There’s no such thing as “away” anymore
Whether you toss it out the window
Or throw it on the floor.
It’s got to go somewhere; it doesn’t disappear.
It’s a whole new way of thinking!
I learned this lesson melodically, singing it at the top of my lungs as an eager third grade “actress” in my elementary school’s annual Earth Day play. However, I never considered this lesson when I returned items to a store—when they were damaged, didn’t fit, weren’t the right color, or had caused me to suffer buyer’s remorse. To me, these items simply “disappeared” after I handed them back to a store associate or took advantage of free returns by mail. It wasn’t until I became aware of efforts by some of my favorite outdoor brands (e.g., Patagonia and Chaco) to recycle, resell, or repair their returns that I started to wonder how other companies handled the process.
According to David Hogan, President of America’s Remanufacturing Company (ARC), outdoor brands aren’t the only companies redefining how their returns are handled. Companies around the world are placing an increased importance upon improving their reverse supply chain and returns management. Why is this area growing? Today, consumers return 8% of their purchases. In 2017, this resulted in $643 billion dollars of returns. Consequentially, brands and retailers spend an average of 10% of their revenue on returns management. As retailers implement more lenient return policies in an effort to compete in an increasingly competitive and disrupted market, Hogan argues that the business of returns management will continue to grow and, as a result, present a huge opportunity to consumer brands and retailers around the world.
A member of Georgia Tech’s Class of 2010 (with a major in Management and a minor in Engineering & Management through the Steven A. Denning Technology & Management Program), Hogan didn’t initially envision working for a remanufacturing company. However, his current enthusiasm for and knowledge about the industry was immediately evident when I heard him present a talk in the Business, Environment, and Society Speaker Series on November 7th. The talk, “Sustainability Must Be Sustainable,” was sponsored by the Ray C. Anderson Center for Sustainable Business at the Georgia Tech Scheller College of Business.
Hogan described how ARC works with a wide range of products from different brands. As a result of product and manufacturer diversity, no two days on the job are the same. But what exactly does a remanufacturer do? Hogan explained that remanufacturing is significantly different from manufacturing. While the ARC plant, for example, also uses an assembly line, the timing is unique. Since ARC works on a wide range of products, the assembly line process is sometimes completed within less than one day. After receiving a delivery from a brand or retailer, Hogan’s team inspects the product for failure, makes necessary functional and cosmetic repairs, and then puts the product back on the market.
Each product and contract is different, however. Some brands want to control the resale process. Other brands allow ARC to work with secondary markets directly. A third group of brands prohibits the resale of its goods and has contracted ARC to recycle the parts directly. These complexities and variations in how each product is managed requires Hogan to have a wide breadth and depth of knowledge across a wide range of consumer goods and products, from coffeemakers to generators.
Hogan’s excitement about the potential in the industry was contagious, and as someone newly introduced to the concept, I couldn’t help getting inspired and excited about future opportunities in the field. Finance and CSR departments can agree that remanufacturing is beneficial. A well-executed returns program also provides a unique benefit for a manufacturer’s quality control/production engineering: The remanufacturer’s assessment is the only opportunity to gain failure analysis after a product has been in a consumer’s hands.
The key to remanufacturing implementation is having a champion who is high enough in the company. This person must be someone who cares about the company’s overall profitability—not just sales numbers. We as consumers can also help. By pressuring our favorite brands and retailers to adopt more sustainable remanufacturing and returns management programs, we can drive change to occur more quickly and completely, ensuring that there truly is “no such thing as ‘away’ anymore.”
Blais Hickey is a first-year student in the Full-time MBA Program and a 2018-19 Scheller College of Business MBA Sustainability Fellow.