Reverse Logistics
End-of-Life Logistics: Expanding the Traditional Supply Chain

Analyst Insight: You design a product, source it, build it, store it, ship it, and your consumer enjoys it... then what? It is inevitable that at some point the original intended use will be over and the product will reach its end of life. What happens now is a topic that is piquing the interests of many traditional and non-traditional supply-chain players. The challenge lays in how to efficiently reintegrate or disposition these products. - Melissa Hadhazy, associate partner, Infosys Consulting

End-of-Life Logistics: Expanding the Traditional Supply Chain

With the pace of innovation and consumerism increasing every year, product lifecycles are shortening and the volume of end-of-life products is growing exponentially. Where the retirement of a product was never of much concern for many manufacturers, it is now becoming a hot topic. Many industries (electronics especially) are being governed by stricter policy and regulations to ensure the proper disposal, refurbishment or recycling of components. Other companies are benefiting from the research and information gained by studying product use and failures. Regardless of the motivation, all require reengaging with the product to guide these late lifecycle activities.

These internal and external pressures are also forcing many manufacturers to go back to their design teams to develop products with less material, extended operable lives, easer repair, increased durability, or simplification of material recovery for recycling.

The transportation and handling of these “used” products is a beast unto itself. Most traditional supply chains are not equipped to handle returned product. Unlike direct from supplier shipments, these products are brought back into the supply chain from multiple users, stores or collectors. So instead of the “one-to-many” context on the outbound side, you are dealing with the many-to -one when it comes to reverse. And the exact condition and shipment details are not always clear. 

The variability and uncertainty of inbound end-of-life products has led many shippers to outsource the entire end-of-life process. The 2017 Third-Party Logistics Study (sponsored by Penn State, Penske Logistics and Capgemini Consulting) cited that over 40 percent of shippers would prefer a third party to handle all aspects of end-of-lifecycle collection and processing. 

That said, the challenges of handing and incorporating end-of-life logistics into overall product planning and supply-chain design can pay off greatly. The EPA announced that in 2013 the U.S. recycled 1.27 million tons of consumer electrons; this is estimated to be about 40 percent of those that were at the end of their life. The amount recycled has gone up over 30 percent compared to the previous year. The collection and redisposition of these materials has become an industry of its own.

Beyond the direct material reclamation benefits, many shippers are seeing cost savings in treating the end-of-life logistics as part of their overall supply chain. Shippers can gain valuable insights from the end-of-life product information (where the products landed, how long they lasted, what failures caused disposal, etc.), which can be used in product development and sales planning for future versions. Additionally, supply-chain managers and executives can leverage end-of-life logistics in managing traditional supply-chain contracts and negotiations. Approximately 60 percent of traditional third-party logistics companies also offer end-of-lifecycle support, according to the 2017 Third-Party Logistics Study.

The Outlook

The pressures to appropriately and efficiently handle post-consumer products are only going to gain momentum in the coming years. The speed of technology and fast manufacturing will continue to push products into the marketplace. Companies that can successfully plan for and integrate end-of-lifecycle activities will be best positioned to handle this expansion of what is typically considered the traditional supply chain.

With the pace of innovation and consumerism increasing every year, product lifecycles are shortening and the volume of end-of-life products is growing exponentially. Where the retirement of a product was never of much concern for many manufacturers, it is now becoming a hot topic. Many industries (electronics especially) are being governed by stricter policy and regulations to ensure the proper disposal, refurbishment or recycling of components. Other companies are benefiting from the research and information gained by studying product use and failures. Regardless of the motivation, all require reengaging with the product to guide these late lifecycle activities.

These internal and external pressures are also forcing many manufacturers to go back to their design teams to develop products with less material, extended operable lives, easer repair, increased durability, or simplification of material recovery for recycling.

The transportation and handling of these “used” products is a beast unto itself. Most traditional supply chains are not equipped to handle returned product. Unlike direct from supplier shipments, these products are brought back into the supply chain from multiple users, stores or collectors. So instead of the “one-to-many” context on the outbound side, you are dealing with the many-to -one when it comes to reverse. And the exact condition and shipment details are not always clear. 

The variability and uncertainty of inbound end-of-life products has led many shippers to outsource the entire end-of-life process. The 2017 Third-Party Logistics Study (sponsored by Penn State, Penske Logistics and Capgemini Consulting) cited that over 40 percent of shippers would prefer a third party to handle all aspects of end-of-lifecycle collection and processing. 

That said, the challenges of handing and incorporating end-of-life logistics into overall product planning and supply-chain design can pay off greatly. The EPA announced that in 2013 the U.S. recycled 1.27 million tons of consumer electrons; this is estimated to be about 40 percent of those that were at the end of their life. The amount recycled has gone up over 30 percent compared to the previous year. The collection and redisposition of these materials has become an industry of its own.

Beyond the direct material reclamation benefits, many shippers are seeing cost savings in treating the end-of-life logistics as part of their overall supply chain. Shippers can gain valuable insights from the end-of-life product information (where the products landed, how long they lasted, what failures caused disposal, etc.), which can be used in product development and sales planning for future versions. Additionally, supply-chain managers and executives can leverage end-of-life logistics in managing traditional supply-chain contracts and negotiations. Approximately 60 percent of traditional third-party logistics companies also offer end-of-lifecycle support, according to the 2017 Third-Party Logistics Study.

The Outlook

The pressures to appropriately and efficiently handle post-consumer products are only going to gain momentum in the coming years. The speed of technology and fast manufacturing will continue to push products into the marketplace. Companies that can successfully plan for and integrate end-of-lifecycle activities will be best positioned to handle this expansion of what is typically considered the traditional supply chain.

End-of-Life Logistics: Expanding the Traditional Supply Chain