Dell Says the Circular Economy Is Good for Business: Q&A with Michael Murphy

by | May 10, 2017

At Dell, obsolete electronics are viewed as a resource rather than waste. In North America, the Dell Reconnect program with Goodwill Industries accepts computer equipment of any brand for refurbishment or recycling. Since 2008, the company reports that it has collected 1.6 billion pounds of electronics from its global take-back programs.

Scaling up is essential, especially to meet aggressive goals for incorporating post-consumer recycled content (PCR) into products, according to Michael Murphy, vice president of global product compliance engineering and environmental affairs at Dell Technologies. Murphy will be talking about the circular economy at the 2017 Environmental Leader Conference in June. Recently we caught up with him to find out how the world’s largest technology recycler is closing the loop.

What does the circular economy mean for Dell?

The circular economy for Dell means smart business. We’ve gotten more sophisticated in the efficiencies for the environmental attributes of our products and packaging. We started to work more cross-functionally beyond the product designs.

Has Dell’s approach to reducing waste changed over time?

Dell’s core initially was how to bring PCs to market. We aimed to design products to be built quickly. Then we were doing design for manufacture. As we started putting a lot of products in the field, we had to design for quick serviceability. Years ago, we had to look at the recyclability of our products as they came off the market.

Consumers wanted post-consumer recycled content in our products. Some of that was on the public procurement side. A good intersect was when we connected Goodwill with a recycling partner that wanted to take products back from the market, and [send] plastics and precious metals back into the PC loop. We did that in 2014 with the OptiPlex 3030 All-in-One, and we’ve scaled that to 91 different Dell products. Since 2015, we’ve recycled more than 10.5 million pounds of plastics into those products.

How did the design, take-back, procurement, and marketing teams come together?

We’re talking about major parts of the business. They’re all great at what they do. But when you start looking at a circular economy, you’ve got to step back, do systems thinking, and get folks to commit to the end state. For the procurement team, the cost of PCR coming out of a closed-loop process initially was going to be slightly higher than PCR from other suppliers. However, if we could get to scale, we believed that we could [make] the cost lower than traditional PCR.

You have to start bringing in other team members. One was our services team. We negotiated a cost for the value of the goods that we direct to our environmental partners. For post-consumer recycled content, the goods come to Goodwill. Then they’re aggregated and sent to a company called Wistron out of McKinney, Texas.

By changing the available market of recycled goods that we’re giving our environmental partners, we could get savings to offset the initial increased cost of PCR plastic. Longer term, not only do the procurement costs go down, but you can start negotiating with your primary material suppliers for a different cost model. Now we’re getting more value creation for products coming back on the market, and finding wins for each business unit.

How does the recycling program actually work?

We have the largest technology recycling program on the planet. We offer free consumer take-back in 83 countries and territories, and we offer take-back as a service for corporate customers. We look at PCs that are coming back off the market as a resource. The first pass is refurbishment. The bulk we take back goes into our asset recovery business, and we are either reselling those as refurbished or utilizing components of those systems in the manufacturing of refurbished systems.

Our products, like many, reach a point where the embedded value is no longer worth trying to reuse the system so we’ve got a network of environmental partners held to the highest standards on recycling. PCs are a complex product type, but value streams come out of them. One key is the extraction of precious metals. We’ve helped design for recyclability so our partners can get the materials that are of most value easily, and either get them back into our product or into other sectors.

What’s an example of a material that wasn’t easy to get early on?

In 2008, because of demand from federal and institutional purchasers, we started utilizing post-consumer recycled content and blending it in with our plastic. We had to get recycled plastic water bottles, PET. The cost for that had been going up because other industries were using PET and post-consumer recycled content. That’s when we started to close the loop on the materials already in our product.

With our PCR project, we brought in the design, take-back, procurement, and marketing teams. We had no intention of doing a demonstration project. The intent was to scale it. We’ve been able to do that even with the fluctuation of oil prices that [influence] the cost of plastic. We had set a target that to use 50 million pounds of PCR in our product by 2020. We actually achieved that goal in the last year. For 2020 we reset that to 100 million pounds. A big piece is closed-loop PCR from electronics that come through Goodwill and are repurposed into our products. If you can make the economics work for plastics that are fairly inexpensive, it becomes a tipping point for recyclers to get the volumes they need to close the loop on higher-cost materials.

What is your advice to other companies, especially around systems thinking?

You’ve got to be willing to take risks and be willing to fail. We almost failed in our ability to get the formulation right for PCR to go back into our products. We worked through that. A systems approach with a focused outcome opened our eyes to opportunities. We’re driving better costs. There’s no compromise on the product. And it’s driving different business relationships within our company, and with our partners.

Michael Murphy will be speaking at the Environmental Leader Conference in Denver June 5-7, 2017. His workshop, Circular Economies – Extracting Maximum Value Out of Resources, starts at 1 pm on June 5.

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