business case_prateek singh

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Business Case:

E-waste Tracking System

Autumn 2010

Submitted as a part of computer

Systems II Assignment, by:-

Prateek Singh

9810051

MBA 2nd

Year


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1. Project Team:

1. Original Equipment Manufacturers: The Plan requires carrying its operations by forming various alliances with the original

equipment manufacturers, which according to the e-waste draft policy have a responsibility

to look after their products after the end of life and ensure an environmentally safe disposal.

We are providing a solution to these OEMs to help them tackle their problem of tracking the

e-waste by formulating a central database of their products which will have a unique ID

stored along the products name and will be used to track its end of life. The project will

require some monetary support and for sharing of data responsibility by the firm, which the

firm normally compensates from the extra markup of 2% to 5% that they do on their

products for the waste management. The team will mainly have Representatives from

Different OEMs (Like for example, Intel, AMD, Samsung, LG Electronics, Videocon, HCL, HP,

DELL, Sony Electronics etc) and associated societies (Electronics society of India, Computer

Manufacturers Society etc) in the Industry.

2. Government: The Project strives for containment of unsafe disposal of e-waste by keeping a record of the

electronic equipments manufactured by the OEMs. The project also supports the

governments initiatives for environment friendliness and consumer awareness and their

responsibility to ensure and regularly update consumers about the hazardous and ill effects

of unsafe disposal of WEEE (Waste Electronics and Electrical Equipments). The project will

join hands with various government initiatives and programmes such as Jawahar Lal Nehru

Urban Renewal Misssion and other such schemes. A lot of allocations in the recent Budget

and the five year plans have been made, promoting the management of waste in an

environment friendly manner. The team will mainly have Representatives from Ministry of

Communications and Information Technology and Ministry of Environment and Forests.

3. Recyclers:

Recycling Industry in the e-waste segment always run underutilized, just because they are

not able to procure enough raw materials for their plants. As supported by the facts and

figures by various surveys, only 3% of recycling is done in the organized sector. It is clear

that there is lack of environmentally sound recycling infrastructure, and therefore, e-waste

ends up going into unorganized segment. However, the project wants to make sure that e-


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waste goes through proper channel into recyclers hands for the proper treatment. The

project wants that they run their plants at their efficient capacities and the e-waste

recycling segment gets a push so that new players come up in this field. By providing them

the necessary information about the e-waste resources in their region, the Project team

intends to receive some monetary credits for our supply of inputs. The team will mainly

have Representatives from Different Recyclers in the region attero recyclers, bharat

recyclers etc

2. Project Description:

There are about 350 million mobile phones and 80 million PCs in India. PCs and Television

Sets form the major chunk of e-waste. An estimate 1,50,000 Computers become obsolete

every year. Mobile phones have an even shorter life. The e-waste inventory based on the

obsolescence rate and installed base in India is expected to exceed 8,00,000 tonnes by

2012.

Government of India is bringing in legislations embracing Producer Responsibility for e-

waste and also drafting policies for other players involved in the value chain. Ministry of

Environment and Forests released on 14th May, 2010 draft e-waste policies. They are

already in force in the

EU, Japan, Korea, Taiwan and some US states.

As per a GTZ-MAIT sponsored study conducted during 2007 by IMRB, only 3% of e-waste

enters the organized sector and rest of it is processed in an environmentally unsafe manner,

releasing a lot of hazardous substances into the surroundings. All this, is in the absence of a

monitoring system to track the movement of e-waste after the end of life. Since,

government of India is introducing the Extended Producers responsibility; it will become

imperative for the Producers as well as government too, to make sure that the e-waste is

disposed off properly.

The project aims at registering the product IDs which is a unique identification no. of the

electronic item, with the government ministry, similar to the way, how automobiles are

registered with the government. The government in turn will issue a registration certificate

certifying the owner, with their address and current contact no. stored. The company while

issuing the product, will also notify the customers about the life time value of the product,

after attaining which it will be the local recyclers responsibility, which obviously be


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registered with the government too, and will have special rights to procure such e-waste,

according to the newly drafted e-waste guidelines, to collect the e-waste from the customer,

in case a transfer has been made, the RC will have to be updated with the government

authorities, otherwise it would be illegal to use the electronic product. Moreover, it shall also

be customers responsibility to help the authorities claim the e-waste, after the end of life.

