F100 Network and Communications Equipment Manufacturer Case Study

Bottom Line: Our client's reverse logistics function has realized a 50% reduction in recycling program processing expenses -- saving $3.5 million per year -- and has transformed the recycling function from a cost center to a net contributor of more than $10 million per year in incremental commodity revenue.

Business Problem: Our client is the manufacturing division within of a F100 Network and Communications Equipment Manufacturer. In order to recover value stored within component commodities (gold, platinum, etc) and reduce black- and grey-market exposure, our client needs to maintain a system for accepting more than 10 million pounds of excess or obsolete electronic waste each year from customers, repair facilities and internal sources and recycle them in a secure and environmentally sound manner. Our client's incumbent recycling capability, managed by an external entity, was expensive, fragmented and utilized multiple vendors worldwide with inconsistent rules for handling materials. Two recently acquired companies were also not yet integrated, maintaining their own vendor relationships - bringing the total vendor relationships to 15 worldwide.

Solution: Our client contracted with four suppliers, which collectively provide a rationalized global recycling footprint. As a direct result of NAVICENT's guidance, our client realized a 50% reduction in program expenses saving $3.5 M per year and is now obtaining nearly $10MM per annum in additional revenue yields due to more efficient commodity extraction, improved recovery terms, and reduced revenue leakage. In addition, our client reduced operational risk by limiting exposure from product theft and implementing systematic financial and operational controls. The solution is also environmentally sound, sending less than 2% of materials to landfill.

NAVICENT's Role: NAVICENT consultants and analysts managed an internal, cross-functional team to analyze and restructure the recycling program. Once the analysis was done, NAVICENT directed a RFX process that included over 90 vendors. NAVICENT also conducted an online auction which helped the client achieve true market-based pricing for a rationalized global recycling program delivered collectively by 4 suppliers worldwide. NAVICENT led a supplier audit program along with finance, corporate security, brand protection and other client stakeholders that included site visits, financial audits, and reference checks. Finally, NAVICENT worked in conjunction with the client's legal team and the suppliers to negotiate fair and performance based service contracts.

Results: NAVICENT architected and helped implement a world class electronics recycling management program that delivers both environmental and business benefits. As a direct result of this project, our client's recycling function delivers profitable, secure, and environmentally sound recycling services, and has transformed itself from a cost center to a profit center with a bottom line impact driven by a $3.5 million per year in opex reduction and more than $10 million per year in incremental commodity revenue contribution.

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