rlsc 2016: key success factors for optimizing value recovery in the ematerials market

March 2016

Key Success Factors for Optimizing Value Recovery in the eMaterials MarketMichael Blumberg, Blumberg Advisory GroupJoe Morrow, Belmont Trading Company

© 2016 Belmont Trading Co., Inc. All rights reserved.

Agenda

• The eMaterial Market and Challenges

• Criteria for Selecting an eMaterial Management Partner

• The Integrated Value Recovery Partner

• Integrated Value Recovery Case Studies

• Belmont Trading Company Overview

• Blumberg Advisory Group Overview

2

THE EMATERIAL MARKET AND CHALLENGES


eMaterial vs eWaste

4

eWaste

Generally implies material that is:• Beyond Economic Repair

(BER) or End Of Life (EOL)

• Destined for lower-value recycling/metals recovery

eMaterial

Any electronic product that is transitioning from one use to the next, such as:• New in box equipment that an OEM never sold as new • Resalable used equipment even if it requires repair or

refurbishment to make it suitable for resale • Material generally referred to as eWaste: BER or EOL

material that cannot be used again due to obsolescence or damage.

In this presentation we use the most applicable term given the context of the topic we are discussing.


eMaterial Value Recovery Drivers

5

Maximizing Economic Value

Pursuing Sustainability

Goals

Complying With Regulations

Protecting Private Data


The Growing eWaste Problem: 2014

6

India, 4.1%

China, 14.4%

Brazil, 3.3%

Russia, 2.9%

Japan, 5.3%

Italy , 2.6%France, 3.3%

Germany, 4.3%

United States, 17.0%

UK, 3.6%

Top eWaste Producers (%age of Global eWaste)

1.4

4.4

7.0

8.5

17.3

18.0

21.9

22.1

22.2

23.3

0.0 5.0 10.0 15.0 20.0 25.0

India

China

Brazil

Russia

Japan

Italy

France

Germany

United States

UK

eWaste Generated per Capita (KG)

Source: http://i.unu.edu/media/ias.unu.edu-en/news/7916/Global-E-waste-Monitor-2014-small.pdf


The Growing eWaste Problem: Trends

7

33.835.8

37.839.8

41.843.8 45.7

47.849.8

55.2

5.45.7

5.96.1

6.36.5

6.7

0

1

2

3

4

5

6

7

8

0

10

20

30

40

50

60

2010 2011 2012 2013 2014 2015 2016 2017 2018

Growth in Global eWaste Generation

E-waste generated (Mt) E-waste generated (kg/capita)

Total CAGR = 5.0%Per Capita CAGR = 3.7%



The Growing eWaste Problem: The Impact We Can Have

8

Paladium, 0.05

Gold, 0.12

Silver, 1.24Copper, 8.44

What We Keep Out of Landfills(ounces per 100 phones)

Paladium, $27.25

Gold, $145.19

Silver, $18.97

Copper, $1.10

What it's worth(value per 100 cell phones)

Source: Shegerian, John, Triple Pundit, August 21, 2015

Total value per 100 cell phones: $192.51


eMaterial Reuse & Recycling Options

9

Lower Value

Recovery

Higher Value

Recovery

Scrapping & Recycling

Component Harvest & Resale

Remarketing Whole Units

Striving for higher value recovery options helps us achieve economic, sustainability, and regulatory goals


Global eMaterial Challenges

10

North America Latin America Europe Asia Africa

Canada:

• 7 provinces have recycling systems in place

• National-leveleWaste export controls

US:

• 25 states have (differing) laws on eWaste and recycling

• Limited national regulation

• Most countries have regulations and follow UN protocols

• Robust private-sector self-regulation, e.g. by MNOs who put in place take-back programs

• WEEE directive

• Local laws like PAS 141 in UK

• RoHS directive

• Battery directive

• Japan only country with formal laws

• Taiwan & S. Korea have well developed systems in place

• China has national regulation on imports and licensing

• India has no national law but some state laws

• Little governmentaction to speak of

• South Africa is building eWaste recycling infrastructure

Countries with regulations: 52Countries without regulations: 153


SELECTING AN EMATERIAL MANAGEMENT PARTNER


Evaluation Criteria for eMaterial Management Service Providers

12

eMaterial Manager

Geographic Footprint &

Local Expertise

Vertical Market & Material Diversity

Breadth of Services Offered

Logistics & Processing

Capabilities

Remarketing &

Distribution Capabilities

Analytics & Reporting

Capabilities

These are the critical criteria to examine when evaluating the capabilities of any eMaterial management partner


Evaluation Criteria: Geographic Footprint and Local Expertise

13

Value Recovery

Goal

How Geographic Footprint and Local Expertise Helps Achieve It

Maximize Economic

Value

Diversity of resale markets maximizes value-in-use for materials

Maintains current knowledge of constantly changing local regulatory environment and demand trends

Pursue Sustainability

Goals

Deep knowledge of local markets allows greater transparency into the material’s second life

Comply with Regulations

Decreased risk of violating local regulations

What Is It?

