Sustainability vs. Bottom Line Lecture

By: Crissi

Sustainability is highly relevant to today’s business world  and many students and prospective students want to know what opportunities the Simon School offers to learn more about this topic.  Professor Harry Groenevelt of Operations Management recently presented in the lecture series Sustainability vs. Bottom Line: The Role of Reverse Logistics.

Reserve Logistics is the ‘after-life’ of a consumer product.  Products are born through the conversion from raw materials to fabrication of parts, assembly, distribution and purchase by the consumer.  After the initial consumption, each stage of the product ‘life’ may have channels to incorporate the product’s used components again, known as reverse logistics.  After a consumer purchases a product, they can then resell the product, say on e-bay, and this is seen as a secondary market for recycling the original product.  The same product may also be returned to the company, for example a product exchange or upgrade, where the initial product is refurbished and placed back in the distribution channel.  Further down the line, a used product can be remanufactured, or cannibalized for its valuable parts which then go back into the assembly line for incorporation into a new product.  The last stop before the landfill is recycling; reprocessing parts of a used product to incorporate into the fabrication of new parts, i.e. melting down plastic components to form parts for a new product.

A fascinating example of this process is disposable cameras.  Companies like Kodak and Fuiji reuse the components – circuit board, battery, lens, plastic shell – of single-use cameras redeemed to develop the film.  The cost to the companies to produce a single-use camera from scratch is around $10 or more, yet they sell for around the same amount in retail stores. How does Kodak or Fuiji turn a profit on these products?  By developing a return process for film developers to mail used cameras back to their plants, Kodak/Fuiji can refurbish the same camera – or reuse its pieces – up to ten times.  Unusable parts are melted and reformed, thus recycled at the fabrication level.  At this rate the cost per camera goes down by more than 50%, making a seemingly unprofitable product, a good business proposition. 

If you find these topics as interesting as I do, take a look at Simon’s classes in Operations Management, or email the Admissions Office to get in touch with a Simon professor or current student at admission@simon.rochester.edu.

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