valuable products and product assets, the need to manage product returns from leasing programs, quick manufacturing cycles and the need to procure parts to support longer-term warranty programs, concerns about toxic liabilities from disposal of products with their brand name on them, and greener industrial ethics and consumer markets. Governments at all levels are developing waste handling prohibitions, regulations, or 2 For definitions for this and other terms, please see Appendix A. incentive programs to encourage alternative disposition of electronic waste [3] and considering policies to make the producer or the consumer of products more responsible for ensuring their safe disposition [4]. These motivations help to explain why, in recent years, the rate of electronic reuse and recycling has steadily increased, and why in America the volume of products recovered is expected to increase at an annual rate of 18% [5]. These developments reinforce the theoretical ideals about closing industrial material cycles that underlie contemporary green industrial movements and, through this lens, portend a greener industrial future. However, despite the environmental hopes that the computer recovery infrastructure offers, little attention has been paid to its environmental consequences along the supply chain. One of Kate’s desires is to ensure that her reverse manufacturing capitalizes on green design and management opportunities. Unfortunately, insufficient environmental impact analysis is available to help her. This article, which describes the experience of Kate and other computer recovery companies, has two parts. First, we provide an anatomy of ‘reverse manufacturing’ and describe it as a step-by-step process analog to the ‘forward manufacturing’ activities traditionally used to bring products to market. Most researchers who have examined recovery for complex, high technology products like computers have concentrated on the front end of the reverse manufacturing process and the infrastructures to remanufacture equipment for reuse. We focus more specifically on the demanufacturing challenges in product recovery and the way that residual components and durable materials are stripped from computer equipment for sale as inputs into myriad manufacturing industries. This, we argue, is a more accurate depiction of reverse manufacturing for high-value but rapidly obsolete products like computers. Second, we use our synopsis of this recovery enterprise to identify and explore a variety of environmental consequences of reverse manufacturing design and operation. These environmental issues lie hidden underneath the practical logistical, technological, and economic decisions that shape business practices. Although ‘recycling’ is often discussed in terms of its environmental benefits, there are also environmental costs, such as energy intensity and material downgrading, that require attention. As global economies move toward a recovery-oriented approach to electronic waste, it becomes increasingly important to measure these potential negative impacts and to mitigate them. Both our description of a reverse supply chain and our analysis of environmental challenges common to all reverse manufacturing have dual intentions: to provide a basis for further research into the environmental dimensions of product recovery, and to help policy makers and others interested in moving the computer industry toward sustainability consider the complexities of C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 putting reverse manufacturing on an environmentally optimal path. 2. A description of product recovery Much of the early literature on reverse manufacturing concerns the technology and logistics of recovery for products such as beverage containers, toner cartridges, and tires, whose relatively simple design and composition makes their recovery relatively straightforward and requires little attention to reverse supply chains. Increasingly, however, operations’ researchers are attuning their research to much more complex products, like computers, photocopying machines, and automobiles. These products’ multi-step reverse manufacturing occurs in relatively elaborate supply chains and produces multiple ownership patterns that place different parties in control at different stages of the process. Understanding the managerial and environmental challenges of product recovery for these industries requires investigation of supply chain dynamics, and operations researchers are now beginning to explore the associated logistics, technologies, and economics. Their ongoing work provides insight into the range of discrete product handling and assessment tasks that constitute and support reverse manufacturing in these industries, and Daniel Guide offers an excellent summary of progress to date and future challenges [6]. Our study builds on this more recent work, while delving more deeply into demanufacturing of computer equipment than most of the existing research. In addition to drawing on recently published case research and other scholarly literature3, this study is based on field research. In 1998 we conducted interviews at eight firms involved in the reverse remanufacturing supply chain, including three OEMs or OEM partnerships and five non-OEMs. Our interviews consisted of one hour of discussion, approximately one hour of facility tour, and subsequent phone conversations with plant managers. The firms we visited operate some of the most advanced and most basic product recovery programs in the United States and are involved in various mixes of the stages in recovery. These case subjects serve as the basis of our description of computer recovery. Because we are focusing on their common experience with desktop computers, our description emphasizes the demanufacturing aspects of product recovery 3 For the computer and electronics industry, the most consistent source for coverage of new experience and ideas about product recovery has been the proceedings from the annual IEEE Symposium on Electronics and the Environment. Even obliquely, very little coverage has been available in other literary fora, but this paucity is changing as interest from the operations management and business contracting community grows. 447 and ignores associated remanufacturing (e.g., with mainframe computers). Naturally, these simplifications reduce the deductive power of the model: like forward manufacturing, reverse manufacturing is highly variable and, like photocopy machines and automobiles, computers are an idiosyncratic case study4. Acknowledging these limitations, we use our experience to expand existing descriptions and to provide a broad overview of reverse manufacturing in practice. In this section, we highlight fundamental management challenges common to all reverse manufacturing and begin this discussion first with a description of computer products before turning our attention to the step-by-step process. 