Ability to deal with the global business challengesand their implications through:• Knowledge of local

regulations• Knowledge of local

markets & demand patterns

• Understanding of trade requirements & relationships between countries

• Local market presence


Evaluation Criteria: Vertical Market and Material Diversity

14

Value Recovery

Goal

How Vertical Market and MaterialDiversity Helps Achieve It

Maximize Economic

Value

Single point of contact for all eMaterial value recovery needs

Potential to cross sell components across product segments

Knowledge transfer between verticals

What Is It?

Breadth of vertical markets and material processing capability; may include:• Mobile devices• Computing equipment• Telecom equipment• Network connectivity

devices• Consumer electronics• Wearables• Batteries


Evaluation Criteria: Breadth of Services Offered

15

Value Recovery

Goal

How Breadth of Services Helps Achieve It

Maximize Economic

Value

One-stop shop for all processingservices you may need

Savvy partners specialize in services they are best positioned to provide and outsource others


Goals

The fuller the range of services provided, the more options for avoiding less sustainable practices (e.g. landfill disposal)

Protect Private Data

Secure, certified data erasure/ device destruction is one service your partner should perform in-house, with a strong track record of avoiding security breaches

What Is It?

The breadth of services a partner can perform on agiven device, such as:• Triage, sorting and

grading• Data wipe/destruction• Repair/refurbishment• Component harvest• Remarketing whole

units• Remarketing

components• Recovering precious and

other metals• Recovering other

materials


Evaluation Criteria: Logistics and Processing Capabilities

16

Value Recovery

Goal

How Logistics and Processing Capabilities Help Achieve It

Maximize Economic

Value

Lean, efficient, standardized logistics & processes reduce operating costs creating more value


Goals

Tracking of process metrics support demonstrates progress toward sustainability goals


Standardized, documented processes allow clear demonstration of compliance

Protect Private Data

Efficient, mature, standardized QA processes reduce the risk of incomplete data wiping

What Is It?

Maturity & sophistication of logistics & processing capabilities:• Productivity vs. other

vendors• Logistics expertise and

partnerships in locations served

• Quality assuranceprocesses and certifications

• Process and technology standardization across facilities

• Metrics and SLAs measured and supported


Evaluation Criteria: Remarketing and Distribution Capabilities

17

Value Recovery

Goal

How Remarketing and Distribution Helps Achieve It

Maximize Economic

Value

Find both the highest price and the quickest payment for your material—then optimize the two to maximize value


Goals

The more remarketing options a partner has access to, the more capable they are of finding solutions aligned with customers’ goals


The more country and channel options a partner has access to, the more capable they are of ensuring & demonstrating regulatory compliance

What Is It?

Breadth of market reach and depth of expertise in remarketing and distribution:• Insight & knowledge

into every viable market

• Direct presence in these markets

• Access to multiple channels and potential customers

• Proven track record of optimizing inventory turnover


Evaluation Criteria: Analytics and Reporting Capabilities

18

Value Recovery

Goal

How Analytics and Reporting Helps Achieve It

Maximize Economic

Value

Modeling & scenario planning to examine several variables to ensure processing and remarketing decisions are yielding maximal value in minimal time


Goals

Use data to demonstrate clearly where you are in relation to your goals


Generate reports to demonstrate regulatory compliance

What Is It?

Ability to analyze and report against KPIs relevant to recovering value from eMaterial, such as:• The frequency &

thoroughness of reporting on recovery rates, revenue sharing schemes, and compliance levels

• Analytics to support procurement,processing, remarketing and sales decisions

THE EMATERIALS VALUE OPTIMIZATION PARTNER


The eMaterials Value Optimization Partner

20

eMaterials Value

Optimization Partner


Local Expertise




Capabilities

Remarketing &

Distribution Capabilities


Capabilities

Global

Multi-Vertical

Broad Services

High Process Maturity

Broad Reach, Deep Expertise

Robust Analytics & Reporting

The eMaterials Value Optimization Partner possesses advanced

capabilities along every dimension of our

framework

EMATERIALS VALUE OPTIMIZATION CASE STUDIES


Case Study: Global, Diversified Telecom Equipment OEM

22

Client

• Leading Europe-based telecom equipment OEM

• Operations in 120+ countries• Diverse portfolio of Telecom Network products

Integrated Solution

• Five providers (including Belmont) partnered to provide solution

• Services span remarketing, recycling, logistics management, and CO2 offsetting for all the client’s products across all 120+ global locations