However, if the customer does not want to leave the electronic product, it can claim an

additional life of 3 years, by renewing the registration certificate, which shall be a hassle

free process and should be aided by the dealer, retailer, supplier etc from whom the product

has been purchased.

Thus, in this way the entire value chain of e-waste, consisting of manufacturer, supplier,

dealer, retailer, consumer, reseller, dismantler, reprocessor, recycler and other players are

coming together on the same platform and sharing the information repository, where they

can all work together for the common cause of reducing environmental pollution, with

government playing the supervisors role and checking if the things are done according to

the set norms and conditions and implementing the regulatory authority over the defined

players in the value chain, and completely transforming the unorganized market into an

organized system of operations.

3. Measurable Organization Value:

3.1 Defining MOVs:

The primary objective of the business case is to cater the society by preventing the unsafe

disposal of e-waste and develop a systematic system in directing the e-waste into an

organized segment so that the waste is disposed in a manner, which may be both profit

generating, may generate employment for people, create a business out of it and develop

society and most importantly protect the environment. Now, it collaborates the electronic

industry, government , various NGOs and societies working in this direction and also the

recyclers involved , who will be the end users responsible for disposing of e-waste safely. Lets describe the benefits that the project promises to offer with respect to the perspectives

given below:


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1.Strategic:

Faster Updating of Information and a Common Access: The collaborative structure of

Industry, government and recyclers and other registered bodies means that many decisions

which require insight and approval from many different sources, will now have a single

source of information, a common database for all. So a recycler may be able to clear the

entries of a HP computer, a Dell computer etc from the list. Also, registration No.s of both

Intel chip in a Lenovo PC can be cleared simultaneously. Thus, all the integrated products

may be cleared from the same concurrent list at the end of their lifes. The plan wants to

automate the operations from the point of sale entry into database to point of recycling

from a recyclers venue.

2.Customer:

It will reduce the OEMs headache in maintaining of such an information log for all its

products. They can focus more on redirecting their products towards proper facilities

for recycling after end of life.

Moreover, it will help the government to scrutinize the recycling activities by variousOEMs in ensuring that their products reach a proper registered recycling facility after

product end of life.

The project will help us increase the flow of raw materials in e-waste recyclingplants. Thereby, increasing environmental conservation and also protecting

environment from harmful release of substances.

3.Operational:

It will promote the OEMs to focus on their productivity and innovating in terms oftheir business processes in generating more eco-friendly substances to be used in

their products. They will get in an organized and extended value chain to transfer

their products to recycler and follow the legislations of the state.

It will mostly benefit the authorized recyclers, who now have a database, which liststhe source of their raw materials and thus by a search in a specific region will help

the collect the necessary e-waste.

It simplifies the process of e-waste containment for the government. The databasewill know the correct outflow of waste electronic and electrical equipments.


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4.Finance:

The most obvious fact in saving over finances is that it will best utilizegovernment funds to create something beneficial for the society and useful for

the industry. Also, importantly its saving funds on individual creation of such databases by

various OEMs and rather instigating them to collaborate and form a coherent

database. The concurrency of tracking the e-waste by recyclers and integrative

manufacturers will bring in efficiency.

The transparency the project brings in with the registration by OEMs, will curbthe unauthorized recycling of dumped waste by other countries. This way

government is saving costs in dealing with such a kind of e-waste, and also

decreasing the amount of pollution caused to its environment.

5.Social:

The Projects implementation will be very beneficial to the society as a whole. Some of the

benefits are:

Efficient resource recovery: The distribution of correct and specific parts and

components to the respective facilities with appropriate technologies is going to ensure

higher recovery of materials post recycling. The targets for recycled materials can

gradually be pushed higher to increase the recovery percentages eventually leading to

resource conservation.

Potential to create jobs: The proposed plan will create many opportunities for

consultants, people required in OEMs to deal with e-waste management operations and

as the recyclers operations are advanced or other people enter the business, a lot of job

opportunities will be created at all levels, from rag pickers, scrap dealers to a company

department handling their e-waste management or a recycling factory owner.