2.1. Inputs and outputs Broadly consistent with product recovery literature, practitioners discuss recoverable assets in three broad classes of process outputs: the whole product, designed parts, and constituent materials. Understanding management and planning for recovery of durable products requires understanding the potential outputs from the reverse manufacturing process. This, in turn, requires understanding the process inputs (the recoverable product themselves). Computer products as inputs to recovery span a wide array of types, makes, models, and years. Because desktop computers are the driving force behind these recovery processes, for the sake of simplicity it is easy to consider a generic desktop computer as the core input for reverse manufacturing. An average desktop computer consists of three primary subassemblies: the central processing unit (CPU), the monitor, and other input/output peripherals such as keyboards, mice, or speakers. These subassemblies contain the various recoverable parts. The CPU contains hard and disk drives, circuit boards with integrated circuit chips, impact-resistant plastic casings, an internal metal framework, small batteries, motors, power supplies, and cables. The cathode ray tube-based monitor is housed in an impact-resistant plastic shell and composed of a leaded glass funnel and coated glass front panel, a 4 Much like automobiles and copy machines, computers have become integral to modern living and commerce. However, their characteristics as products separate them from these others and create new challenges not addressed by existing research. Like automobiles and copy machines, computers are complex, complicated goods and contain hazardous materials which require careful disposal. Unlike automobiles, computers are marked by rapid technological obsolescence, weak recovery infrastructure, and little lay culture for repair and reuse. These features make computer life cycles much shorter and their end-of-life reuse opportunities much more limited. Unlike copy machines, computers are generally sold, not leased by the manufacturer or an agent who works closely with the forward supply chain. As a result, many details about computer products, such as their location, age, and current condition, are not available to the firm recovering them. 448 C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 cathode, and circuitry. The peripheral equipment is comprised of minor circuitry and some movable parts, most of which are not readily salable in their own right. The materials recoverable from this medley of components include ferrous metals, aluminum, copper, precious metals, polystyrene and ABS plastics, thermosetting epoxy plastics, leaded and unleaded glass, and hazardous wastes like batteries (see Fig. 1). Because products are often transported with appreciable amounts of paper, cardboard, and polystyrene foams, these materials also require disposition and present parallel material management challenges [7,8]. Like the manufacturing process, reverse manufacturing requires choices about how, and how much, to engage in various stages of operation, and at first glance these processes can appear to be the converse of one another. In practice, though, recovery outputs are not simply manufacturing inputs. To put it briefly, physical laws, financial payback, hefty information demands, available technologies, and ownership structures all affect the admixture of final goods. Thermodynamically, entropy impedes the ability to distil product assets at end-of-life, such that thorough reclamation of assets is only possible with colossal inputs of energy. This constraint, in short, means that we cannot get everything back out of a product that we put into it [9,10]. Economically speaking, the payback on reclaimed assets bounds the investment in recovery. Because reclamation is only viable if someone is willing to pay for it, managers must balance the level of asset purification with market prices for materials and overall recovery profitability. From a logistical standpoint, managing recovery operations requires detailed information about product quantity, quality, timing, and composition—data which are particularly challenging to procure with current infrastructure. In addition, reverse manufacturing demands new technologies of disassembly, which in some cases reveal a need for new technologies for assembly as well. Collaboration between assemblers and disassemblers is often desirable to facilitate such technological developments, as reflected by joint partnerships and vertical integration to improve communication and control along the supply chain. In short, this abridged laundry list of challenges begins to explain how recovery operation and management affect the end products of reverse manufacturing and prevent the outputs from being essentially a reverse bill of materials for the inputs. Because profitable recovery requires choosing outputs vis-à-vis the potential admixtures of refurbishable products, reusable parts, and recyclable materials, managers faced with the challenges nominally introduced in this paragraph are struggling to improve their understandings of reverse manufacturing processes. It is to this topic that we turn in the next section. 2.2. The process Although detailed process descriptions are somewhat lacking, existing models of reverse manufacturing offer a conceptual starting point for explaining computer recovery [10,11,12, 13]. These models introduce the idea of reverse manufacturing as a multi-stage process and often use the concept of closed-loop manufacturing to draw its operations parallel to forward manufacturing. Fig. 2 illustrates this idea with a picture of production and recovery as halves of a circular industrial process. In Fig. 2, generic stages involved in forward manufacturing are depicted along the left side of the picture: material manufacturing, component manufacturing, product assembly, and distribution and sale. The stages on the right half of the loop are stylized depictions of the Fig. 1. A desktop computer and its assets. C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 Fig. 2. 449 Supply loop (forward manufacturing on the left; reverse manufacturing on the right in bold). activities constituting reverse manufacturing: acquisition, assessment, disassembly, and reprocessing5. Drawn in the middle of the diagram are two ancillary stages intended to return reconditioned products back to use: testing and repair, which may operate in conjunction with forward-chain warranty and service programs, and redistribution and resale, which may be confluent with forward distribution and sale. In addition, there are two virtual stages not depicted in this diagram, product design and contracting strategy, which influence the entire process but exceed the complexity of our basic input-output model6. In our discussion, we focus on the four primary recovery stages on the left: acquisition, assessment, disassembly, and reprocessing. 5 We acknowledge that preceding authors have used different terminology to describe the stages in product recovery (see Ferrer and Whybark, 2000). We have chosen our categories to reflect our focus on the design or information content of assets. This approach allows us to consider the ‘value’ of products, components, and materials jointly. 