Edition 98
Big Data, Data Analytics and Reverse Logistics
by Joe Walden, Supply Chain Management, The University of Kansas

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For several years now the buzz word in business has been “big data.” From a Reverse Logistics perspective where does this data come from? How do we turn this “big data” into usable information? And what does the data tell us about our company and the handling of reverse logistics?

We have had big data in businesses for decades and in some cases so much data that we became overloaded and not able to convert the data into useable information in order to make better business decisions. The world of reverse logistics is no exception. The US Army conducted a detailed study into their reverse logistics practices (commonly referred to in the Army as retrograde operations) in 1998-1999 (Peltz, Lackey, Blake, & Vaidyanathan, 1999) about the same time that Dr Rogers and Dr Lembke were conducting a study of commercial reverse logistics out of the University of Nevada at Reno (Rogers & Lembke, 1998). Both of these studies were based on the use of big data from the reverse logistics transactions and resulted in a greater emphasis on items going backwards in the supply chain.

In 2000, Murphy and Poist published a paper on the collection of reverse logistics data. In their paper they stated “Another environmental topic that has been receiving increased attention in recent years is reverse logistics (RL). RL refers to the process involved in reducing, managing, and disposing of hazardous and non-hazardous waste from packaging and products. The growth and interest in RL is very likely to continue in the future as firms recognize that reverse logistics is a key component of the total logistics management process” (2000). In this study, Murphy and Poist collected big data on the use of recyclable materials and compared the data from the US and International companies that responded to their surveys.

In 2002 Lembke published a paper in the International Journal of Physical Distribution and Logistics Management on product life cycles and reverse logistics planning (Lembke, 2002). In this paper, Dr. Lembke states “As the relative newness of this area of research would indicate, many companies are just beginning to understand the importance of reverse logistics, and to grapple with how to best manage their reverse logistics processes” (2002). Not long after Lembke’s paper was published the Waste Electronic and Electrical Equipment (WEEE) Directive went into effect in the European Union EU) to reduce the impacts from the growth of electronic products and the resultant disposal or life cycle management. This new directive produced a growth in the big data captured within the EU on the management of electronic waste materials.

One of the first of these studies was published in 2005 by Hischier, Wager, and Gauglhofer focusing on the impacts of WEEE on the collection of e-waste in Switzerland (2005). The authors captured data on the recycling of batteries, capacitors, other hazardous materials, metals, metal–plastic mixtures, plastics, cables, wiring boards and monitor screens. Their goal was to establish a correlation between higher levels of recycling in Switzerland compared to the rest of the EU and environmental impacts/sustainability. A follow up was conducted by Wager, Hischier and Eugster in 2011 that revealed a significant increase in the recycling of products in Switzerland compared to the 2005 study (2011).

In the reverse logistics world we are constantly throwing around the number of tons of electronic waste that is disposed of in landfills (approximately 40,000,000 metric tons (Walden, Recycling of Electronic Products, 2012)). Since e-waste supposedly only accounts for 2-5% of the actual land fill wastes, this would mean that total waste production equates to approximately 800,000,000 metric tons or approximately 1.792 trillion pounds of waste each year. At the upper limit of the e-waste projections, this would still leave 1.7 trillion pounds of waste from other sources going into our landfills. What percentage of that quantity is also recyclable?

A report from the Ellen Macarthur Foundation places the estimate at 95% of all plastics used in packaging is not being recycled each year with an estimated recycling loss of $(USD) 80-120 billion while 32% of all plastics never get recycled (2017, p. 1). Besides plastics, what other resources are not being recycled or captured through the reverse logistics process?

Cucchiella, D’Adamo, Koh, & Rosa reported a plethora of data on the disposition of electronics in their 2015 paper on results from the WEEE Directive. “Waste from Electric and Electronic Equipment (WEEEs) is currently considered to be one of the fastest growing waste streams in the world, with an estimated growth rate going from 3% up to 5% per year. The recycling of Electric or electronic waste (E-waste) products could allow the diminishing use of virgin resources in manufacturing and, consequently, it could contribute in reducing the environmental pollution” (2015). The goal of this data capture was to demonstrate the volume of recyclable materials to include precious metals and limited natural resources coming from electronic products.

Although the study by Rogers and Lembke in 1998 stated that “now more than ever, reverse logistics is being seen as important” (1998), the growth of reverse logistics continues to burden companies with a mountain of products going backwards. Tansel reported “Increasing quantities of discarded consumer products remain a major challenge for recycling efforts, especially for discarded electronic products. The growing demand for high tech products has increased the e-waste quantities and its cross boundary transport globally” (2017). Rogers and Lembke reported the reverse logistics issue to be a $35 billion (USD) industry in 1998 (1998). By 2006 the estimate was placed at $100 billion (USD) and yet even with the growth in importance of reverse logistics, by 2012 the value of electronics in the reverse logistics system had risen to $677 billion (USD) (Walden, 2012). The year prior to this a data collection effort showed: “The resource recovery per tonne of high-grade WEEE ranged from 2g of palladium to 386kg of iron. Quantified in terms of person-equivalents the recovery of palladium, gold, silver, nickel and copper constituted the major environmental benefit of the recovery of metals from WEEE. These benefits are most likely under estimated in the model” (Bigum, Brogaard, & Christensen, 2011). Thus showing that the recycling of electronic products can not only produce limited resource precious metals such as palladium, gold and silver but also reduce the need to mine those metals as well as other metals such as iron.

