IT Asset Disposition Is the Future of Reverse Logistics
While forward logistics optimizes the flow of goods from the producer to the consumer, reverse logistics inverts that flow from the consumer back to the producer. Most often, this includes warranty recovery, value recovery, repair, redistribution, product recalls, used parts, and replacement materials for refurbishment, service, or product contract returns, and end-of-life recycling. In a typical organization, reverse logistics accounts for 3 to 15 percent of the overall bottom line.
But many companies overlook the risks that can come with the reverse logistics process. Corporations are scrambling to protect their customers’ information on the equipment they use day in and day out. But what about after they’re done with the equipment? There is a huge challenge when disposing of old equipment—all sensitive data must be securely removed before returning, recycling, reusing, or reselling the equipment back into the market. However, not all IT assets require the same level of security; data sanitization and IT asset transport should be consistent with the level of security each asset requires.
The Global ITAD Supply Chain
The booming IT asset disposition (ITAD) global market is currently estimated at around $9.8 billion, handling 48 million tons of discontinued or excess technology gear. However, it is set to grow to $41 billion to appropriately deal with the projected 141 million tons of used equipment. As demand increases, companies must innovate within ITAD to keep up, or risk losing ground to flimsy data security.
The Impact on Reverse Logistics
Reverse logistics can present danger and extra costs if the returned product differs from the original. Because of this added complexity and the associated regulatory compliance risks, large corporations are finally recognizing the importance of ITAD. ITAD also allows these corporations to become more environmentally friendly as they place an increased emphasis on corporate social responsibility. Expect to see more collaborative partnerships between supply chain companies and ITAD providers to beef up end-of-life recycling processes, such as remanufacturing, refurbishment, recycling, reuse, and asset recovery.
Best Practices for Choosing an ITAD Partner
At a minimum, a reputable ITAD firm can help you understand the best path forward in the reuse/recycling portion of the reverse logistics process. The firm can help you put a more accurate market value on your assets, and perhaps more importantly, help define what it’s costing you to keep those assets in service. Finally, the firm will help you extract the most value from your old equipment which can take the sting out of that new equipment purchase, and they can prevent you from wasting valuable time trying to package and resell equipment that no longer has any marketable value. When trying to find the right vendor to work with, ask yourself four questions:
- Will my ITAD partner help me determine if the best financial option is to resell or recycle an asset?
- If an asset is to be resold, does the vendor have the right wipe technology, and specific, documented processes to ensure all sensitive data is verifiably destroyed?
- Will my partner ensure an environmentally sensitive recycle process to protect my organization from liability and help us meet our sustainability objectives?
- Does my partner have (or can they make) the market relationships to maximize the value that I recover from my old equipment?
Also consider this: An ITAD vendor with an effective software platform can give companies the visibility to determine the right time to replace assets as well as maximize the value they receive for them. Organizations can use these tools to monitor the resale/recycling of assets to ensure that their business is protected from the potentially serious liability of data loss.
We expect partnerships between large logistics companies and specialty logistics vendors to expand as the need for the transportation of items with potentially sensitive data increases. It’s important for companies to assess the data risks and work with an ITAD provider to deliver a secure, cost-effective chain of custody process flow.