6 For the environmental goals we pursue, greater understanding of the roles that multiple process flows play in manufacturing is needed to understand the shared, iterative learning that defines design for the environment (DfE) efforts and the motivations for particular contracting strategies. We leave these details for future research. Our research exposed several distinctions between existing models of durable product recovery and the experience of computer reverse manufacturing. The principal differences we found stem from assumptions about product outputs and the role of the original equipment manufacturer (OEM). Most recovery models focus on OEM refurbishment and reuse of product ‘cores’ to produce remanufactured products, such as the reclamation of an engine or a chassis to rebuild a car. This emphasis is rare in computer recovery, whose independent actors overwhelmingly commodify and disperse product assets. By this statement we mean that most computers are not disassembled to collect the motherboard, the microprocessor, the power supply, or any other component and to then rebuild a new product around it. Instead, products that cannot be reused intact are disassembled and their products are scattered for reuse wherever feasible. Sometimes this pragmatism involves reuse in a wholly different product. For example, a microchip taken from a desktop computer may be reused in toys, or the plastics from a computer may be recycled into telephony. In describing computer recovery, we omit an exhaustive discussion of all such possible outcomes and instead ground and generalize our description at each stage in 450 C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 the simple loop of Fig. 2. We believe that the dispersion of product assets underlies the state of relative confusion and the struggle for operational norms in computer recovery and, as we offer an overview of the process, we ask the reader to keep these ideas in mind. 2.2.1. Acquisition The most basic questions a reverse manufacturer must ask are, which products do I want and how do I get them? That is, before a product is recovered, a recovery business must select a type of product, locate it, collect it, and transport it to a processing facility. These activities define the first stage in recovery, which we call acquisition. Ideally, reverse logistics planning and network design are used to control the timing, quantity, composition, and quality of products as they enter the recovery process [14]. If this level of control is available, acquisition procedures can significantly reduce the uncertainty of inputs (quantity and timing) as well as the need for contingency planning and manufacturing flexibility (composition and quality). If not, intermittent and heterogeneous products flows and information asymmetry about product condition cause confusion and inefficiency in reverse manufacturing. This latter description is representative of current dynamics in computer recovery, whose product characteristics and existing infrastructure have not facilitated sophisticated acquisition. With little ability to control the flow of process inputs, businesses take what they can find, collect, and ship to their processing facilities. The characteristics are evident in the tasks of selection, location, collection, and transportation. 2.2.1.1. Selection and information asymmetry. In some cases (e.g., the growing market for end-of-life cellular telephones), reverse manufacturers are developing the capacity to select products and discriminate in their acquisition prices based on model, age, and condition. The information and infrastructure needed to support this particularistic transaction is not available for most computer products, and most products make their way into the recovery process with very little pre-screening. Generally, the products are received from OEM inhouse uses or from upgrade contracts with large users, such as financial institutions. Smaller firms without OEM contracts attempt to tap product flows through cold-calls, brochures, and direct solicitation of end-users. However, because of the current glut of end-of-life products in garages and storerooms, most businesses are able to procure spot contracts by word of mouth. Firms like Kate’s also make special provision for donations from the community, but many have blanket policies against drop-offs or charge fees for end-of-life disposition because older products generally are net costs to process. In short, product selection is not highly specific and discriminating, and computer recovery businesses generally accept broad categories of equipment. Along with the lack of information comes potentially problematic information asymmetry. For example, endof-life batches can contain a large number of products that the donor knows are missing valuable components, or are not working. Such adverse selection and moral hazards problems can significantly reduce recovery profitability if businesses are unable to discriminate between products because they cannot tell if products are operable, or contain all the expected parts. The case is easy to understand for an office computer. During the course of its lifetime, it may have several components upgraded or removed, such as the memory chips. Recovery companies with arms-length relationships and dealing in spot end-of-life management contracts often interact only with the facilities staff, who often have little data about IT equipment’s composition. Unless the recovery business can obtain information about product condition from the computer staff who serviced the equipment, they find it difficult to discriminate with variable prices for different products. Instead, their best guess is that the product contains the same components as when it was originally sold, but these guesses are often wrong. For this reason, some firms negotiate recovery contacts with two-part tariffs: a fixed-fee to cover overhead and a tolling fee to cover per-product costs of recovery. This type of dual scheme protects a recovery firm against broken products and those altered during their lifetime. An alternative protection against these effects is to seek an additional profitability buffer. We observed some companies turning to government grants, parent-company overhead, or joint ventures to steady revenue streams. 2.2.1.2. Intermittence and heterogeneity. Although demand-side concerns about proliferating electronic wastes appear to be creating a push for alternative disposition, businesses still struggle to guard themselves against intermittent, batch flows of products, which disrupt the efficient use of labor and shop space. (In fact, the uncertainty in computer product flow rates motivates firms to employ half of their work force as temporary labor.) To buffer against the unpredictable nature of a batch retrieval process, computer recovery firms compensate for intermittent flows by developing multiple sources of equipment. A consequence of this approach can be an extremely heterogeneous feed stream, which requires more information, learning, and shop floor flexibility. For example, to stabilize its inputs, one firm we visited recovers everything from medical diagnostic equipment to microwave ovens, from desktop computers to vacuum cleaners. For those processing such a wide array of products, knowledge about the product compositions becomes essential for identifying and recovering the full value of product assets. If the components of a C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 product remain unclear or unknown, disassembly and resale cannot attend to them. To simplify information demands, some recoverers are able to reduce the number of input sources to their process, but even that approach can fail to guard against surprises. One OEM manager, who was operating a recovery program for only his company’s in-house use, told us about a time that he opened a semi trailer and discovered office furniture accompanying the computer equipment he expected. Because acquisition was unable to control process inputs, managing this unfamiliar equipment became a net cost and a learning exercise in end-of-life furniture disposition. 