material efficiency for smartphones - … · source: arthur d. little analysis kpi company 0,4 kpi...

Material efficiency for smartphones

Plenary session 2

June 28th, 2018

2

Compared to the holistic circular economy approach, Material Efficiency

KPIs are to be implemented by each player in their era of accountability

Source: Arthur D. Little analysis


Circular economy Material Efficiency KPIs

In a circular economy, each player must have a

holistic view of the value chain in which its

products are

Efficient and rigorous… but could be difficult to

implement across all stakeholders of a complex

value chain

Each player is empowered to monitor its KPIs at

its own level

Once standardized and harmonized across the

value chain, material efficiency KPIs will

increasingly be summed up, with a cradle-to-

grave approach

Production

UseRecycling

Raw

Materials

Player 1 Player 2 Player 3

KPIs calculated at firm

level, between the entry

gate and the exit gate

Holistic view

3


Source: WMF & Arthur D. Little analysis

Updated KPIs for WMF 2018

Updated set of KPIs

Use

Longer

Use

Less

Use

Smarter

Resale price

Product lifetime

% of innovative materials

Product performance vs. weight

Buy-to-use

% of recycled materials

End-of-life recycling

Overall product usage

Energy

Material value in the product / material value used in production

Total energy consumption to produce the product

Resale price after Y years / initial price (Y is industry specific)

Performance measurement of the product key functions vs. weight

Weight of recycled / total weight of materials in new product

Weight of materials effectively recycled / total weight of materials

Total lifetime of the product, from completion to waste

Weight of new or innovative materials / total weight of materials

% of the time the product is used relatively to its full capacity

Description

4

The smartphone industry value chain is composed of 4 steps, with several

types of players present in multiple steps



Fabrication End of LifeUtilization

Components

(IC, display,

etc.)

Assembly &

testing

Recycling &

e-Waste

Conception

(R&D, product

design, etc.)

Marketing &

Sales

After Sale

Services /

Reparation

SM

ART

PH

ON

E L

IFE C

YC

LE

PLAY

ER

S

Reconditioning

& Resale

Distribution

OEMs

EMSs Carriers

Specialized

recycling comp.Repair shops

Specialized reconditioning companiesRetailers

Design

agencies

5

There are numerous players in the smartphone industry



OEMs EMSs Carriers

Specialized

recycling

companies

Repair shops

Specialized

reconditioning

companies

ILLUSTRATIVE

6

Depending on their type, the players have a different impact on each KPI



Legend:

Being in charge of design, conception

and fabrication, OEMs and EMSs have

a strong impact on all KPIs

OEMs are the only players able to

have a holistic view of their products

Carriers, repairers and

reconditioners can recycle the

product, extend its lifetime and

impact its residual value (resale

price)

Recycling companies’

impact is limited to

recycling the product

and the energy used

for reclycing

OEMs EMSs CarriersSpecialized

recycling

companies

Repair shopsSpecialized

reconditioning

companies

Use

Longer

Use

Less

Use

Smarter

Resale price

Product lifetime


Product perf. vs. weight

Buy-to-use




Energy

Limited impact of the KPI by the player

High impact of the KPI by the player

7

We have considered only the

three largest OEMs in our

analysis, representing 45% of

the global market (in units)

We have analysed the 3 largest OEMs: Samsung, Apple and Huawei


Source: Arthur D. Little analysis, Counterpoint

7%

Samsung

Xiaomi

LG

Vivo

HuaweiOppo

Apple

Others

21%

14%

10%

7%

2017

(in units)

4%7%

31%

OEM market sharesGlobal, 2017, in % of units sold

The next three OEMs do

not release Sustainability

or CSR report

8

As a Material Efficiency dashboard, we propose a dual methodology to

evaluate both firm’s KPI management and KPI value



KPI

Company

0,4

KPI management

Qualitative qualification of the company’s efforts to monitor and improve

the KPI

Source: company communication only (annual report, RSE report and

website)

