Resource Recycling System

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1 Resource Recycling System The "Resource Recycling System" are one of the core elements of our environmental preservation activities. Based on Environmental Vision, the aim of the system is to conserve energy while introducing minimum fresh resources. The ultimate goal of such efforts is to achieve Zero Waste, defined as zero net production of materials as landfill waste. Resource Recycling system Lifecycle planning Inverse Manufacturing Reusable / Recycling designs Company operations are organized in a Closed-Loop System that makes thoroughly effective use of resources. The guiding principle being that "rather than treating products as waste at the end of their useful life, they should be valued as a source of reusable parts and materials." Two main concepts structure our approach to making the Closed-Loop System of circulating materials a practical reality. One, referred to as "inverse manufacturing," is the basic way we try to minimize environmental impact. This means producing parts that can be reused or, if they cannot be reused, designing them to facilitate the separation and reuse of the materials that comprise them. We also use materials that have minimal environmental impact, and this overlaps with the other concept of "zero emissions," the central intention of which is to completely cut waste. Running operations according to this system has enabled Fuji Xerox to achieve the target of "zero landfill waste." Environmental impact assessments Closed-Loop System Parts / Components reuse Materials reuse Closed-Loop System Separation of toxic substances Materials recycling Thermal recycling Zero Waste Zero Emissions Goals Fuji Xerox Environmental Vision : Advance towards complete "Resource Recycling" and "Zero Waste.". Restrict the input of fresh resources. Through the Closed-Loop System, we promote maximal reuse of components and restrict the input of fresh resources in making new products.. Reduce landfill disposal of used products to zero. Aiming to achieve "Zero Waste," we are developing processes to recover the maximum amount of resources from those that cannot be reused. Amount of material input savings (t) 2, 1,5 1, ,2 1,4 1,7 '96 '97 '98 '99 ' (Year) Limited introduction of fresh resources With the reuse of parts, we could reduce 2,75t-c in CO2 emissions generated at the manufacturing stage of new parts in FY 2. t-c 1, 2, 3, 2,75 t-c Proportion of waste sent to landfills (%) '96 '97 '98 '99 ' Year Reducing landfill disposal of used products to zero Awarded the Economy, Trade and Industry Minister's (METI) Prize in the Recycling Technology and Systems category 1 Awarded the Environment for Tomorrow Prize 2 1, 2 For more information, see page

2 Resource Recycling System Closed-Loop System The basic concept behind the Closed-Loop System is to collect used products from the market, and then reuse or recycle all the various parts and components from these products in a closed loop, so that the input of fresh resources is restricted. Used products are collected from the customer, and then disassembled and cleaned at our plants. An integrated selection, repair and quality control inspection system is then used to supply those parts that meet strict QC standards to production lines so that they can be reused. In addition, as much as possible, we try to direct the materials generated from those parts that cannot be reused to the production of new components within the loop. The information gained from these processes provides feedback for our design teams to help them create more highly recyclable components, and thereby expand the use of such parts. By improving designs and developing more advanced technology, we aim to expand production volumes while simultaneously raising the recycling ratio. Recycling line at the Ebina facility: disassembly and screening Collection Used at customer site Disassemble and cleaned at the plant Fuji Xerox Closed-Loop Recycling System Screening the component Automatic shower washer for small items inspection Completion and delivery Decomposing to raw material Repair Quality Inspection and assurance Feedback to design for recycle Processing of base materials Integrated production line Blast cleaning is used for larger items. Toward a More Effective Collection System The effectiveness of any recycling system depends on the collection of used items and transportation to processing centers. In FY 2, we retrieved 97% of copiers sold on the Fuji Xerox direct sales route and 78% of those sold through agencies. Before we started recycling parts (1995), there was no need for a "reverse distribution system," so we had to develop new logistics in order to organize the movement of used equipment. We've been trying hard to optimize our efficiency while minimizing the environmental impact of trucking and other means of transportation. The first thing we did was to construct an information system to rationalize collection and transfer. Our UNICORN (Used-machine Nice Control Navigator) system divides Japan into ten control blocks. For each block it processes information about used equipment in stock and computes the shortest distance to pick up the amount of used equipment necessary to feed the production of reused parts. We have tried to improve the rate of truck utilization and make the most efficient use of transportation by maximizing loads and other measures. In FY 2 we managed to reduce truck journeys to 17% less than the previous year. Furthermore, to curtail the unnecessary consumption of new resources, when used equipment is collected we protect it with used packing materials. Collection of used equipment - reverse distribution 19

