asset recovery management 8803 business and the environment beril toktay college of management...
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Asset Recovery Management
8803 Business and the Environment
Beril ToktayCollege of Management
Georgia Institute of Technology
Xerox Life Cycle Design
Infrastructure Development Need to develop cost-effective regional recyclers Need to develop a collection infrastructure
Markets for Recycled and Remanufactured Products Market Acceptance Developing Slowly Government Purchasing is Key
Cost-Effective Recycling of Raw Materials Partnerships required
Industry-wide Alliances with suppliers
Need to restructure thinking and organization
Manufacturer Product Recovery Strategies (PC example)
Do nothing
Promote market Gateway donation program
Sponsor EOL event at Best Buy
Long-term contract Dell packs customer PCs and ships to contracted recyclers
Joint venture with recycler HP partnership with Micro Metallics for recycling facilities
Industry consortium EU, Japan
Integrate into recovery Dell PC recycling facility
IBM Asset recovery centers
Profitability of Recovery We want to make recycling profitable:
Profit = Revenue – Cost
Revenues are obtained from: High value (high demand), undamaged recovered reusable
components. Additional processing (cleaning, inspection, upgrading,
reassembly, and redistribution) adds to costs. High value, uncontaminated scrap materials.
Any contamination which reduces material properties depreciates the material value.
Energy recovered and sold from incineration or pyrolysis. Lowest revenue of all.
Common Cost Factors Buy back of product ($/product)
Dependent on condition and value of product type. Transportation costs ($/km)
May also dependent on weight and damage tolerated. Tip/storage fees ($/product), also for landfilled residue.
Strongly influenced by location of facility and local legislation. Labor cost ($/hour)
Dependent on level of skills required and location. Equipment investment cost ($)
Influenced by need for special (expensive) equipment. Equipment operating cost ($/car, $/hr) Time necessary to recover parts and materials (hr/product)
STRONGLY INFLUENCED BY PRODUCT DESIGN !
A Quick Costing Example Recovery of a dashboard:
Removal of dashboard from car = 35 min. Removal of dash components = 35 min. At $20/hour, labor cost $23
In order to break even with material recycling, more than 10 kg of copper (most valuable scrap material in table) would have to be recovered
Or, dash components (gauges, etc) would have to be sold for re-use. Big questions: What is the market willing to pay for recovered
dashboard components? How much value would remanufacture add to
recovered components?
Material Mass Virgin price Scrap price[ kg ] [ % ] [ $ / kg ] [ $ / kg ]
Steel / Iron 1004 72.38 0.12Aluminum 71 5.12 1.32Zinc 9 0.65 1.07Copper 23 1.66 2.20Lead 10 0.72 0.25Polyurethane foam 12 0.87 2.20 0.00Polypropylene 15 1.08 1.10 0.11Poly Vinyl Chloride 11 0.79 1.00 0.22ABS 13 0.94 2.50 0.73Nylon 10 0.72 3.00 0.00Polycarbonate 9 0.65 3.30 0.66Polyurethane 10 0.72 3.50 0.00Polyethylene 5 0.36 0.90 0.40Polyester 20 1.44 3.30 0.00Rubber 61 4.40 2.45 0.05Other polymers 5 0.36 2.30 0.06Gasoline 15 1.08 0.30Oil 5 0.36 0.05Antifreeze 5 0.36 0.06Other hazardousfluids
5 0.36 0.00
Glass 39 2.81 0.00Plastic ReinforcedFibers
5 0.36 0.00
Plastic CompositeFillers
5 0.36 0.00
Miscellaneous 28 2.02 0.00Total weight of car 1395 100
Typical 1990 vehicle material mix
Remanufacturing Today
Remanufacturing is a $53 B industry in the US. e.g. motor vehicle parts, office furniture,
engines, tires, copiers, cell phones, heavy equipment, PCs, toner cartridges, single- use cameras
73,000 firms, 480000 direct employment.
Both OEMs and third parties remanufacture.
http://www.remancentral.com/about_reman_industry.htm
My Research
Forecasting product returns for Kodak single-use camera
Procurement for Kodak single-use camera Joint pricing of new and remanufactured
products Effect of competition on recovery strategies Taking into account diffusion effects in new
product introductions
Manufacturer’s Decisions
Price evolution of both products Capacity evolution of both products Remanufacturability level Capacity structure (flexible vs. dedicated) Reverse channel responsiveness
Investing in Remanufacturability
0
0.1
0.2
0.3
0.4
0 0.25 0.5 0.75 1
slow diffusion
fast diffusion
0
0.005
0.01
0.015
0 0.25 0.5 0.75 1
fast diffusion
slow diffusion
Optimal remanufacturability level q* Profit difference V(q*)-V(0)
Value of Flexibility
0
0.005
0.01
0 0.25 0.5 0.75 1
fast diffusion
slow diffusion
Profit difference between flexible and dedicated capacity
Reverse Channel Responsiveness
-0.015
-0.01
-0.005
0
0.005
0.01
0.015
0 0.25 0.5 0.75 1
fast diffusion
slow diffusion
-0.015
-0.01
-0.005
0
0.005
0.01
0.015
0 0.25 0.5 0.75 1
fast diffusion
slow diffusion
low disposal cost high disposal cost
Change in profits as a result of speeding up returns
Single sales peak
Remanufacturing potential
Dedicated capacity appropriate
e.g. diesel engine
Likely single sales peak
Highest remanufacturing potential Remanufacturability most valuable
e.g. copiers
Some sales fluctuations
Lowest remanufacturing potential
Rapid returns most valuable
e.g. high-tech cell phones
Sales fluctuations
Needs high capacity investment
Flexible capacity most valuable
e.g. radial tires
low repeat purchase rate
high repeat purchase rate
slowdiffusion
fastdiffusion
Policy Implications