END OF PRODUCT LIFE:CLOSING THE LOOP

ISQA 511

Mellie Pullman

Overview

EOL Supply Chain Management & 3 Rs

Landfill vs. Recycling

Recycling & Innovation

EOL Supply Chain & 3Rs

Disposal-Land Fill & Incinerate

Pro

duct Ta

ke-

Back

Recycling with Disassembly

Pro

duct

Use

Distributor & Customer

Final Assembly (OEM)

Raw Material Suppliers

Subassembly

ComponentSuppliers

Recycling without

Disassembly

Remanufacture & Reuse

Secondary Markets

US Municipal Waste Stream Generated from Products

Category Thousand tons

Durable Goods (tires, appliances, furniture, carpets, etc.)

45,670

Non Durable Goods (newspapers, books, plastic utensils, disposable diapers, etc.)

58,710

Glass Packaging 10, 050Steel Packaging 2,550Aluminum Packaging 1,880Paper & Paperboard Packaging 38,280Plastics Packaging 13,010Wood Packaging 10,670Other Misc. Packaging 310

Source: Franklin Associates (2008), a Division of ERG.

The Three Principles Of Waste & Pollution Reduction:

There are three different strategies to reduce or prevent waste/pollution:

• Dematerialization: Increase resource productivity (use less to achieve the same function)

• Material/process substitution (different material/process to achieve the same)

• Reuse & recycling (use material and value-added over and over)

Dematerialization examples

• Advanced High Strength Steels (AHSS) in automotive applications (25% weight reduction)

• Mass reduction of beverage containers

• Continuous casting technology in metals production

• Drip lines instead of sprinklers for irrigation

• Spaceframe design concept

• Miniaturization in the electronics industry (e.g. precious metal content in consumer electronics)

Material substitution examples

• Steel, aluminum, magnesium, composites in automotive

• Steel, concrete, timber in construction

• Glass, steel, aluminum, plastics, paper in packaging

• CFCs instead of ammonia, chloromethane, sulfur dioxide

• MTBE instead of lead (TEL) as antiknock in fuels

• Bio-based plastics versus petroleum-based plastics

• Lead-based solder versus lead-free solder

End-of-lifeproduct disposal

Product demand & use

Raw materials

mining

Primary materials

production

Component

manufacture

Finalproduct

assembly

Productsale anddelivery

Component

re-processing

Productre-

processing

Materialsre-

processing

Eol productcollection

& inspection

A supply loop is constrained when it is not able to reprocess all targeted end-of-life products into secondary output marketable at above-cost prices.

The reasons can be:• Limited collection of end-of-life products• Limited feasibility of reprocessing

• Limited market demand for the reprocessed secondary resources

Reuse and Recycling (Supply Loops, Closed-Loop Supply Chains)

Recycling Rates

Batteries are recycled at a rate of 99% Metal has next highest recycling rate 6O% Paper Products: 55% Current Glass (Aluminum) container recycling

rates: 11 Deposit States rates 64% (76%) Remaining No-Deposit States rates 12% (35%)

Wood Pallets: 800 Million produced each year (300 M from recycled or reclaimed content) 1/3 of US landfills no longer accept these pallets;

others charge for their disposal.

Primaryproduction

DisposalUse

Supply Loops – Environmental Benefits

1. Diversion of product or process waste from landfill or incineration

by collecting them for economic value recovery via reprocessing.

2. Generation of secondary resources from product or process waste and

displacement of primary resources, i.e. materials, components & products.

When are the environmental benefits from displacement moresignificant than the benefits from avoided landfill / incineration?

2. 1.

Collection &reprocessing

Material Primary Production (cradle-to-gate in

MJ/kg)

Recycling (scrap-to-gate

MJ/kg)

SavingsFactor

Aluminum 194.7 10.3 19

Copper ~100 20 – 30 5 – 3.3

Steel 21.7 7.1 3

Steel section

33.3 16.0 2.1

PET 82.7 30.2 2.7

Paper 18 12 1.5

Glass 12 8 1.5

Supply Loops – Potential Benefits from Displaced Primary Production

Product Primary Production Reuse Savings Factor

Steel section

33.3 MJ/kg 5.2 MJ/kg 6.4

Cell phone 150-250 MJ/phone 2.5-5 MJ/phone 30-100

Could we replace all primary steel (BF/BOF) with recycled steel (EAF)?

