Sinctronics How to generate value in the circular economy? Introduction

Transcription

1 Sinctronics How to generate value in the circular economy? Introduction Earth as a resource system has a limited capacity for supporting a growing human population with an intensive exchange of materials and energy with its environment. Communities, governments, businesses, international agencies, and non-government organizations are increasingly concerned with establishing a means to monitor performance and to assess progress towards sustainable development. The latter is defined as meeting the needs of the current generation without compromising the ability of future generations to meet their own needs However, it is inevitable for humans to consume resources to fulfil their own needs and it is impossible for them not to extract the resources at the present time. Thus, an alternative towards sustainable development is to consume the resources which have less potential for depletion and not to utilize easily depleted resources. Closed-loop supply chains and recovery of used products, in particular, have received much attention lately due to the above mentioned factors. While traditional logistics are perceived as managing the supply of goods and/or services from the producer to the (end) customer as well as internal logistics, and input and output to the company, reverse logistics is the process of planning, implementing and controlling the efficient and effective inbound flow and storage of secondary goods and related information opposite to the traditional supply chain (SC) direction for the purpose of recovering value or proper disposal. In August 2014 was released the Law / 2010, known as the National Solid Waste Policy ( PNRS Política Nacional de Resíduos Sólidos ), which aims to promote and integrate the management of solid waste. PNRS requires firms to give correct destination and treatment of solid waste through reverse logistics, requiring the management of these processes through reuse or recycling, thereby extending the life cycle of the material. This law created obligation for selected industries such as the electronic devices industry to collect used equipment for correct destination or recycling 1. It also created a unique opportunity for the development of new business models focusing on the management of the reverse logistics. In this case, we are going to investigate one company that was specifically created to take advantage in this new and challenging business environment. The National Solid Waste Policy (PNRS) also recognized the vital role of waste pickers and recycling cooperatives to society. The waste pickers historically have been 1

2 considered as a marginalized group of society, but with the PNRS they gained a huge step in inclusion and recognition: It is now an Occupation listed on the Brazilian Classification of Occupations (CBO), which means access to social security and other workers rights. Thus, wasted pickers started to belong to the economic circuit, no longer seen as marginal by society, being considered important actors in the industry of recycling. It is important to note that recycling depends on various factors such as the quantity, quality and cost of material, its processing technology requirements, as well as the existence of a consumer market for the final product. Thus, the selective collection of solid waste is vitally important to facilitate the prior separation of materials that have a certain value to the economy, thereby reducing the cost and increasing the efficiency of recycling. Moreover, investing in research in the recycling technology is fundamental to obtain products with higher quality, increasing its acceptance in the market. Sinctronics Sinctronics, located in the city of Sorocaba - SP, is a technological company specialized in electronics equipment recycling. The company has developed technology to convert what would be discarded into raw material for new products, providing solutions to the problems caused by inadequate treatment of electric and electronic waste, thereby contributing to the development of a closed loop supply chain. It was founded in 2010, as a business unit of Flextronics 2. After a period of business and operational planning, environmental and legal licensing, in late 2012 the plant went into operation. According to Sinctronics data, in 2015 the company employed in average 90 employees, in several different occupations, from shop floor personnel with basic education to engineers and researchers in material sciences. In the same year the company obtained ISO 14001: 2004 and OHSAS 18001: 2007 certifications, the first of which related to environmental management and the second about occupational safety and health. The aim of Sinctronics is to offer electronics industry a better alternative for the disposal of their products in their end of life. The National Policy of Solid Waste calls for shared responsibility for the end of life products, which means that users, producers, distributors and retailers are all equally responsible for the correct disposal and recycling of them. See figure 1, below. 2 Flextronics is is an American international supply chain solutions company that offers design, manufacturing, distribution and aftermarket services [ to original equipment manufacturers (OEMs). It is headquartered in San Jose, California. It has manufacturing operations in over 40 countries, totaling approximately 27.2 million square feet and 200,000 employees.