In a recently published paper, the US Environmental Protection Agency reported “In 2014, approximately 41.8 million tons of e-waste was generated worldwide. Only 6.5 million tons of total global e-waste generation in 2014 was treated by national electronic take-back systems” (EPA, 2018). The report goes on to say “Cell phones contain a very high amount of precious metals such as silver and gold. Americans throw away approximately $60 million worth of silver and gold per year” (EPA, 2018). A separate EPA report states “For every million cell phones we recycle, 35 thousand pounds of copper, 772 pounds of silver, 75 pounds of gold and 33 pounds of palladium can be recovered” (EPA.Gov, 2018). The problem is that although the EU has the WEEE Directive for all of its member companies, in the US there is no national policy and only a little over half of the states have laws on the books concerning e-waste recycling.

Consider the recent report in Forbes Magazine: “given the fact that flash sales such as the soon to come Black Friday and Cyber Monday mostly encourages spontaneous consumer purchases, the return rate for clothing spikes dramatically following these limited time periods. According to a study from KPMG, 31.4% of consumers who had bought fashion apparel on 2017’s Black Friday, expected to return one or more items. With return rates up to 30% on Black Friday, the revenue lost from unnecessary returns from this day alone sums up to billions of dollars globally” (Khusainova, 2018).

The bottom line is that we continue to produce a plethora of data on reverse logistics activities and continue to report the vast amounts of electronic products produced and discarded but the problem continues to grow. Data collection and reporting is fine, but without analytics to turn all of this big data into usable information to help stop the growth of reverse logistics, we are not making progress. Data collection is fine but the whole purpose of data is to analyze the data, convert it into information and use that information to make better decisions within the world of reverse logistics and enable companies and consumers to think about the product design, process design and their impacts on the environment from the continued growth of electronic products and the growth of reverse logistics as a result of electronic commerce growth.

Works Cited
Bigum, M., Brogaard, L., & Christensen, T. (2011). Metal recovery from high-grade WEEE: A life cycle assessment. Journal of Hazardous Materials, 8-14.

Cucchiella, F., D’Adamo, I., Koh, S., & Rosa, P. (2015). Recycling of WEEEs: An economic assessment of present. Renewable and Sustainable Energy Reviews, 263-272.

EPA. (2018). E-waste recycling facts and figures. Retrieved Oct 4, 2018, from thebalancesmb.com: https://www.thebalancesmb.com/e-waste-recycling-facts-and-figures-2878189

EPA.Gov. (2018, Nov 2). Electronics donation and recycling. Retrieved Nov 16, 2018, from Environonmental Protection Agency: https://www.epa.gov/recycle/electronics-donation-and-recycling

Khusainova, G. (2018, Nov 13). Back To The Burner: Black Friday Is National Throw-Away Day. Retrieved Nov 16, 2018, from Forbes.com: https://www.forbes.com/sites/gulnazkhusainova/2018/11/13/back-to-the-burner-black-friday-is-national-throw-away-day/#400344c36919

Lembke, R. (2002). Life after death: reverse logistics and the product life cycle. International Journal of Physical Distribution and Logistics Management, 32(3), 223-244. Retrieved Oct 4, 2018

Macarthur Foundation. (2017). The new plastics economy. Ellen Macarthur Foundation .

Murphy, P., & Poist, R. (2000). Green Logistics Strategies: An Analysis of Usage Patterns. Tranportation Journal, 40(2), 5-16. Retrieved November 3, 2018

Peltz, E., Lackey, A., Blake, D. J., & Vaidyanathan, K. (1999). Value Recovery from the Reverse Logistics Pipeline. Santa Monica: Rand Corporation.

Rogers, D., & Lembke, R. (1998). Going Backwards:. Reno: Reverse Logistics Executive Council.

Tansel, B. (2017). From electronic consumer products to e-wastes: Global outlook, waste. Environment Internationa, 35-45.

Wager, P., Hischier, R., & Eugster, M. (2011). Environmental impacts of the Swiss collection and recovery systems for Waste. Science of the Total Environment, 1746-1756.

Walden, J. (2012). Environmental Impacts Associated with Current Methods of Re-USe, Recycling and Reclamation of Personal Computers and Cell Phones. Lawrence, KS : University of Kansas.

Walden, J. (2012). Recycling of Electronic Products. Lawrence, KS : University of Kansas.

Wischier, R., Wager, P., & Guaglhofer, J. (2005). Does WEEE recycling make sense? Environmental Impact Assessment Review, 25, 525-539. Retrieved Nov 16, 2018
Joe Walden has 30+ years in warehousing, distribution, operations and supply chain management. A third book on supply chain leadership will be released this summer. In addition to operational supply chain experience, Joe also teaches graduate courses in Operations Management and Supply Chain Management for Webster University, as well as undergraduate classes in Operations Management for the University of Kansas. https://business.ku.edu/joe-walden  

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