3 Inverse Manufacturing Our concept of inverse manufacturing is composed of 4 main elements: product life cycle planning using LCA methodology; the creation of reusable and recyclable designs; the use of environmental impact assessments; and the Closed-Loop System. The heart of our recycling system is the "Closed-Loop System" that, based on the idea of recycling parts within a closed system, gives priority to the reuse of parts. To realize it, from the planning stage parts are designed to be reusable. Moreover, using environmental impact assessment procedures, we aim to develop excellent green products. Lifecycle Planning When new products are planned at Fuji Xerox, the reuse of parts is given the highest priority. By the time a copier reaches the end of its working life of three to five years, it is natural to expect that it will be replaced by a new, succeeding model. This means we have to look ahead to ensure that parts are suitable for use in succeeding models. In 1999 we launched the Able Series, in which we ensured that, over two generations, about 4% of parts could be reused. Since then we have improved on that figure. In the year 2 about 75% of all new models had parts that were reusable in the next generation. For our main models we will try to increase the number of parts that can be used in the succeeding models and extend reusability beyond the next generation. No. of units Production volume: First-generation product Recovery rate: First-generation product Production volume: Second-generation product (b) (a) Model for three-generation parts reusability Second-generation equipment (b) First-generation equipment (a) Production volume: Third-generation product 75% 25% Results of production for reuse in the year 2 Time 2 Reuse and Recycling Design Recycling design at Fuji Xerox, which aims to make more highly recyclable parts and components, is carried out based on Recycling Design Guidelines originally formulated jointly by teams of Xerox Group engineers from Japan, the United States and Europe back in These guidelines specified 13 separate requirements for good recycling design, including ease-of-disassembly, the use of common components, and the choice of materials. In addition, to increase the number of reusable components, we try to design them so that they are strong, have a long usable life, and can easily be separated. These efforts are supplemented by case study manuals that have been assembled to show designers successful ways of raising recyclability. A database of related information has been compiled, and a system is working to allow designers to share information and reflect the latest technical developments in their designs. To strengthen our cooperation with parts and materials manufacturers, we have also formulated specific Recycling Procurement Guidelines. This initiative seeks to help our development partner firms by sharing information on component longevity and via the joint development of repair technologies to make components fit for reuse. We are also helping those firms to whom we outsource production to benefit from our recycling design expertise by assisting them in incorporating reused/recycled parts, components and materials into production. Control panel Carriage pad Logo plate Fan / Duct Aluminum electrolytic condenser PWBA Electromagnetic clutch Harness Rubber-covered roller Motor assembly FPC / FFC Drive assembly Cover assembly Relay Low-voltage power supply High-voltage power supply Tray pad Tray Use of reusable materials Standardization of parts Design items incorporated in the DocuColor 125 Counterbalance Flat-spring gasket Labels / Stickers Developer housing Xenon lamp Interlock switch ROS Electric discharge lamp Fan Main frame Corotron PWBA. Lithium battery Outer cover Drawer connector Circuit breaker Current fuse Casters Longevity Separability Ease-of-disassembly Redundancy Strength Reuse/recycling design guidelines (No. of models) 15 Longevity Design long-life parts that can be used again Separability Make it easy to separate short-life components 1 Strength Ensure parts suffer minimal damage during use/collection/recycling Ease-of-disassembly Make parts and materials easy to 5 disassemble Select materials that can be regenerated via recycling processes Use components that are common to existing and future models '98 '99 ' (Year) Number of models designed to parts reuse

4 Resource Recycling System Environmental Impact Assessment Resource-Recycling Products Using stringent internal criteria, we evaluate the environmental impact of our products throughout the various stages collection, reuse or raw material conversion of components, manufacturing, and recycling design of the Closed-Loop System. We have designated those copiers and digital copiers to meet all these criteria as "Resource-Recycling Products," and mark them with the label pictured to the right. Assessment criteria and a list of products that qualify are shown on page 56. Resource-Recycling Product label Product Eco-Data Booklet Product Eco-Data We evaluate environmental impact over the entire lifecycle of a product, from the manufacturing process and use through to disposal after its useful life. For each product we have started making available, in an easily understandable form, product eco-data for each stage: "manufacture," "use," and "after use." By using stringent evaluation methods such as LCA at each stage in order to assess the use of material resources, amount of energy consumed, CO2 emission and use of environmentally detrimental substances, we can ascertain when these factors are more prevalent at the manufacturing stage of materials and parts. The analysis of all these items allows us to reduce environmental impact by designing for the reuse of parts in which these factors weigh heaviest during production. We carry out these investigations of environmental impact jointly with Mitsubishi Research Institute, Inc. (%) kg -3.6% Material resources consumed 49195MJ -16.1% Energy consumed Units made with all new parts Units made with reused parts 695kg-c -18.3% Greenhouse gas emissions Eco-data values for the DocuCentre kg -25.1% Environmentally detrimental substances (included in part) Results for the Year 2 (No. of models) '96 '97 '98 '99 ' (year) Number of models using recycled parts (cumulative totals) (%) (1 thousand units) '96 '97 '98 '99 ' (year) Number of units manufactured using recycled parts (cumulative totals) '96 '97 '98 '99 ' (year) Rate of parts reuse (proportion of parts used) 21