Consumer Awareness: The proposed business case will involve end user involvement

in depositing their respective e-waste in safe hands to be dealt with in a proper way.

Thus along with the government initiatives, OEMs will also be planning various

marketing and promotional activities to make consumers aware of the intricacies of their


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operations and also the problems and hazardous nature of their disposal of e-waste

through alternate unorganized channels. Thus trying to make consumers vigilant and

choose the right way.

Environmental benefits: The biggest advantage that the project will be providing are

the environmental benefits, as the complete process will force OEMs and other parts

manufacturers to follow the norms of environmentally sound management and be

compliant with the legislation and policies introduced. All toxic materials such as lead,

cadmium, mercury, barium, BFRs etc which are currently leaching out to the

environment will be highly minimized thus reducing the environmental burden.

Occupational safety: Another major gain is for the workers, who will not be exposed

to the hazards of the toxic elements and gases being released as technology and strict

monitoring and standard setting will help minimize this exposure. The processes will be

carried out at recycling facilities in government supervised and working feasibility

conditions, rather than that being carried out in unorganized sector.

Revenue to the state:Setting up of the new facilities as per the existing norms of

industry, due to increase in supply of raw materials after stipulated or expected end of

life period of products will bring in revenue for the state.

3.2 Identifying Value to the organizationThe value to the organization, which is government in this case should not be identified just

in terms of monetary benefits it may receive. Rather, the correct scales should be

transferring or promoting of e-waste to be processed through the organized sector,

security/ transparency and role in protecting environment.

1.Increasing the e-waste processing in the organized segment:

The proposed project after registration will allow the stakeholders involved in the value

chain to access the data, thus enabling them in procurement of the e-waste after end of life.

Proper measures should be taken such that the waste does not enter the unorganized

stream.

2.Growing the Database to cover the entire nation:


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The Project also intends to grow over a period of time and extend its operations in the

entire country. It first starts from NCR and Haryana. Later covering the northern states in

the next phase and then the southern states and in the last stage covering the remaining

states in India.

3.Increasing the no. of stakeholders involved:

Government needs to collaborate and bring as many players in manufacturing of electronic

and computer goods in the project and also invoke the recycling industry to have e-waste

processing as a new segment and authorize them with the capabilities.

4.Security Issues

Governments investment in this project is because of the security issues it has in

controlling the operations of various OEMs, who despite all the e-waste policies and

legislation released, will not follow them as effectively as they should. The project gives

government complete control to overlook the sales and recycling of all the products

manufactured by parts and equipment manufacturers. It makes the entire system

completely transparent, with all the stakeholders having an eye on the operations being

carried out.

5.Protecting Environment

Governments role in ensuring its citizens a safe environment to live in and look over the

environmental matters of concern will ask the authorities to step in and implement such a

project. By the laws and various policies being made, government should make sure it has acontrol over the laws implementation and it has some tools by which it can actually measure

whether the laws are being followed in the right spirit or not.

3.3 Defining the Metrics

Increasing the e-waste processing in the organized segment:

The proposed project after its implementation targets to shift in 17% of informal market in

first 3 years to a more organized market. In this manner, around 20% of e-waste recycling

market will be catered by the organized sector, amounting to 160 million tonnes.

In the next 3 years after the all India extension, the expected market share capture is by

30%, thus bringing enormous WEEE goods in the formal recycling industries. Similarly, the


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long term goal of the project is to bring in as much as 75% market into the organized

segment in India.

Growing the Database to cover the entire nation & Increasing the stakeholders

Involved:

The Project aims at including all the OEMs and part manufacturers, along with the

registered recyclers. Initially, all the major OEMs will be required to work on this project

collaboratively. In the subsequent phases region wise local parts manufacturers and small

recyclers will be included from North, South, West and East respectively.

Rest important points in measurement of organizational value are not quantifiable.

3.4 Setting a Time Frame

Lets analyze the milestones to achieve the overall benefits due to installation of such a

project by the government.

The project has an initial cost of 20 lac Rupees and subsequent implementations in other

states at 10 lacs in 2 Phases. The personnel require in maintaining and constantly updating

will be charging at the rate of 20 lacs per annum. The stipulated time of completion is 1

year from project approval. And next phases every 6 months.

