Since its inception, the idea of sustainable development has sparked heated debates over corporations' responsibility for the waste their products produce. Recently, the European Union (EU) directed that by 2007, European OEMs will be fully accountable and responsible for the treatment of waste from electric and electronic equipment (WEEE). The question thus becomes not if but how companies will address this new responsibility. Although WEEE targets have not yet been set in the U.S., the EU precedent prompts careful consideration of how future directives may affect the U.S. electronics industry.
In today's electronics industry, economy and ecology are at odds. Production processes are designed to build products from scratch. So the higher the level of aggregation of a product to be recycled, or the closer it resembles the original product, the more effort and expense are needed to move it back into the market. While it is easier and more profitable for OEMs to include recycled primary materials in production (logistics to support this process are in place, and the "green" label wins with customers), the reuse of highly aggregated products is better for the environment.
Directives that require OEMs to shoulder WEEE responsibility will force even more dynamic linking within an already complex supply network. The simple supply chain is already a thing of the past for most electronics OEMs. To establish closed-loop product lifecycle management (PLM), OEMs will have to design and engineer products for reusability and sustainability. Today's enterprise resource planning and advanced planning systems focus forward. Tomorrow's supply networks will have to look backward as well. To exploit the opportunities from the return flow of products and to adequately handle the increased exchange of information that WEEE responsibility will trigger, OEMs will increasingly rely on support from sophisticated systems for a closed-loop lifecycle.
TAKING RESPONSIBILITY
Corporate responsibility for WEEE directives will soon be a global proposition. To meet the changing requirements of an evolving business ecosystem, OEMs will need a better, more integrated view of their markets and supply chains. The ability to dynamically adapt to changes in demand for new, reused, or recycled products depends on how well the enterprise can communicate internally and externally. Real-time detailed knowledge about the product at the end user significantly enhances the overall quality of information. A constantly updated status can help reduce waste and lower costs in the logistics and production cycles. A holistic view of the entire business ecosystem and a closed-loop mentality are essential in forming the strategy and business model to succeed under new WEEE directives.
Variability and flexibility in the cost and capacity structure are also key to remaining competitive under future WEEE directives. A fragmented value chain allows the most flexibility. But this type of chain puts product ownership in multiple hands over the product's lifecycle, so it will be difficult to sustain an economical and ecological perspective from both. Owning the entire value chain is not an option either. Any business must focus on competitive advantage.
To profit from WEEE responsibilities, corporations should change their mindset to view products as vehicles for other business models, such as services. Frequently, the market for services—like voice-based communication—is many times greater than that of products like telephones or mobile phones. With the producer as the single entity now held responsible for the full product lifecycle, traditional businesses may evolve more quickly into leasing or renting models simply to gain access to services.
The EU has taken the first step in rectifying the disjointed approach to WEEE in the electronics industry. By handing responsibility over to OEMs and producers, the EU has paved the way for a new business ecosystem. Once this integrated ecosystem is realized, it will become a key value driver for the consumer-electronics industry. As the supply chain loops back with more and more precision, the current sell and buy paradigm will change. Maintaining a view across the complete product lifecycle puts the consumer electronics OEM in position to grab the opportunities that new WEEE directives offer.
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