BF: blast furnaceBOF: basic oxygen furnaceEAF: electric arc furnace

0

500

1000

1500

2000

2500

100% BOF 100% EAF

GHG emissions from global steel production in 2005 (in MMT CO2 eq)MMT= Million Metric Ton

Factor 5.4

• 1020 MMT finished steel (1142 MMT crude steel)

• Scenario 1: All from basic oxygen furnace (BOF 2.021 kg CO2eq / kg)

• Scenario 2: All from electric arc furnace (EAF 0.3471 kg CO2eq / kg)

MMT CO2eq

1950 1960 1970 1980 1990 2000

200

400

600

800

1000

1200

Global crude steel production (in MMT)

EAF602

(53%)

BOF540

(47%)

most consumed

640 MMT scrap

generatedin 2005

2005

0

500

1000

1500

2000

2500

100% BOF 64% BOF,33% EAF

47%BOF, 53%EAF

100% EAF

Factor 1.4 Factor 1.75

GHG emissions from global steel production in 2005 (in MMT CO2 eq)

• 1020 MMT finished steel

• Current: ~ 70% recycling rate (?), 64% BOF, 33% EAF

• Feasible today but steel demand increases: 100% recycling rate, 47% BOF, 53% EAF

MMT CO2eq

Research by: Roland Geyer, Vered Doctori Blass, University of California, Santa Barbara

Should we reuse or recycle our cell phones?

Background

Plastics 40-50%

Glass and Ceramics 15-20%

Ferrous metals ~ 3%

Non ferrous metals 22-37%

Other 5-10%

• Estimated amount of cell phone subscriber in 2007: 2.5 billion

• Estimated end-of-life phones in 2005 in the USA: 130 million (~ 0.55 wt% of total e-waste in the US)

• Estimated av. life time 18 months, collection rate < 20%

• More handsets reuse than recycled

Metric tons wt% of USconsumption

Copper 1500 0.06%

Silver 40 0.5%

Gold 4 2.3%

Palladium 2 1.7%

Material compositionRecycling potential in USA in 2005

in MJ/phone

Best case 250 21.6 1 0.5 1.5 ~ 0

Worst case 150 16.2 5 1 2 ~ 0

reusedisplacedE recycle

displacedE collE reusereproE recycling

reproE dispE

Diversion from

landfill Edisp

Displaced production Edisplaced

Collection Ecoll &

reprocessing Erepro

Material & product markets

Cell phoneuse

Energy required to produce, collected and reprocess cell phones

Economics of cell phone recycling and reuse

US 2006 (2006 $/phone) UK 2003 (2006 $/phone) Average Cost 7.88 11.36 Average Revenue 0.75 0.90

1

Recycling (including reverse logistics)

US 2006 (2006$/phone) UK 2003 (2006 $/phone) Total Cost 9.8 12.76 Average Revenue 17 23

1

Reuse (including reverse logistics cost)

Not profitable if recyclers have to bear the reverse logistics costs.

Profitable even if refurbishers bear the reverse logistics costs.

Closer look at cell phone recycling

Mass (in Grams) Metal price in Value of recoverable metals (in cents) High Low 2006 (cents/g) High Low Ag 0.90 0.11 36.01 32.41 4.03 Al 7.20 1.52 0.27 1.94 0.41 Au 0.033 0.026 2151.71 70.15 56.12 Cr 0.72 0.20 0.82 0.59 0.16 Cu 20.68 9.30 0.68 14.09 6.33 Fe 6.62 2.70 0.10 0.66 0.27 Ni 2.74 0.70 2.43 6.64 1.70 Pb 0.80 0.28 0.17 0.14 0.05 Pd 0.09 0.00 1060.97 93.37 0.00 Sn 0.80 0.43 0.92 0.74 0.39 Zn 0.92 0.27 0.35 0.32 0.10 Total 41.57 15.56 221.03 69.56

1

Currently, only copper and the precious metals are being recovered.

However, together they make up 95% of the total material value.

Conclusions

• More cell phones are currently reused than recycled

• Reuse is profitable even if collection cost is included,

one of the reasons being the short lifetime of cell phones

• Recycling is only profitable without the collection cost

• Recycling currently only recovers copper and precious metals,

i.e. 70-84% of the embodied energy and 95% of the economic value

• The displacement rate of metal recycling is estimated to be high

• The displacement rate of cell phone reuse is estimated to be low

• WHY?