5 Zero Emissions (Product-Related) It is "zero emissions" to achive zero waste. That is why, based on a concept of a "Closed-Loop System," we give a high priority to the reuse of parts. Used copiers after the end of their service life, are collected and broken down by hand into 44 different types of parts. To thoroughly recycle resources, parts that cannot be reused are ultimately processed into useful materials. We have even been recycling rubber and glass materials that, until recently, were poorly recycled. In addition, working with materials manufacturers, for the first time in the industry we've developed a way to recycle a particular type of plastic into material that is of equivalent quality to fresh plastic. Endeavoring to minimize the input of new resources, we use these materials in our resource recycling system. Reuse of Materials Plastics are typically difficult to recycle because the quality of their material has degraded. We have jointly developed with Ube Saikon, a Japanese plastics manufacturer, a system that is the first in the world to be able to recycle the ABS (acrylonitrile butadiene styrene) resin used to make the external covers of copiers. Used covers that have been collected from the market are separated and then pulverized and cleaned to produce fresh ABS raw material, which is then used to make new copier. Quality control tests have shown that the recycled ABS plastic is as good as newly manufactured raw material in terms of its moldability, physical properties and color tone. These results have been independently validated in tests conducted by Underwriters Laboratories Inc., a safety-testing corporation based in the United States. We now used recycled plastic to make external covers for copiers one of the parts where the strictest standards for visual appearance apply. Currently, it is being supplied to the production lines for the various DocuCentre 75/65/55 and DocuColor 125 models. We also used to remove aluminum copier drums from the used copiers we collected, and they have been used for other aluminum products. However, we standardized the material used in drum cylinders so that no custom additions would be needed. Then, in May 2, with the cooperation of a materials manufacturer we set up a system for closed-loop recycling of the aluminum used in drum cylinders. Today, with regard to new drums we recycle all the aluminum recovered from the drums in the used copiers we collected. This ABS recycling technology was awarded the Technology Prize in the 1th Nikkei BP Awards For more information, see page 51. Copier in use Integrated production line Molding/assembly Process using Ube Saikon-developed technology Used copier disassembled at factory Plastic cover separated Closed-Loop System for ABS plastic recycling Repalletization Graded, crushed ABS plastic Removal of internal impurities Crushing Cleaning (removal of surface impurities) Process using Ube Saikon/Fuji Xerox-developed technology 22 Reducing the Use of Toxic Chemicals To reduce the use of chemicals that are estimated to be harmful to the environment, we have taken the initiative and formulated our own internal Green Procurement Guidelines. This places us ahead of Japanese and international legislation on this matter, as well as domestic industry standards. We have distributed these guidelines to all our parts suppliers so that we can ensure that no harmful substances are used or incorporated in the production of parts and materials, starting at the purchasing stage. Our technical development teams are also working to create alternative parts and materials where required. So far, since April of 2, we have used chrome-free galvanized sheet steel in all our new products. We have been using lead-free wiring in some new products since May of We also introduced lead-free lenses to some of our new products in April 2. Further, we're going ahead with other plans, such as the use of lead-free solder and halogen-free plastics in all our products.