Rating system:

– detailed ratings:

+20% if the company communicates about the KPI’s subject

+20% if the company monitors the KPI’s value

+30% if the company shows efforts in improving the KPI’s value

+30% if the company shares the KPI’s value (only +15% if the

value shared cannot be matched with a device)

– Average weighted by the market shares:

KPI value

The KPI value in the adapted unit

When the KPI is not a % nor a ratio, the

maximum of the bar chart is arbitrary

chosen

Average of the KPI weighted

by the market shares

0% 100%

50%

9

OEMs communicate about most KPIs’ subjects but rarely share values


Source: Arthur D. Little analysis, Samsung, Apple, Huawei1 Maximum recycling rate for iPhone 6 using Liam

Product lifetime(year)

Buy-to-use(ratio)

% of recycled

materials(%)

End-of-life

recycling(%)

Energy(Wh)

26%

3 years

?

?

1

?

?

?

?

?

?

Samsung Apple Huawei

?

?

?

?

?

Use

Longer

Use

Less

10

In spite of a very secretive policy, Apple is more communicative about its

KPIs, and shows the best results


Source: Arthur D. Little analysis, Samsung, Apple, Huawei1 Processor speed (MHz) / weight (g) ; Samsung Galaxy S9, iPhone 8, Huawei P202 Third-party data (Decluttr)

Resale price after 1 y.(ratio)

% of innovative materials (%)

Product performance vs. weight1 (ratio)

Overall product usage (%)

Samsung Apple Huawei

30% 45%

30%

16

All KPIs13% 24% 11%

?

2

?

1417

??

?

?

2Use

Longer

Use

Smarter

11


Source: Arthur D. Little analysis, Decluttr

Example of KPI value (resale price) – Both Apple and Samsung

smartphones similarly depreciate quickly over the first 2 years

-85%

-80%

-75%

-70%

-65%

-60%

-55%

-50%

-45%

-40%

-35%

-30%

-25%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Months after release

Average rate of depreciationSource Decluttr (US smartphone reseller), iPhone 5 to 7, Galaxy S3 to S7

Apple

iPhone

Samsung

Galaxy S

12

3. KPIs data analysis

Source: Arthur D. Little analysis, Apple

Example of KPI value : Product performance vs. weight of iPhones

522560

427

358383383

190194

129102100

0

100

200

300

400

500

600

iPhone iPhone 4iPhone 3G iPhone 4SiPhone

3GS

iPhone 6SiPhone 5 iPhone 8iPhone 5S iPhone 6 iPhone 7

Product performance vs. weight of iPhonesProcessor speed / weight, index 100 for iPhone 1

13

Overall, OEMs shows rather low performance on average, both for KPI

management and KPI value



KPIs

Use Longer

Use

Less

Use

Smarter

Resale price

Product lifetime


Product performance vs. weight

Buy-to-use




Energy

KPI management average KPI value average

0%

0%

9%

0%

20%

25%

10%

78%

0%

14



How Material Efficiency KPIs could be spread across companies on a large

scale ?

Cost management

Risk managementP&L direct impact :

Optimized the cost (e.g

buy to use) and the

product attributes (e.g

Product performance vs.

weight)

Enable positive

communication regarding

sustainability and

environment

Arthur D. Little has been at the forefront of innovation since 1886. We are an acknowledged thought leader in linking strategy, innovation and transformation in technology-intensive and converging industries. We navigate our clients through changing business ecosystems to uncover new growth opportunities. We enable our clients to build innovation capabilities and transform their organizations.

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Copyright © Arthur D. Little 2018. All rights reserved.

Contacts:

Vincent BambergerManaging Partner

Arthur D. Little Paris7, place d’Iéna75116 [email protected]

material efficiency for smartphones - … · source: arthur d. little analysis kpi company 0,4 kpi...

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