2.2.1.3. Collection transportation network design. Three distinct modes of collection and transportation have emerged in reverse manufacturing: curbside pickup by the municipal government, customer drop-off or pay-as-you go collection, and producer or reverse manufacturer retrieval, sometimes through a common carrier. No universally dominant paradigm has emerged7, and the tendency toward each appears to depend on the assignment of responsibility for end-of-life disposition to the government, the consumer, or the producer. Despite some pilot projects, curbside collection programs are not a developed avenue into the recovery process. In the US, where only faint rumblings about endof-life product legislation are audible, few programs exists for customers to return their products to manufacturers or sale outlets. Only those consumers who can accept that their once valuable gizmo has no residual value and who live close enough to a recovery business can donate and drop off old equipment. (For others, curbside waste collection or attic stockpiling are the only alternatives.) Most of the products we observed entered the recovery process from commercial contracts or from OEM operations (including leased goods, defects, excess inventory, production rejects or scraps, or in-house equipment upgrades). Because these acquisition efforts do not involve steady streams of products and are not collected far and wide from consumers, no one we interviewed was actively considering coordination or integration of collection and transportation with the countercurrent distribution channels. Instead, most shipments were scheduled on a case-by-case basis, and in most cases the customer paid the cost of collection and transportation. 2.2.2. Assessment Once equipment has arrived at the facility, managers must determine which assets are valuable and, given that 7 Some researchers studying electronic wastes have attributed tendencies toward municipal collection in the US, consumer responsibility in Japan, and producer handling in Europe [4]. All three do occur in the US, but our experience is primarily with producer-driven recovery. 451 products parts, and materials are mutually exclusive outputs, the optimal mixture of them to recover. This evaluation of inputs and outputs to choose a trajectory for recovery is the assessment stage of reverse manufacturing. During assessment, businesses determine whether to repair, refurbish, renovate, recondition, retrofit, or just plain resell a product or its parts and generally do so when products first arrive and are sorted. This input appraisal and output planning parse the process inputs into revenue streams of recoverable products, recoverable parts, as well as recoverable materials and costs streams of unrecoverable wastes. Theoretically, assessment should be integrated into overall process planning and direct selection activities [15], but computer assessment sometimes does not occur until after the product is partially disassembled. To some extent this timing in assessment depends on whether the product is considered a marketable good or waste upon receipt. When end-of-life products are still considered potentially marketable goods, a value-oriented approach can be used to discriminate in product quality and to control input variety through selective acquisition of products [16]. That is, recovery firms can streamline assessment and improve the cost-effectiveness of subsequent recovery operations by using the acquisition process to select products based on quality or variety. For end-of-life products already considered wastes, product recovery is viewed as a means of diverting computers from landfills or incineration. For this waste-oriented approach, control of input streams through active selection is usually not possible because little information about the product is available in the selection process. This dearth of data delays assessment until after acquisition. That is, if organizations can only vaguely, if at all, choose which products to acquire, they simply get whatever is in the semi trailer and work from there. This lack of control constitutes one of the greatest risks in recovery and requires repeat assessment or assessment-on-the-fly to evaluate unfamiliar products as the are disassembled. The primary challenges for conducting assessment are incomplete information about inputs and market immaturity for outputs. 2.2.2.1. Incomplete information. Understanding the assessment process requires recognizing the fundamental distinction that production adds value to and recovery extracts value from a computer, which is otherwise categorized as waste and discarded. Unless relatively complete and accurate information is available at the onset, managers must reassess the value of asset recovery and choose among disposition alternatives at each stage or sub-stage of recovery. To evaluate products, organizations use information about product compositions, asset values, reclamation methods, and the markets for recovered assets to determine recovery strategy. For example, a manager might compare the cost of disas- 452 C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 sembling a computer to recover a hard drive or another component against its expected resale price; similarly the manager might determine the expected copper content and then weigh the cost of copper purification against commodity prices for copper. The data needed to perform more detailed market forecasts and economic analyses are often not readily available, even for OEMs recovering their own products. Indeed, one OEM’s assessment initially relied on casual review by technical staff of sale prices in trade journals. For small firms without a connection to product manufacturers, obtaining this information can be difficult or prohibitively costly to procure in the face of batches of heterogeneous product inputs. However, most viable businesses have recognized the need to have dedicated sales forces to make this information available. 2.2.2.2. Market identification. Without much data to facilitate assessment, managers must still make decisions about which assets to recover. Judging the risks associated with the recovery of assets is challenging in the absence of information about the structure of the costs. In addition, managers must determine whether to sell recovered goods into existing markets or whether to seek or to create new markets. With little forged connection or direct relationship with the forward manufacturing process, reverse manufacturers must identify or develop markets for recovered assets. In addition to inventory challenges associated with balancing returns with demands [17], the changing architectures, rapid rates of technological obsolescence, and relatively weak resale markets for used computer assets, product and part recovery can be risky. Because mature secondary markets for metals exists, recovery of commodity materials is the primary driver for most computer recovery [8]. Among firms attempting to recover and resell design components, we observed distinct differences in strategy. Unless under contract to do otherwise, non-OEM firms seek to resell any valuable designed assets, particularly intact computers. Kate told us that equipment brokering is extremely profitable, with 80% of her profits coming from the 20% of the equipment that she can resell. However, brand loyalty and market protectionism can affect product or part recovery: some OEMs destroy proprietary technologies to prevent their secondary sales from cannibalizing primary markets. (In fact, one firm we interviewed internalized its previously outsourced recovery operations to gain control over secondary product streams.) This unintended consequence of protecting market share obstructs the reuse of some useful assets, such as brand-name hard drives8. 8 As a related point, some disassembly firms offer guaranteed data erasing services on hard drives. Although this service protects the security and intellectual property of clients, it does not necessarily destroy the equipment. 