Outside Thinking `the Box':
DESIGNING A PACKAGING TAKE-BACK SYSTEM
H. Scott Matthews
he electronics industry is characterized by highly optimized global supply chains, outsourced manufacturing, and critical time-to-market pressures. Despite these high-priority concerns, many firms and industry groups are finding time to manage the environmental impact of their products. Product-specific environmental improvements are difficult due to rapidly changing technology and production methods. Thus firms have been looking for ways to reduce the overall environmental burden of their products by looking at packaging, purchasing, facilities management, and their supplier networks. In this industry, transportation and packaging of electronic components and subassemblies is often accomplished in single-use packages via airfreight. Since packaging waste and the effects of transportation are amongst the most significant sources of the environmental burdens of electronics, there are big opportunities for improvements. We worked with one of these companies, Quantum Corporation, a computer storage products company, to design and assess a new packaging system for their bulk hard disk drives shipped to Original Equipment Manufacturers (OEMs) worldwide. The system involved a packaging design with a smaller environmental footprint and, more significantly, collection and reuse of the used packaging from OEM sites worldwide. As of the year 2000, Quantum Corporation was the highest volume global supplier of hard disk drives (HDD) for personal computers, and sold a broad range of storage products to OEMs and distribution customers worldwide.1 As part of ongoing improvement processes by firms in the electronics industry, many questionnaires were sent between companies in the industry from the OEMs all the way down to component suppliers. The goal of these questionnaires was to help identify areas where environmental improvements
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CALIFORNIA MANAGEMENT REVIEW
VOL. 46, NO.2
WINTER 2004
105
Thinking Outside `the Box': Designing a Packaging Take-Back System
TABLE 1. Key Objectives and Associated Challenges of Packaging Reuse Program
(PRP) Objectives
Reuse packaging worldwide with key customers and manufacturing partner Improve customer satisfaction by reducing waste burden Exhibit industry leadership in environmental management and prepare for compliance with international regulations Demonstrate financial savings
Challenges
Coordination/approval of internal and external teams and stakeholders Showing value to customer in terms of overall system costs and environmental quality Communicating importance of these standards and regulations to internal and external groups Increased use of logistics will offset gains from packaging reduction, uncertainties in modeled versus actual system Differences in grasp and appreciation of environmental issues
Demonstrate local and global environmental benefits
were possible. However, they also led to the identification of industry best practices in all functional areas. Through such investigations, Quantum was able to learn that its customers were interested in--and its key competitors had plans to institute-- internal supply chain packaging reuse programs as of mid-1999. The hard drive industry was showing signs of moving towards a commodity market, and thus any cost or marketing advantage had large potential benefits.2 The internal stakeholders decided to pursue the design and implementation of a packaging reuse program between Quantum, its Asian manufacturing partner, and its OEM customers. However, many obstacles and barriers were identified that would need to be overcome to make this initiative a success. In addition, this initiative would need approval and oversight from nearly every business group in the organization. Thus the internal sales pitch would need to be compelling. Table 1 summarizes the key objectives and challenges. The economic motivation behind this packaging reuse initiative was well founded. Approximately 95% of Quantum's HDD products were shipped in bulk packaging on pallets to OEM customers around the world (e.g., PC as...
Matthews-2004