The Overlooked Supply Chain Issue in Biden's Latest Executive Order - Repairs

President Biden’s July 9th Executive Order, Promoting Competition in the American Economy, created quite a stir in the supply chain community regarding the potential impact on the ocean freight and railroad markets. But, there was another supply chain issue that was addressed in the executive order that was overlooked by many supply chain folks - the right to repair.

Repairs are one of the three major pillars of reverse logistics - returns and disposition are the other two.

As consumers, most of us have made minor repairs on various goods we’ve purchased such as eyeglasses, lamps, and some automotive work. Often times we’ve utilized third-party repair shops or sent our items to manufacturers for repairs.

Business owners have also faced similar repair needs on electronic equipment and other goods.

However, some manufacturers of such goods as cell phones, computers, gaming systems, home appliances, and even some farm equipment and medical equipment, impose tight restrictions on repairs, often requiring they or only an authorized dealer to perform repair work and software updates. Thus, not making available manuals or parts to consumers, businesses, and other third-party providers.

Among the reasons that some manufacturers keep close control on repairs is because of what they see as risks in security and safety, and industry competitiveness.

But, in its fact sheet detailing the initiatives in the July 9th executive order, the White House noted that companies’ restrictions on “the distribution of parts, diagnostics, and repair tools” make repairs more expensive and time-consuming for the end-user.

Indeed, the fact sheet cited a 2019 Vox article that included such examples as a computer repair shop unable to acquire an Apple part to fix a Mac laptop; Microsoft’s Surface tablets that are glued so tightly that “you basically have to break it” to fix it, which makes repairs costly and Asus as another computer maker that refuses to sell parts.

A quite telling quote from the Vox article, “the system encourages people to throw [electronics] away and replace them,” creates another reverse logistics problem - the proper disposal of such items.

Consider the following statistics from the United Nations :

• The United States generated 6.92 million tons of e-waste, about 46 pounds per person, in 2019. It recycled only 15% of the material.

• The value of the raw materials contained in the e-waste produced in the U.S. during 2019 was $7.49 billion.

Spotlight on Reverse Logistics

E-commerce growth was the catalyst that turned the spotlight on reverse logistics but this executive order allows the spotlight to shine even brighter for a part of the supply chain that is often overlooked or just accepted as a necessary pricey expense for businesses.

Supply chains are not linear. The extra pair of shoes you ordered, the old sofa you no longer want and the laptop that needs to be repaired are all part of reverse logistics which, in turn, is part of the circular economy.

A circular economy is an industrial system that is restorative or regenerative by intention and design. It replaces the end-of-life concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems, and business models. - World Economic Forum

For those manufacturers that will now be required to ‘open’ up their repair practices to third parties, consumers and businesses, they will need to retool their reverse logistics strategy by ensuring parts, manuals, and other needed items are made available to consumers, businesses, and third parties. Businesses and third parties will also need to retool their supply chain strategies to incorporate these changes.

It’s quite likely that many businesses and manufacturers do not even have a reverse logistics strategy - They just do it ‘on the fly’. If they actually do have a strategy, it may only include a part of reverse logistics, such as repairs, and neglect to include returns and disposition decisions. From a cost and time perspective, it’s important to have a reverse logistics strategy, particularly as more business is conducted online and in an omnichannel manner.

As of June, I’m spending a few hours a week working with the Reverse Logistics Association on various research projects. I highly recommend folks to check out the website for more about the market, identify reverse logistics partners, and to attend sponsored sessions - It does not have to be a pricey option for businesses. Indeed, we’re seeing more technology startups entering this space as well as more innovative strategies to address issues. So, expect more thoughts on reverse logistics from me in the coming months.

- Cathy

For more on the right to repair issue, check out a great article from Wired - Joe Biden Wants You to Be Able to Fix Your Own Damn iPhones

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