2.2.3. Disassembly Preceding authors have introduced relevant terminology [13, 18], and we acknowledge and borrow from this literature when describing disassembly. In a nutshell, product disassembly is the stage of actual deconstruction of a good to sort its assets for reuse, recycling, or disposal. The first phase of disassembly improves the accessibility of reusable subassemblies and parts, usually by opening the product. The second phase is the removal of any reusable parts. The third phase prepares the remainder of the product for material recovery [7]. Not all disassembly proceeds through these stages in the same way. When disassembling, some firms disaggregate a product to preserve all of its designed components. This careful unfastening of parts occurs when a firm wants to recover numerous valuable components for reuse or resale, and we only encountered this type of disassembly when a large, expensive product, such as a mainframe computer, was repaired or remanufactured for reuse. A majority of the products we observed were dismantled or disassembled in such a way that certain assets were demolished to recover others. For example, to save time when recovering internal components, plastic panels and casings are often irreparably broken. Similarly, the removal of integrated circuits may cannibalize motherboards by damaging them during disassembly. In other cases, lower-end or obsolete products require no attention to design value and are simply demolished. This demolition, which destroys all design value, is the predominant recovery strategy when firms are interested in recycling materials instead of recovering designed assets. We observed multiple types of demolition. One firm demolishes equipment with large shredding equipment, grinding products into small material chunks for separation and sale. Another firm specialized in computer monitor recovery destroys the product design content by separating the panel glass and funnel glass from cathode ray tubes (CRTs) and then crushing them separately. Each of the three styles of disassembly represents a different degree of design value retention for recovery and affects the distribution and value of product assets. Some businesses have developed semi-continuous operating lines along which disassemblers unscrew, pry open, or break apart computer products; more often disassembly takes place at a semi-circular workbench surrounded by bins for various parts and materials [19]. In either case, the disassembly of products and segregation of their assets greatly multiplies the number of recovery streams and subsequent transactions: reusable subassemblies and parts are sent to repair shops, manufacturers, or retail outlets; scrap parts are further separated and purified for material recovery; and as residues are hauled away by scavengers or waste disposal companies. Process planning is needed to manage these streams efficiently, but uncooperative designs, information poverty, and constraints from upstream choices impede it. C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 2.2.3.1. Uncooperative designs. Under the auspices of design for the environment (DfE), researchers and product designers are beginning to investigate ways to improve the design of products to facilitate their disassembly, as opposed to simply optimizing their assembly. Among those interested in computers, a principle concern is the way that products are fastened. Chips soldered to circuit boards and drives riveted to internal structures are difficult and costly to remove. Engineering research into development of extraction and separation technology [20, 21] and economic assessment of technological options continue to improve the cost-effectiveness of recovering product assets [22, 23], but changing product designs may be the only way to overcome some hurdles. Because many organizations in the reverse supply chain do not have a relationship with the forward supply chain and the organizations that design and assemble products, DFE requires alternate fora, such as research conferences or chartered collaborations, to communicate information between those who design and make products and those who recover them. 2.2.3.2. Information poverty. Like acquisition and assessment, a lack of information thwarts disassembly. To disassemble a product efficiently, an organization needs to know what and where the assets are in it, but most disasssemblers do not have a product bill of materials nor a schematic. Even OEMs recovering their own products lacked this information and were engaging in database development efforts to collect and compile it. In some cases, even these efforts are insufficient since some products are modified during their lifetimes. However, detailed product information helps organizations to avoid expensive search-and-rescue operations for regulated components like batteries, which are illegal to resmelt with metals. When information about products is not readily available, many firms tend to dismantle or demolish potentially valuable assets in their efforts to quickly and cheaply disassemble products. This ignorance of product contents and designs is one reason that an OEM recovered only twelve percent of a product’s weight for resale and recycled or discarded the remaining eight-eight percent. Practitioners and researchers alike suggest that greater information availability, either through consortia, regulations, or longer-term contracts, can improve disassembly and production management. [24]. 2.2.3.3. Upstream choices. Choices made upstream can significantly affect disassembly management. The information demand created from acquisition decisions is a good example. A choice to collect a wider variety of equipment as a way to stabilize an otherwise intermittent input stream increases information demand during assessment and disassembly: composition data and assets values are needed for more products and their 453 components. This need for information raises the bar for recovery of whole products and parts. Accordingly, a choice to recover products in bulk drives decisions to recycle commodity materials instead of recovering the more challenging, but higher-value, reusable parts. 2.2.4. Reprocessing Once a product has been disassembled and all reusable subassemblies and parts have been removed, the leftover assets are valuable only for their material contents. As illustrated in Fig. 1, there are seven primary categories of materials recovered from computers (eight if packaging is included): ferrous metals, aluminum, copper, precious metals (e.g., gold, palladium, and silver), glass, plastics, and hazardous wastes9. The goal of material reprocessing is to reclaim these materials in salable quantities, and businesses naturally try to maximize profits by optimizing the benefits of purifying materials against the cost or doing so. Initial separation occurs by hand during disassembly, either on a disassembly line or at a workbench, to sort assets into basic categories according to material content. For example, because of its large copper coil, a motor would be thrown into a bin for copper recovery. These disassembly output bins are material processing inputs streams consisting of a mixture of parts segregated by their highest value materials. For example, boxes containing the cables and wires are typically transported for copper recovery, and the bins for many of the larger internal components (e.g., disk drives, structural pieces) are sent to steel mills. Before materials from these disowned computer parts are recycled, they are commonly shredded and ground down into small pieces and then separated in an automated process according to their densities and electromagnetic properties. This final separation step decreases the volume and increases the purity of the materials. The process of recycling is different for each substance, and the various material streams are shipped to facilities specializing in their reclamation. Depending on the location of the disassembly facility, transportation thousands of miles away to Canada, the UK, or China may be necessary. Because of a robust infrastructure, metals are the easiest to reprocess. The ferrous metal scrap is perhaps the easiest and most economical material to reclaim. Electric arc furnaces are used to melt and purify steel back into standard lots for sale in commodity markets. Aluminum scrap undergoes a similar operation resmelting operation in a gas-fired furnace but requires large amounts of chlorine to purify it before selling it as a commodity. The recycling process for copper and precious metals requires chemical pre-treatment 9 Again, packaging is an additional category of materials that must also be managed during computer end-of-life disposition, but we have omitted it from this discussion. 