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Supply-chain Management: Asset Recovery & Disposition
December 31, 1969 |Estimated reading time: 6 minutes
With an increased focus on the environment through RoHS and WEEE initiatives, it has become essential for OEMs and CMs to be increasingly aware and involved in the entire disposition process of their excess and scrap materials.
By Roland Brewer and Steve Gregoire, Sea View Technologies
Pulitzer Prize-winning author and Amherst professor Joseph Ellis, in commenting about his book Founding Brothers, made the following observation: If Thomas Jefferson and John Adams were to be resurrected, they would surely be impressed with our scientific and technological advances. But, they would likely be more impressed with the sheer quantity of material goods that we have. In their day, all goods were handmade - resulting in high costs and scarcity. With the advent of the assembly line and advances in materials, we are blessed with a plethora of inexpensive, well-made goods. Sadly, this blessing is almost overshadowed by too much waste at the end of a product’s life. This concern for waste has increased dramatically in recent years with the proliferation of low-cost, short-technological-life products such as cell phones and MP3 players. This burden is especially felt in the European Union (EU) because of limited landfill and waste sites.
With an increased focus on the environment through the RoHS and WEEE initiatives, it has become essential for OEMs and contract manufacturers (CMs) to be increasingly aware and involved in the entire disposition process of excess and scrap material. The process for RoHS and WEEE compliance begins with selecting a supply-chain partner who is an expert in disposition processes, is dedicated to understanding these initiatives, and has the equipment to determine how materials must be disposed according to all laws and initiatives. This partner should be committed to following ISO’s Environmental and Quality Management standards.
The first step a qualified supply-chain partner should take is a logical one - determining RoHS-compliancy levels of the incoming material from a client OEM or CM. ICs, resistors, capacitors, and other electronic components typically are made of several layers of materials, each of which must be tested to prove RoHS compliance using the EU’s definition of “per homogeneous material.” One company* uses an X-ray fluorescence (XRF) analyzer** to conduct initial tests in-house and document the findings. A proprietary, in-house, chemical-analysis process using various spectrophotometers and related chemical-analysis equipment is also used. When working with its networking OEM partners, one OEM had six circuit boards that they needed to confirm were RoHS compliant, but were unable to obtain the pertinent manufacturer information of the material on certain parts on the boards. Testing equipment was brought into the OEM’s facility, and all material on the boards was tested.
One aspect to having a successful program in place for RoHS is to have a software system that allows the material to be classified as compliant or not, and to what level. Documenting the quantity and date code of components or assemblies is no longer sufficient. OEMs and CMs should expect supply-chain partners to have elaborate software systems that enable them to log on and view inventory and material information in real-time.
In additional to helping an OEM or CM achieve RoHS compliance, a qualified supply-chain partner should also be flexible enough to handle all aspects of the changing world of WEEE. There are four basic steps to a successful WEEE program: recovery, reuse, recycling, and reporting.
WEEE - Cradle to Grave
A supply-chain partner must ensure that:
- All electrical and electronic equipment scrap is collected, separated, and recycled in accordance with the WEEE initiative.
- Incoming receipt of material is identified, coded, separated, and added to stock.
- Testing is done when necessary to determine material content.
- If material can be reused, it is separated and placed into inventory for resale in accordance with the revenue-share agreement.
- If material is to be recycled, it is dismantled and sorted by commodity.
- Certificates of Destruction are provided for scrap material.
- Documentation of disposition of all materials ensures compliance with WEEE.
- Customer access is available 24/7.
- Documentation of any customer or government deviation is processed.
- Accurate data is maintained and verified for Certificates of Compliance (CoC).
RoHS and WEEE compliance depend on proper disposition of excess and obsolete (E/O) material, and materials to close the loop in the manufacturing process. A supply-chain partner must be flexible depending on the nature of the compliance needs, and willing to improve and adjust procedures.
The issue that opponents of RoHS and WEEE initiatives most commonly mention is cost. With shrinking margins in many electronic manufacturing companies, how can anyone put resources and funding toward a costly recycling program? The good news is that not all recycling programs result in additional cost. Market leaders in recycling have developed fully-compliant RoHS/WEEE programs to support manufacturing that operates on a revenue share for reclamation on scrap, excess and obsolete material, or in simple terms - a profit. PCBs should be viewed as a source of wealth when they are excess or obsolete. This material is collected and shipped to the recycling location where it is separated and processed for reuse or recovery. The material may include finished goods, PCBs, excess electronic components, plastics, metal enclosures, or electro-mechanical devices. The OEM or CM partner receives a revenue share for the returns generated from sale of these goods.
One telecom company, who decided to partner with a third-party recycling company 10 years ago, collects and ships excess components and scrap quarterly. They once absorbed a high cost to transport and process the material by conducting the process in-house, but saw the third-party recycling model as an opportunity. They are being rewarded with over $1 million per quarter in recoverable revenue from their unwanted and excess materials. From this success, the company also set up a third-party logistics program for their excess components. Upon receipt of components, all parts are tested and separated for RoHS compliance. This ensures a proper identification for re-entry into the manufacturing process - closing the loop on purchasing tested and documented components. Excess components are held as active inventory in a humidity-controlled warehouse, and sold to EMS providers, distributors, and manufacturers.
The industry’s migration to RoHS and WEEE as standards is revolutionary. But there are no established ways to manage how one electronics company or another achieves compliance. The results of RoHS and WEEE compliance are a shared win for the industry, resulting in a cleaner environment. Each electronics companies’ path to achieve compliance may differ, but the result must be the same - compliance at both ends of the supply chain. The development of programs and processes that are improved continuously provide manufacturers with a competitive edge and shareholder value for their commitment to secure effective RoHS and WEEE management.
Conclusion
It is a vital role of a supply-chain partner to support the manufacturing process with RoHS identification and verification for the components it places in the supply chain. It also is important that the back-end of the supply chain properly dispose of electronic waste as directed by WEEE. For manufacturers to accept untested and undocumented material from suppliers is an invitation for non-compliance, and worse.*Sea View Technologies, Exeter, N.H.** Thermo Electron, Billerica, Mass.
ACKNOWLEDGMENTs:The authors thank Ronald C. Lasky, Ph.D., PE, Indium Corp. and Dartmouth College.
Roland Brewer, president, Sea View Technologies, may be contacted via e-mail: rbrewer@seaviewtech.com. Steve Gregoire, strategic account manager, Sea View Technologies, may be contacted via e-mail: sgregoire@seaviewtech.com.