6 Resource Recycling System 1% Material Recycling Formerly, when used copiers was collected for disposal, the main recycling materials were iron and other metals. But unrecyclable materials were landfilled for disposal. Now, Fuji Xerox is committed to an uncompromising "Zero Landfill Waste" policy. Beginning in the autumn of 1998, in cooperation with best 13 recycling companies all over Japan by using the latest technologies. After disassembling and sorting 18 t of parts from 1 used copiers collected at the end of their service life, we confirmed that it was possible to achieve zero waste. Then, beginning in February 1999 at the Ebina Facility, as part of a systematic process encompassing collection to recycling, we made complete recycling a practical reality with a disassembly line in which parts that could not be reused were removed and dismantled for recycling. In addition, to facilitate research and the proving trials needed to raise the efficiency of disassembly and material separation, we built "Ecoland" at Ebina Facility. This allowed us to process copiers that had reached the end of their service life in the Tokyo, Kanagawa and Yamanashi areas. We expanded this "Zero Landfill Waste" system to cover the whole country. We built a network with 23 recycling companies with the same type of technology, which had proved effective. In August 2 our recycling system was complete and we achieved our goal of zero landfill waste by completely recycling, all the materials except for some process loss in the used copiers we had collected from customers. Disassembly and separation at Ecoland 1% Material Recycling Iron parts Frame Melting Fe Detailed results of the effort to achieve 1% resource recycling Previous method Zero-waste processing Recycled item (process up to 1999) (process in the year 2) Iron Aluminum Copper Lead Gold Silver Other metals Plastic (material reuse) Plastic (material) Cork substitute (plastic) Rubber Glass Iron and non-iron combination parts Electronic boards Motors Al Sorting Melting Refining Cu Au Sn Ag Pb External plastic parts Covers and trays Washing Kneading Repelletization Covers/Trays Material recovery rate For slag For heat (combustion improver, melting enhancer) Recycling rate Incineration Dust (landfill) Process loss Total Other plastic Rubber parts Glass parts CRU Toner parts Housing/Duct Blast-furnace reducing agent DADF belt Removal of contamination Pulverizing Rubber Achieving Zero Landfill Waste Disassembly Material reuse Sorting of toxic parts Sorting of non-toxic parts Parts detached from used copiers Quality assurance Repelletization Quality assurance Lenses Platens Fuse consolidation Removal of contamination Washing Cullet Glass % Blast-furnace reducing agent Drum Converter material Packing materials PS pellets Plywood chips Glass Minute amount Minute amount % Toxic parts CRU Expanded Drum Toner polystyrene Pallets Lamps Batteries Compacting Kneading Batteries Melting Forming Removal of Cullet contamination Dissolution Baking Refining Aluminum Repelletization Refining Use in new copier Sorted into 44 categories Latest recycling processes Material breakdown (Crushing) Material breakdown (Crushing) Elemented breakdown (detoxification) Elemented breakdown Material recycling Mercury Glass Iron Aluminum Copper Au Sn Pt Lead Zinc Rubber Energy recycling 1% recycling Recycling efficiency Mercury Cadmium Reduced environmental impact 23

7 Support for Resource Recycling System: Information Systems The implementation of the Closed-Loop System to promote Zero Waste and resource recycling is dependent on the integration of various types of information. We have developed six major information systems to support our recycling efforts, which we are currently in the process of integrating fully. Collection unit volume simulation system Collection logistics control system Asset recovery stream management system Recycled parts QC/QA system Recycling-production mainframe system Recycling design database Collection unit volume simulation system A special program uses past data to simulate estimated volumes of used and collected products, and their quality. This helps to make collection and recycling production activities planned and efficient. Collection logistics control system Products collected at all of our recycling centers in Japan are recorded in a database. This nationwide network helps raise the efficiency of sending collected products to factories, ensuring smooth logistics. Recycling-production mainframe system Based on the results of the collection volume simulation and inventory data from the nationwide recycling network, this system determines and plans recycling production volumes several months in advance to help smooth out variations in collection rates. Recycled parts QC/QA system Based on technical data on component quality control and longevity, this system, run as a database, sets strict selection criteria for reusable parts. It ensures that machines containing such are of equivalent quality to brand new machines. Recycling design database This database, which is accessible via a company intranet, collates all the data and expertise on Resource-Recycling design. It allows all our designers to share information on the best methods in this field. Asset recovery stream management system This system manages the recovery of resources from used components that cannot be reused via the disassembly of collected machines on a unit basis. It manages material recycling volumes by category, thereby integrating the Resource-Recycling process to help achieve Zero Landfill Waste. 24

8 Resource Recycling System Reuse and Recycling of Toner Cartridges Goals. Ensure more collection of used toner cartridges and increase the number of reuse. Results Closed-Loop System for Toner Cartridges At an early stage we began recycling the photoconductor drums, cartridges and other exhausted consumables used in our main copiers and printers. In 1994 we established a Closed-Loop System for toner cartridges and built a recycling line to detach, disassemble, clean, inspect, process and rebuild cartridges. Recycled items are inspected and packed for reuse. Our efforts have paid off. By 1997, through the reuse of parts and recycling of materials from parts we were unable to use, nothing from our used toner cartridges was ending up in landfill environments. We had achieved zero emissions. Our designers have also been working to create cartridges from parts that can be recycled more effectively. Right from the planning stage, parts are developed for optimal reuse and recycling. In addition to technical efforts, we have implemented a distribution infrastructure created through our rental business. This has enabled us to achieve a high collection rate of 84% for toner cartridges. Moreover, 35% of the units we ship contain recycled parts. Collection rate (%) (%) Reuse rate '97 '98 '99 ' (Year) '97 '98 '99 ' (Year) Cartridge collection rate* *Cartridge collection rate: Expressed as a percentage, the number of units collected during the current year divided by the number of units shipped from the factory during the previous year. Parts reuse rate (weight) Conversion to incinerator ash New component / new materials Production / assembly line Product Processing / assembly Component Sub-assembly components Distribution / sale Use of energy Recycled materials Inspection Customer Conversion to materials Conversion to materials Cleaning Regional warehouse Disassembly Conversion to fuel Goods-in inspection Collection Landfill Zero landfill Materials separation Disassembly Closed-Loop System for Toner Cartridges Separation 25