454 C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 and then separation of the copper with arsenic, as well as additional resmelting to prepare the metals for resale. Glass and plastics have much more limited recycling options. The glass in computer monitors is considered hazardous waste because of its lead content. Because costs associated with RCRA’s monitoring and recordkeeping requirements have proven prohibitive for many firms, only a few facilities in the United States recycle CRT glass. The process of recycling requires removing the cathode and circuitry from the glass tube, separating the funnel from the front panel, and then crushing each. This crushed glass, called cullet, is mixed with virgin materials during the CRT manufacturing process. Only a small percentage of CRTs in the United States undergo this process. The reclamation of plastics is even more problematic and less economically feasible. Since no human nor technology can identify and costeffectively separate the hundreds of plastics in a typical shipment of mixed computers, the operating costs for plastic reprocessing can be difficult to justify in the face of lower cost virgin plastics and the inferior quality of recycled ones. If a batch of mixed plastics is of high enough quality to pass a purity test, it is shredded, magnetically separated from metals, size-reduced, and sorted according to density. If not, the plastics are burned for their energy content, used as cheap filler materials in paving, or landfilled. The biggest challenges in material reprocessing are locating markets for materials and determining the appropriate purity end-point during their reprocessing. These challenges are highly variable among the materials in computer products. Infrastructure is relatively well-developed for metals, but glass, plastics, and hazardous wastes continue to be a disposal concern. Like disassembly, the reprocessing choices and material output opportunities are highly dependent on choices made upstream. For example, a decision to operate a material recovery process with large shredding, grinding, and sorting machinery changes the purity of the material outputs, since existing technologies are not able to distil all co-mingled materials cost-effectively. Recovery operations that, alternatively, disassemble and sort products by hand are sometimes able to separate higher purity materials, such as aluminum from large structural plates, than those with automated equipment. assets in support of forward manufacturing, demanufacturing operates mostly to divert wastes from disposal and reuse assets wherever practicable. Thus, demanufacturing decreases the likelihood that recovered assets will repair existing products or can be traced to process inputs for the production of new ones. Instead, product assets are commodified and dispersed into other products or other manufacturing enterprises (e.g., computer circuits being reused in toys; plastics reused in telephones). Fig. 3 offers an illustration of the difference. Distinguishing demanufacturing and remanufacturing as strategies in reverse manufacturing draws a more complete picture of practices and deepens insights into the challenges of product recovery for complex goods. For products with multifarious manufacturing, understanding that products are demanufactured helps to explain why forward and reverse supply chain organizations are less likely to form relationships: the outputs from the recovery process do not necessarily become production inputs for the same products. Although we cannot refute a charge that demanufacturing may be a less integrated, and possibly more immature version of remanufacturing, we also believe that research on product recovery must consider the effects that product characteristics, ownership patterns, and recovery infrastructure have on strategic choices in reverse manufacturing. Without additional information, we do not suggest that computer recovery will or will not converge on existing reverse manufacturing models, only that further research on recovery strategy is needed to understand the shape that industries take. 3. Description of environmental dimensions of operational decisions Product recovery is particularly interesting because of its potential reduction in end-of-life product, material 2.3. Demanufacturing and remanufacturing The fundamental difference that we observe between the experience in computer recovery and existing literature on complex product recovery, is the use of demanufacturing, instead of remanufacturing, as a dominant strategy. The distinction between remanufacturing and demanufacturing, which has not been emphasized in the literature, is a subtle one. As opposed to remanufacturing’s focus on refurbishing products and reclaiming Fig. 3. Manufacturing strategy. C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 wastes, and energy. However, despite the opportunities that reverse manufacturing offers, recovery is not an instant panacea for environmental burdens. Examining the reverse supply chain from a life cycle perspective [25,26] reveals that recovery may reduce or delay, but not eliminate, waste problems and may erode energy savings if poor planning and techniques are not identified and corrected. To capture the benefits and avoid the pitfalls, environmental factors must be considered in decision making and industrial architecture. Although much work is ongoing to determine how to operate recovery processes efficiently, little coordinated attention has been paid to designing them environmentally. In the succeeding paragraphs, we describe the benefits and drawbacks of reverse manufacturing and begin laying a foundation to study and to mitigate the environmental impacts of its infrastructure. There are a number of direct and indirect environmental advantages that product recovery can offer over existing extraction and disposal practices. Among other benefits, reusing parts and recycling materials can directly reduce ecological disturbances from raw material mining and from waste interment and combustion. That is, recycling materials to support another generation of manufacturing can reduce energy demands and prevent habitat disruption from the production of raw materials. One study reports that resmelting copper from recovered circuit boards can reduce the contribution of copper manufacturing to global warming gas emissions by 40%, acidifying pollution by 90%, and ground-level smog by 80% [27]. More thorough disposition of electronic products through recovery can also divert heavy metals, such as lead, cadmium, and mercury, away from landfills or incinerators and, thereby, prevent their leaching