• At current estimated displacement rates cell phone recycling might

generate more environmental benefits than reuse

Reuse & Remanufactured Products How do you feel about buying these

used or remanufactured products? (rate 1 neutral to 3 very strongly on how

strong you feel) Unattractive/Disgusting Safety and Reliability Issues Purchase is more green

Technology Product

Unattractive/Disgusting

Safety and Reliability Issues

Purchase is more green

Would buy it if it were X % of new price?

Household Product

Unattractive/Disgusting

Safety and Reliability Issues

Purchase is more green

Would buy it if it were X % of new price?

Personal Product

Unattractive/Disgusting

Safety and Reliability Issues

Purchase is more green

Would buy it if it were X % of new price?

Other examples for reuse:• Beverage containers and other packaging• Printer/copier cartridges• Single use cameras• Electric motors of analog photocopiers• Cell phones• Tire retreading• Automotive spare parts

Fundamental reuse challenges:• Challenge to competitively match supply with demand• Newness seems to have intrinsic value for most consumers• OEMs do not usually support reuse (almost no design for reuse)• Reused products are seldom perfect substitutes• Therefore unclear to what extent reuse displaces new production• Product reuse has conflict potential with product innovation

Reuse

Question:How can innovation improve the situation? Strategies for

reducing waste are not keeping up.

Market demand for many materials = volatile

As Thomas Edison said about inventing: “You need a good imagination and a pile of junk.”

Factors influencing 3Rs vs. Reverse Supply Chain (EPR)

Factors affecting RSC implementation

Factors driving 3R Rate

Legislation Country & State Specific Policies: Product Standards & bans, Performance Standards, Charges& Taxes, Emissions trading, Subsidies & Information Disclosure

Customer demand Customer Demand (both consumer & retail customer)

Strategic cost/benefit Strategic cost/benefit

Firm’s environmental concern

Firm’s environmental concern

Volume and quality of returns

Overall Market Demand for materials

Incentives & available resources between partners

Incentives & available resources between partners

Integration & coordination of SC

Integration & coordination of SC

Carter & Ellram (1998), Carter & Carter (1998), Bowen et al (2000), Stevens (2004), Choinard et al (2005), Dahlatshahi (2005), Tan & Kumar (2006), Walker et al (2008), Guide & Van Wassenhove (2009), Rahman & Subramanian (forthcoming IJPE) and others.

Incremental vs. Radical Innovation (3R Context)

Incremental

Innovation

Product RedesignImprovement to a product within its current typology

Process RedesignImprovement to a process within its current typology

Radical Innovatio

nFunctional

Significant change in the device concept to

provide the same function as the device

it replaces

InstitutionalReplacement of

products with services

SystemSignificant changes in the device concept,

infrastructure and user learning

Washing Machine System-Radical Innovation

How can we get more recycling innovation?

System or Supply Chain Significant changes to

device concept, access to & flows of EOL products

Product and Process Design & Technologies for

Re-processing and Disassembly

Concept & Behavior shifts

Market Demand vs. Legislation

Case analysis findings: Innovation (I vs. R) as a function of key drivers

Key Drivers

Innovation Market Legislative

Product/Process

Low Value: I High Value: I

High Value: I (WEEE & Autos)Low Value: I

System/Supply Chain

Low Value: IHigh Value: I & R (Functional) in shift of durable product to services or “servicizing”

Radical (all types) with Autos and EPR products.

Approaches & Challenges

Incremental innovation seen with low value Customers demand but may not

participate Packaging innovations (weight,

unessential packaging, use of concentrates, refills, different materials)

Incremental innovations face diminishing margins of return

Radical innovation with high value Hard to create system shifts without

high value Serviciszing & sharing products

(company maintains ownership and others lease as needed)

US demand fluctuates for material causing uncertainty & risk avoidance >fragile

China demand for materials is high so radical process innovation happens there

Incremental innovation more likely with standards, emissions trading, required information disclosure and voluntary recycling. (Cander, 2004)

Radical innovation shown with product bans, charges & taxes, subsidies and EPR (EU autos) Shift customer habits in major ways Product Innovations

Design for Dismantling & Recycling (DFD/DFR)

EEE producers Technology & supply chain

innovations Networks of dismantlers/shredders

Market Demand-based Approach

Legislative Policy-based Approach

Example Market Driven: Chinese Recycling Xmas Lights , Minter (2011)

Servicizing or Shared resources B2B

Copiers Equipment Others?

B2C Cars Clothes Wineries

Pros & Cons of Servicizing & Sharing

Questions & Thoughts