Targets to Achieve In Time duration

Key Variables 1 year 2 years 3 years 6 Years

E-waste processing in Organized

Market(Market Share in %ge)

5% 12% 25% 50%

Stakeholders Involved

10 OEMs &

6 Recyclers

15 OEMs &

10 Recyclers

18 OEMs &

12 Recyclers

30 OEMs &

25 Recyclers


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3.5 Summarizing MOV

The Project will be successful if it is able to link up all the OEMs point of manufacture and

point of sale information to the unique IDs represented by them and help the recycler reach

the destination of the product at the end of life and thereby increasing the recycling in the

organized segment by 9% over 2 years and 22% over 3 years.

4. Comparison of Alternatives:

4.1 Including a RFID in each Electronic and Computer Equipment:

Despite RFIDs much-ballyhooed benefitsimproved production efficiencies, asset

utilisation, forecasting and inventory accuracy, all stemming from its ability to pinpoint the

location and status of products as they move through the supply chain, they are still not

popular product as to use for tracking purposes. It's only cost-effective for RFID tags to be

used to track individual items that cost rupees 750 or more. And then there are costs on

readers, which cost Rupees 50,000 or more today.

4.2 A similar database set up at each OEM:

The cost of setting up a similar database at every OEM is not feasible, because of the cost

involved of the project, not all small OEMs will be able to implement it. Also, because of the

area the project can cover, a database will not be able to cover entire national region in its

scope. Similarly, there will be issues in sincerity of data and governments control. The

information might not be conveyed properly to all the recyclers so there may be deficiencies

in the system. It will have problems in taking account of Integrated product companies such

as Monitors from a manufacturer and motherboards from a different manufacturer.

4.3 A Common database set up by the Government:

Because of the size, scope, cost, Information, data credibility and environmental issues

involved the project find its housing only in a government setup. As explained by the facts

mentioned above, and costing being received by government funds, funds from NGOs,

funds from OEMs taking part and also some funds from recyclers. So basically, everyone


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benefitting in the value chain is contributing. A central Information system will enable the

entire stakeholders to co-ordinate well amongst themselves to improve their working

efficiencies.

5. Analysis of Alternatives:

Assuming 1,50,000 computers and 2,00,000 mobile phones become obsolete each

year, then (Cost calculations done for first year)

Cost of Alternative 1: RFID tags

Cost of one RFID tag = Rs. 1000 (avg.)

Number of RFID tags needed = 3,50,000

Total cost of RFID = Rs. 350,000,000

The cost will only increase in subsequent years as the number of computers, mobile

phones etc. becoming obsolete every year will go on increasing.

Cost of Alternative 2: Setting up similar database at each OEM

Assuming that the project will be able to involve 10 OEMs in the first year,

Cost of setting up database at 1 OEM = Rs. 15,00,000

So, cost of setting up individual databases at 10 OEMs (in 1st year) = Rs.

15,000,000.

The cost will increase by Rs. 5,00,000 annually for maintenance and updation of the

database for each OEM.

Cost of Alternative 3: Common database set up by the Government

As mentioned earlier, the initial cost of setting up a common database by the

government will cost 20 lakhs.

This cost will also increase by Rs. 5,00,000 annually for maintenance and updation

but only for the government.

Since the benefits of implementing E-Waste Tracking System cannot be quantified,

so the alternatives can be analyzed on the basis of their costs only.


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From above calculations for 1 year, it is clear that the third alternative i.e. setting up

of a common database by the government is the most feasible option.

6. Recommendation:

The consolidation of the entire value chain of e-waste, consisting of manufacturer,

supplier, dealer, retailer, consumer, reseller, dismantler, reprocessor, recycler and

other players requires the government to play the supervisors role and implement

the regulatory authority over the defined players in the value chain, in order to

completely transform the unorganized market into an organized system of

operations. The best approach to undertake the E-Waste Tracking System is to do it

in a government setup. This fact has been reinforced by evaluating the total cost of

ownership for the three alternatives possible. Therefore, the government should

setup a central database to ensure coordination among all the players involved in the

project and improved efficiency at every step of the tracking system.

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