into the groundwater or dispersion into the air. In addition to these direct improvements, reverse manufacturing carries the indirect benefit of creating learning opportunities to improve the environmental benignity of products. For example, the need to simplify the removal and reuse of assets in end-of-life computer equipment has encouraged computer equipment designers to develop designs that facilitate computer disassembly and improve upgradability. It is possible that, as they become more experienced with these kinds of DfE, designers will find it easier and more natural to make changes that improve other environmental attributes of computers, such as product energy efficiency. Enumerating the benefits of reverse manufacturing demonstrates its superiority to extraction and disposal, but does not tell the whole story. The developing recovery infrastructure for computers, particularly in the face of a global electronics manufacturing industry, has potential environmental consequences as well. In the first part of this paper we described the stages in reverse manufacturing and some of their principal operational challenges. In this section, we revisit those stages with 455 a discussion of primary environmental risks and possible process improvements. 3.1. Product recovery is energy-intensive Naturally, recovering products and product assets requires energy, but inattention to the amount or kind of energy used can erode potential environmental savings from recovery. This point is particularly salient for product acquisition. Input management raises two important questions: which products to collect, and where to process them. In the face of a computer and electronics industry that is increasing global, geographically dispersed computers collected from offices or curbsides could travel thousands of miles across the country or overseas in search of cheaper factors of recovery, such as labor rates or browner jurisdictions. Allowing computer products to circumnavigate the globe to capitalize on low costs almost certainly means relying on heavily polluting shipping networks, the global transport backbone for low-value goods like recyclable materials. The large amounts of vehicle fuel consumed to support extensive shipment will fail to capture much of the environmental savings from recovery, instead contributing to air quality and climate change problems. The concern is that it could still look ‘optimal’ from a cost standpoint. When computing the centralized or decentralized locations of processing facilities within a recovery network, optimization algorithms include the transportation costs as a program constraint but may overlook environmental costs, which are externalized from market prices for vehicle fuels. Models not explicitly correcting these market failures by including constraints for energetic and atmospheric impact offer environmentally suboptimal solutions. Explicit inclusion of environmental hazards into decision models is needed to create network designs that mitigate the deleterious impacts of product acquisition. Initial optimization studies have attempted to consider these factors for curbside collection of household waste [28] and for electronics recovery networks within Germany [29] but not for a global electronics supply chain. The novel approach of these studies is to focus on maximizing energy efficiency or minimizing environmental impacts. Continued network modeling should follow these examples. In comparison to collection and transportation, disassembly and reprocessing activities are likely to have less substantial energy impacts but may still rely heavily on unsustainable fossil fuels. More energy efficient and green energy solutions will be needed to mitigate their energy and atmospheric impacts as well. 3.2. Computer reverse manufacturing still produces solid waste One manager overseeing a processing facility, which collects, disassembles, and separates computer assets as 456 C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 part of an OEM warranty program, praised reverse manufacturing for its dual improvement of the bottom line and elimination of solid wastes sent to landfill. To paraphrase the manager—everything that cannot be resold is recycled; nothing goes into a landfill. This enthusiasm and optimism is admirable, but the claim overlooks the broader picture. After initial collection, assessment, and processing, a substantial amount of parts and materials, such as the computer monitors this manager’s facility was not handling, are discarded as solid or hazardous wastes during subsequent stages of disassembly and material reprocessing. The fate of plastics best demonstrates this supply loop failure. Like glass, low-quality metals, and packaging materials, plastics reprocessed after computer recovery are often not competitive with often cheaper or higher quality virgin materials. In some cases, the lower quality of recycled plastics is driven by the method of disassembly and separation. A firm that we visited shredded and separated materials with the primary intention of recovering higher value metals and, in the process, treated plastics as byproducts. Because separating comingled plastics is expensive, if not impossible, the firm’s only alternative to burning or landfilling mixed plastics was recycling them into low-property, amalgamated products, such as plastic lumber or pavement filler. (They chose to burn them.) Even though recycling into plastic lumber could have prevented immediate disposal, such low-grade applications have limited marketable uses, are likely to saturate the marketplace rapidly, and propel all computer plastics toward their original fate: becoming garbage sent to landfills or incinerators. Overcoming these problems requires multiple changes. Foremost, markets for recycled materials need to be improved and expanded. Transferring subsidies from raw material production to material reprocessing can level the playing field and at least allow recycled materials to come closer to competing with their virgin counterparts. Additionally, technology research and development is needed. For computer plastics, no recycling machinery, human eye, nor combination of the two is capable of sorting mixed computer plastics into pure streams [30]. This problem could be corrected by standardizing and limiting the variety of plastics in computers, but this solution has generally been discouraged by OEMs, who believe that external appearance strongly affects branding and sales. An alternative approach is to label plastics with their formulations, but this suggestion raises proprietary concerns about trade secrets or exclusive recipes. These desires to control information and to foster product loyalty become obstacles to sustainable production and recovery. 3.3. Reverse manufacturing does not itself instill responsible production or recovery The development of reverse manufacturing capacity and the participation in DFE activities by some OEMs has made substantial improvements in products, but these efforts offer no guarantee that all computer manufacturers will behave similarly. The fear is that, in the face of free riding opportunities and other perverse incentives, product recovery may ‘greenwash’ environmentally unsound or other undesirable practices. For example, manufacturers may overlook opportunities to replace harmful or costly substances because recycling may avoid landfill bans or allow them to pass along the costs of intensive material reprocessing to the consumer. In this sense, reverse manufacturing could contribute to a slowdown in environmental progress by reducing pressure on computer manufacturers to use more environmentally friendly designs. However, the biggest problem, as described repeatedly, is the need for information to facilitate recovery. Without knowledge of product design and composition, recovery is slower, more expensive, and sometimes abandoned in favor of disposal. To solve this problem common to recovery for all products, scholars have suggested increasing information availability by establishing clearinghouses or consortia [24]. 