3 Actor Responsabilities Public agents - Proposal of action plans according to the PNRS, such as: development of Local, State and National level plans of Solid Waste management policies; - development of action plans to waste valorisation, articulation of different economic agents in order to develop reverse supply chains Producers/ Entrepreneurs - sell products with planned reverse logistics - develop products and materials with 100% of recyclability - use recycled materials in producing new products - develop Technologies to improve recycling efficiency Retailers - act as a hub for reverse logistics of materials and packaging, being a liaison agent between consumers and manufacturers Consumers - Contribute to the return of end of life products - Create new consuming habits, incorporating recycled products Figure 1 Shared Responsibility for Different Actors. Source: National Solid Waste Policy Usually, recycling companies are considered a low-tech type of industry, because it is considered a simple process of separating material. This kind of traditional process has a low efficiency and its products do not have high value in market. Sinctronics business model, on the other hand, seeks to add more value to recycled plastic, through high investment in process, recycling practices and material development. Its goal is to provide electronic industry 100% of recycled plastic with similar physical and chemical characteristics as virgin material, actually closing the supply chain for this vital raw material. Plastic recycling at Sinctronics

4 In Brazil, Electronics industry had an 8% growth in 2013 compared with the previous year, with this growth driven primarily by the emergence of new consumer goods such as smartphones and tablets. Most of the electronics devices bodies are made of plastic material, such as ABS, polyethylene, polypropylene and polystyrene. Plastic has a great potential for recycling, with several benefits both for economics and environment. Therefore, Sinctronics is mainly focused to recycle the plastic part of the materials for the plastic. Table 1, below, represents the environmental benefits of recycling ABS and HIPS as compared to virgin material. Sinctronics Products ABS HIPS Reduction in energy 65% 82% consumption (compared to virgin material production) Reduction in CO2 emission 55% 71% (compared to virgin material production) Table 02: ABS and HIPS environmental gains compared to the virgin material. Source: SINCTRONICS Sinctronics considers itself as not just a recycling company, but a sustainability innovation center that brings together within the operation, several stages of the process of circular economy and reverse logistic. It produces not only good quality plastic resin from recycling, but also produces parts from recycled material. In the case of HP (a major customer), Sinctronics is responsible for collecting used printers and printer cartridges, disassembling, recycling of plastic parts, correct destination for metal and other materials and also supplies new parts from recycled material, as shown in figure 2. Figure 2 Example of part produced for HP from used printer cartrdiges. One of the main goals of Sinctronics is to achieve a zero landfill policy, which means to recycle or reuse 100% of the received material, obtaining revenue from them. An example of this policy is the development of pallets made from plastics, in replacement to

5 wood. Those pallets use plastic that is not possible to be recycled into new parts to printers/computers. They replace wooden pallets with advantages in performance and duration. They are also projects in development to use plastic in garden furniture, fences and lamp posts. Sinctronics has high investments in product development. It has a fully equipped R&D laboratory, with a PhD researcher in material science working full time in it. The company's laboratory even managed to recycle the white plastic with 94% purity, which was considered a leading technology and innovation in the market. Figure 3 shows Sinctronics processes flowchart products Incineration Partner Companies products Sinctronics Clients Reverse Logistics screening and separation Disassembly Grinding Quality testing Parts Tests and Parts Injection Extrusion Supply Chains Products Figure 3 : Sinctronics processes The process at Sinctronics begins with their clients, who are also their main suppliers: electronic manufacturers that outsource their reverse logistics to Sinctronics. Currently, HP is the main client. Sinctronics sees Brazilian market as a great potential for developing business in reverse logistics for three main reasons: There is strong local industry for electronics manufacturing, certain proximity between industry and main

6 consumer markets (Southeast region, mainly) and strong legislation, which requires that producers conduct reverse logistics processes in order to give their end of life products an environmental correct destination. As demonstrated in the flowchart of Figure 3, Sinctronics process begins with the hiring of its reverse logistics services for its customers, which is intended to meet the requirements of National Policy of Solid Waste, giving a better destination to their post consumer products other than landfills. Currently, the main Sinctronics customers currently are: HP, Toshiba, Lenovo, Lexmark. Hitachi, IBM, ABB, JR1 Computing, Flex and Motorola. Questions 1. Which are the factors that facilitate the closure of the supply chain in the case of SInctronics? 2. Which are the factors that inhibit the closure of the supply chain in the case of SInctronics?