The high-tech industry faces two divergent challenges in product lifecycle management. Consumer electronics are being upgraded and replaced more quickly than ever. In 2009, mobile phone makers introduced 900 more varieties of handsets than they did in 2000, according to McKinsey & Co. And high-end, high-value electronics equipment is being designed (and used) for the long haul. These dynamics put the electronics supply chain in a unique position to provide an expanded array of services to the high-tech ecosystem.
Consumer goods that are set aside due to an upgrade can be returned, refurbished, and redeployed, thereby retaining their value for the manufacturer. Heavy equipment that is otherwise operating efficiently often requires fast and dependable post-sales repair and support. Increasingly, electronics OEMs are relying on reverse logistics services to manage these complex transactions.
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"Many manufacturers view return and repair activities as a cost center," Scott Hertel, head of the North American high-tech customer solutions team for UPS Logistics and Distribution, told us. In reality, experts say, a solid reverse logistics program can help companies increase revenue by up to 5 percent of total sales.
Moreover, electronics OEMs aren't just responsible for developing new products. They now have to manage these products from cradle to grave. Electronic goods are right in the crosshairs of environmental mandates such as the EU's Restriction of Hazardous of Substances (RoHS) and Waste Electrical and Electronic Equipment (WEEE). OEMs--not their subcontractors--are responsible for compliance with such directives.
This has become a significant challenge for manufacturers of high-value equipment. Ken Stanvick, an environmental consultant, told us high-end medical equipment has an expected lifespan of 15 to 20 years. Under the EU's RoHS Recast, medical OEMs will face a quandary in a few short years. Beginning in 2019, medical equipment sold from the EU to secondary markets will have to comply with the EU's most recent environmental standards. It is highly likely the components used in much of this equipment will be out of compliance or obsolete by 2019, Stanvick said. "Sourcing these components and bringing this equipment up to spec is going to be a nightmare."