3.4. Remanufacturing and recycling do not promote responsible consumption The absence of recovery infrastructure is not the ultimate cause of the world’s growing waste disposal woes. Consumption of durable goods as disposable products is. In America, where only 1% of materials are retained in durable goods for more than six months [31], product recovery does not discourage the overwhelming propensity to discard goods after extremely short life cycles. In fact, it may enable it if consumers believe that recycling lessens or eliminates environmental harms. The potential ‘rebound effect’ is that, mollified by the notion that recycling abates the harm of discarding goods, people will increase their consumption rates—buying two or three products in the period in which they previously would have bought just one. Because current free market accounting practices and economic growth hegemonies reinforce this disposable consumption, reliance on product recovery, without policies to encourage responsible consumption, could actually exacerbate unsustainable material and energy use patterns. 4. Conclusions Previous research has laid a foundation for understanding reverse manufacturing for some products, but has focused mostly on recovery to remanufacture products and parts for reuse. Complex goods with less opportunity for reuse, such as computer products, are less capable of remanufacture than some other goods. As a result, they are not remanufactured so much as demanufactured to recover valuable assets wherever and C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 however possible. It is with the goal of describing recovery infrastructure more completely that we have used our understanding of remanufacturing and demanufacturing to present the generalized overview of a reverse manufacturing process for computers (see Fig. 2). We have also described in some detail important aspects and challenges in the acquisition, assessment, disassembly and reprocessing of computer equipment as it moves through this reverse manufacturing process. A great deal of additional research is needed to help managers in the industry’s reverse supply chains optimize the recovery of materials. Demanufacturing offers different incentives and challenges for product recovery from remanufacturing. Our field research and review of the existing literature on current practices reveals that many challenges must be overcome to realize the full potential of product recovery for moving toward more sustainable business. More complete information about product design, composition, quality, quantity, and timing is needed to improve end-of-life opportunities. This will require producer and consumer disclosures about when and how products are made and used. To generate these data, a general reexamination of notions about proprietary information in consumption and production, and suggestions of new responsibilities for product management in industrialized society, is needed. The risks as well as the potential are great. Product recovery offers opportunities to reduce environmental problems associated with electronic solid waste, but it also has shortfalls. Reverse manufacturing can be energy-intensive and may fail to prevent disposal unless reuse and recycling opportunities are expanded, particularly for materials like glass, plastics, and hazardous substances. Although product recovery raises awareness and offers solutions to a particular environmental concerns, on its own it does not correct problems associated with unsustainable patterns of production and consumption. In the face of these limitations, one might ask, “if reverse manufacturing is the answer, what was the question?” The question is how to make industrialization more sustainable. In the case of mitigating electronic wastes, the most prudent approach is to extend computer life cycles by designing more durable products. In contrast to the practices currently followed in the reverse supply chain, developing longer-lasting, more reusable, and more upgradable products would reduce the energy and material demands of the entire industrial process more than breaking them down into their constituent parts and rebuilding them again. This suggestion, frequently advanced in DFE literature, reaches far beyond simply improving reverse manufacturing as a process. It involves a reprioritization of consumption and production practices, which lacks political leadership at the national level in the US and appears left for private actors or other levels of government to undertake. It is 457 for these actors that our study helps to consolidate existing knowledge, highlight environmental aspects at each stage of product recovery, and lay a foundation for an impact model to support environmental planning for the overall process. Further research like this is needed to ensure that reverse manufacturing not only becomes more efficient from a managerial perspective, but also solves waste problems rather than simply rearranging environmental burdens. Appendix A Glossary Recovery: often dubbed recycling in lay conversation, product recovery describes the broad set of activities designed to reclaim value from a product at end of life. An analog to production, this set of activities includes both reuse and recycling. In addition to reclaiming materials for recycling, recovery also extracts information, refurbishes parts, or remanufactures whole products for reuse. We use this term interchangeably with ‘reverse manufacturing’. Reverse Manufacturing: activities designed to reuse, recover, refurbish, remanufacture, demanufacture, or recycle durable product assets at the end of a product life-cycle. Reverse manufacturing is a complementary term to ‘forward manufacturing’, which describes the activities traditionally used to bring a product to market. We use this term as a synonym for ‘recovery’. Remanufacturing: a recovery strategy focusing on refurbishing products or reconditioning components to rebuild products in their original design. Demanufacturing: a recovery strategy that focuses on reclamation of product assets as a diversionary tactic to avoid disposal. Assets are recovered and reused wherever possible without the explicit intention of rebuilding products in their original designs. Acquisition: the first stage in the recovery process, in which product types are selected and products are located, collected, and transported to facilities for reverse manufacturing. Assessment: the second stage in the recovery process where input products are appraised and process outputs are chosen. Disassembly: the third stage in the recovery process, in which products are physically taken apart for repair, refurbishment, reconditioning, or recycling. Disaggregation: careful disassembly that retain design value of the product and all of its components. Dismantling: disassembly that retains the design value of some components but destroys others. Demolition: disassembly that destroys all design value. 458 C.D. White et al. / Journal of Cleaner Production 11 (2003) 445–458 Reprocessing: the separation of product assets to facilitate their recycling. References [1] Matthews HS, et al. 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