• Resale values increased over those attained by prior partners

Client Situation

• Required diverse set of services, from remarketing to recycling

• Operated in 120+ countries with 47 vendors—goal to minimize vendor count

• Required customized services based on product type, country, and optimal value recovery strategy


Case Study: Global, Diversified Telecom Equipment OEM (Continued)

23

eMaterials Value

Optimization Partners


Local Expertise




Capabilities

Remarketing & Distribution Capabilities


Capabilities

Capabilities Demonstrated

Local expertise or partnerships in all

120+ client countries

Consistent processes across all facilities serving the 120+ countries

Improved resale values by leveraging global network to find optimal resale markets and channels

Ability to process all types of telecom

material

Including remarketing, recycling, logistics management,

and CO2 offsetting

Tracked and reported on client KPIs globally


Case Study: Latin American Mobile Device Trade-In Program

24

Client

• Leading LATAM mobile network operator• Diversified service portfolio includes mobile phones, cable TV, broadband, mobile payments

• Operates online eCommerce site and a network of retail stores

Integrated Solution

• Partnered with client and in-store processor to develop end-to-end trade-in program

• Integrated Value Recovery Partner manages all out-of-store logistics

• Leverages Colombia facility for device collection & processing

• Leverages Dubai and Hong Kong facilities for international remarketing

• Leverages U.S. facility for recycling devices that can’t be remarketed

Client Situation

Sought partner to run online and in-store mobile device trade-in program and provide:• Maximum recovery value by selling phones in

optimal markets (domestic or international)• Maximum velocity of cash conversion• Minimum environmental impact• Compliance with strict Colombian regulations


Case Study: Latin American Mobile Device Trade-In Program (Continued)

25

eMaterials Value



Local Expertise




Capabilities



Capabilities

Collection & Processing: Colombia

Resale markets: Colombia, Dubai &

Hong KongRecycling: U.S.

Belmont handles end-to-end logistics, sorting, grading,

repair, and remarketing

Integrated processing and logistics across 4+ countries (Colombia, US, Dubai, Hong Kong)

Belmont remarkets devices on both B2B and B2C channels in Colombia and globally via Hong Kong and Dubai



Case Study: Maximizing Value and Minimizing Environmental Impact of Russian eMaterial

26

Client

• Western-Europe-based global telecomcompany with customers in more than 180 countries

• Strong corporate focus on sustainability and finding highest-value “second life” for eMaterial

Integrated Solution

• Based on local expertise, determined an export route to move the equipment from Russia to an intermediary country, then to Sweden for resale in the EU

• Belmont handled all the logistics for the operation, leveraging its own office in Moscow and processing facility in Sweden

Client Situation

• Routinely installs and de-installs equipment for clients in 180 countries

• Had high-value telecom inventory in Russia • Exporting equipment for resale has many costs and legal complexities

• No resale market for the equipment in Russia; only option was to scrap it, with obvious negative environmental impact


Case Study: Maximizing Value and Minimizing Environmental Impact of Russian eMaterial (Continued)

27

eMaterials Value



Local Expertise




Capabilities



Capabilities

Knowledge of local laws in all European countries, facilities in Sweden & Russia

Logistics management across three countries

Ability to take ownership of material, export from Russia to Sweden, remarket across EU


BELMONT TRADING COMPANY OVERVIEW


We are passionate about creating sustainability solutions for used electronics equipment

29

Belmont Trading Company exists to make our

world sustainable for future generations by

creating responsible and ethical solutions

for managing and recapturing value from

used electronic equipment in every global market

Reducing the proliferation of eWaste

With 10 facilities on 4 continents we are well positioned to localize processing and

remarketing solutions for our partners

Our focus materials include computing, mobility, network

telecom, batteries & accessories, and a range of other electronics

28 year history of growth of innovation for its

business partners

Meeting or exceeding local governmental

and NGO standards

Maximizing value returned to customers

BLUMBERG ADVISORY GROUP OVERVIEW


Experience and Credentials

• Full service management consulting firm specializing in the Aftermarket & Reverse Logistics Service Industry:

- Reverse Logistics & Returns Management

- Depot Repair & Field Service

- Service Logistics

- Tech Support

- Asset Recovery & Liquidation

- E-Waste & E-recycling

• Founded in 1969

• Headquartered in suburbs of Philadelphia, PA

• Practice areas include:

- Strategic & Business Planning

- Market Research & Customer Satisfaction

- Benchmarks & Best Practices

- Productivity & Efficiency Improvement

- Systems Design, Evaluation, & Recommendation

- Mergers & Acquisitions

• Broad Industry Focus

- IT/Telecom

- Consumer Electronics & Appliances

- Medical/Scientific Instrumentation

- Process Control & Plant Automation

- Building Controls & Automation

31


Thank You!

33

ContactBelmont Trading Companywww.Belmont-trading.com

[email protected]