Remanufacturing and Recycling Programs Are Good for Business, Good for the Environment
April 14, 2008
By Jenny Carless, News@Cisco
What happens to used information technology (IT) equipment after a customer has returned it for repairs or replaced it with newer equipment? Is it possible to keep discarded routers and switches out of the landfill?
At Cisco, several organizations across the company work to remanufacture or recycle as much Cisco equipment as possible. These programs constitute part of the company's efforts to reduce its carbon footprint and help the environment - but they also make good business sense.
Remanufacturing Is Big Business
Since 2000, Cisco Capital Remarketing, a business unit within Cisco Capital, has played a primary role in remanufacturing returned units for reuse. In fiscal 2007, the group remanufactured more than 410,000 units, preventing approximately 4,800 tons of equipment from ending up as toxic waste in landfills around the world.
Remanufactured units may be redeployed as field replacement units to support warranty claims or resold as Cisco Certified Refurbished Equipment to new and existing customers.
"Whether they call it 'green IT' or not, the fact is that it just makes good business sense."
The availability of refurbished equipment benefits both the customer and the manufacturer, according to Joseph Pucciarelli, program director, Technology Financing & Management Strategies at IDC.
"I see three main reasons why customers find refurbished equipment attractive," he explains. "The first, which applies particularly to large enterprises, is that they want to maintain what I call infrastructure homogeneity; in other words, they want consistency across the network portfolio, because it's much easier to manage and there are more efficiencies of scale.
"Another driver is availability: they may need the equipment now, but the new model is back-ordered," he adds. "Finally, of course, price sensitivity is a factor."
Cisco Certified Refurbished Equipment sells for at least 25 percent less than an equivalent new product, and it comes with the same warranty and SMARTnet options as new products. It is remanufactured to factory specifications, with all the latest hardware and firmware upgrades.
From a manufacturer's perspective, there are strong business reasons for offering refurbished equipment.
"Providing certified used equipment demonstrates and reinforces that a manufacturer understands the requirements of those IT managers who have to make hard choices about the speed at which they'll get new technology versus the complexity of managing their infrastructure," Pucciarelli explains. "So you are reinforcing that you understand how to meet these customers' needs.
"Such programs also allow a manufacturer to support the prices on its new products," he continues. "By offering used as an option, you're broadening the spectrum of customers you can serve while maintaining integrity in your pricing strategy."
Green Remanufacturing Process
Cisco Capital Remarketing remanufactures and sells more than 2,800 different individual types of product in technology areas including switching, routing, security, wireless, unified communications, peripherals and more. It serves customers in 66 countries across SMB, commercial, government, enterprise and service provider segments.
Remanufacturing includes four primary steps: systems testing, debugging and repairs, product engineering upgrades, and cleaning and reconditioning. All units of Cisco Certified Refurbished Equipment are installed with a current version of Cisco IOS Software.
"We have a strong environmental focus throughout this process," explains Frank Atter, senior director, Cisco Capital Remarketing. "For example, each unit undergoes engineering changes to ensure maximum unit performance - and that means less maintenance, replacement and energy consumption will be required in the long term."
The entire remanufacturing process meets environmental directives such as Restriction of Hazardous Substances Directive (RoHS) and Waste Electrical and Electronic Equipment Directive (WEEE) in the European Union, ISO 14001and relevant federal and state regulations in the United States.
Trade-Ins, Take-Backs and Recycling
Some of the equipment remanufactured by Cisco Capital Remarketing comes from Cisco Worldwide Reverse Logistics, a team that organizes, coordinates, tracks and manages the return of used equipment under its trade-ins and take-back/recycling programs.
Every product received through the trade-in program arrives at one of three warehouses around the world. Product IDs and serial numbers are logged and then checked against a demand list for refurbished equipment. Any products that are ultimately not suitable for remanufacturing undergo ecologically compliant disposal and recycling processes. In 2007, the program recycled 19 million pounds of equipment.
Cisco's trade-in program is global, operating in all countries where such programs are allowed.
Part of Worldwide Reverse Logistics' responsibilities includes regulatory compliance.
"We actually go above and beyond in complying with the WEEE directive, which is intended to make the producers of electronic waste responsible for the end-of-life management of that waste," explains Duncan McCann, environmental compliance manager, Cisco Worldwide Reverse Logistics. "It applies to companies importing into the European market, and we are attempting to register under WEEE in all European countries, although we're technically only required to do so in one, because of our importing procedure."
Take-Back and Recycling
The Cisco take-back and recycling program is in place throughout the 27 European Union member states, Norway, Switzerland and South Africa.
"The program is free to customers. Anyone in possession of our equipment can log on to our website and arrange for collection," McCann explains. "Outside those 30 nations, service isn't guaranteed, but we will still try to do everything we can if a customer contacts us about returning equipment."
Green Is Here to Stay
In the coming years, efforts to refurbish and recycle IT equipment are expected to increase as customers place more emphasis on following sustainable business practices.
Partners can play an important role in helping disseminate information about and implementing manufacturers' refurbishing, recycling and other programs. Even leasing can be an effective strategy for a customer to improve its environmental compliance.
"Partners can help explain the benefits - both business and environmental - of leasing," explains Benson Chan, senior manager, Cisco Capital Remarketing. "When a customer leases Cisco equipment, we're responsible for taking it back, decommissioning it, and remanufacturing or recycling. This lets the customer focus on their business and not on technology life cycle management."
There are benefits for the partners, too.
"Educating our customers on current environmental regulations, assisting them with product life cycle planning and providing them with green options such as Cisco Certified Refurbished Equipment deepens our customer relationships and gives us a strategic advantage," says Frank Kobuszewski, vice president, Technology Solutions Group at CXtec, a Cisco Silver Certified Partner.
For all these business and environmental reasons, it seems that green is here to stay.
"If you look at the number of people in the world and the amount of energy we're using and producing, there seems to be a long-term requirement for large amounts of energy, which will keep prices high. That will encourage companies to continue refurbishing and recycling programs," Pucciarelli notes. "Whether they call it 'green IT' or not, the fact is that it just makes good business sense."
Jenny Carless is a freelance writer based in Santa Cruz, CA.