Let’s start with the obvious: There’s a moral imperative for businesses to increase their sustainability. While individual waste and pollution certainly has a greater-than-zero effect on the health of our planet, businesses, by virtue of their scale, have an outsized effect on our ability to impact our environment, and while these organizations may not have a fiduciary duty to their shareholders to be conscious of their waste, they certainly have a duty to humanity. And many firms have chosen sustainability as a practice for that reason, but in reality, there’s not just a moral imperative, but an economic imperative as well.
For our purposes, we’re going to focus on managing, and mitigating waste, and the catalyst for minimizing waste is the well-covered concept of the Circular Economy. For the uninitiated, the circular economy is the process of eliminating the linearity of delivery by rethinking supply chains, workflows, and delivery cycles. Here’s a short video that considers it from a consumer perspective:
This is obviously a multi-year process that requires significant investment and organizational restructuring, but at its heart, it is aided by rethinking the compact that you, the supplier of goods, makes with your customer. Specifically (and no surprise here!) I’m talking about service.
Structuring Around Service
Service has the effect of taking the seemingly transactional relationship that many businesses have with customers past the sale into their utilization of products and services. If any of that is news to you, I don’t know what to tell you. As we’ve said repeatedly here, building a business around service is good for business. Apple’s products are great, but Apple’s service is why they’re a leader. And that service mindset has helped Apple set itself apart as an example of sustainability.
By keeping your hands on your products past the sale, you can use the resources at your disposal to, of course, ensure that the products are working optimally for the customers. But furthermore, this allows you to more fully control the lifecycle of your products, identify with authority a point of obsolescence, and remit, recycle, and rebuild products, this lowering the bottom-line and keeping hazardous materials out of landfills.
Building a Sunset Plan for Assets
I’ve spoken with a variety of leaders about how they go about the process of evaluating sunset plans for assets, and the list runs the gamut—from choosing a five-year sunset plan for assets that refresh at quick rates, to mandating that products be replaced if repairs costs exceed 50% of the cost of a new unit. The means to gauge this sit unique with each business, thought here are certainly some industry analogues in place. It’s likely that a variant of this policy exists within your service organization at some point already.
Once it’s formalized and socialized, it needs to make its way into your repair systems by default. When logging a job, service workers should be prompted automatically in real-time when a repair passes a specific threshold. With those business rules in place, there’s no second-guessing or questions on the job site.
Building the Right Reverse Logistics Processes
What happens after that is where sustainability takes center-stage, and assuming your service software has prompted a product refresh, and that replacement has concluded, the crux of sustainabile business comes with figuring out what to do with the old asset. This is where a solid, full-featured reverse logistics engine come in.
We’ve spoken about reverse logistics previously, mostly in terms of how it impacts the repair-remittance cycle, but thinking about it through the lens of sustainability, when scrapped parts are returned, remitting them appropriately becomes a unique new challenge. What internal materials must be sent where, what is recyclable, and how must non-recyclable materials be safely disposed of.
You can and should build those rules, and those supply chains, into your reverse logistics workflow, and maintain the ability to adjust them however you need to. This echoes the necessity that you, the business, maintain the levers of the recycling process for your customers. You have the resources (and the incentive) to break apart their products, so that they don’t end up in a landfill.