Many of you have heard the old cliché, “you get what you pay for.” For the purposes of this article, I’d like you to apply this thought towards your corporation’s business relationship with its vendors. In today’s business world, this statement still applies to the various business segments in which your corporation has decided to utilize an external vendor to accommodate a specific internally needed service (a need which your company has determined it does not want to use its own workforce to perform). The use of outside vendors, in today’s marketplace, has established itself as the cornerstone for cutting costs and making most organizations more profitable, efficient, and successful. Corporate “business-to- vendor” relationships, when applied to that of IT asset disposition, data security, and environmental sustainability may quite possibly be creating a misconception between “getting what you pay for” and “getting paid for what you receive.” You are about to embark on a better understanding of the new ITAD marketplace and what current/future advantages are in store for your company’s increased profitability, data security, and environmental initiatives. Let’s proceed through the fog and determine if your current ITAD vendor(s) are serving your needs before their own…
When vetting your ITAD vendor, we will keep the following information very simple and to the point. You first must establish a structure of your vendor approval process. Please note the following five focal points to assist you in establishing an effective evaluation process:
- Industry certifications & downstream vendor transparency
- Versatility through materials processing
- Geographic service capabilities
- On-site audit
1: Industry Certifications & Downstream Vendor Transparency
Environmental certifications and downstream vendor transparency should be your corporation’s number one priority. Your preferred vendor must prove their current certifications via official certification documentation which will verify that they are currently R2 and/or e-Stewards® certified. Make sure it is NOT a customized document created by the vendor stating their compliance. All R2 and/or e-Stewards vendors are audited once per year and they need to successfully pass these audits to remain certified (ask for these updated/annual audit reports!). Also, ask for the vendor’s “downstream vendor management documentation.” This will validate and assure you that they are sending their electronic devices, materials and residuals to the appropriate downstream vendors for further processing in regards to either recycling or reselling. Additionally, this downstream information will allow you to verify that no hazardous waste, received from any of their customers, is being landfilled, sent to underdeveloped countries, and/or processed in non-compliance with any local, state and federal legislation. To further verify the use of their downstream vendors, ask them to provide you with two to three of their most recent bills of lading, thus validating the shipment of focus materials to the appropriate recipient downstream.
Furthermore, you should also prefer that the vendor has obtained or is in close compliance with one and/or all of the following certifications:
- ISO-14001 (Environmental Management Systems)
- OSHAS 18001 (Health and Safety)
- ISO-9001 (Quality Assurance)
- NAID AAA (Data Destruction/Sanitization remaining on data containing devices)
Again, these certifications are preferred but not required. Both E-stewards and R2 certifications cover these same areas and the additional certifications show the vendor’s willingness to go above and beyond the baseline standards.
2: Versatility through Materials Processing
When you evaluate a vendor’s versatility through materials processing, you should inquire about what electronic devices and materials the vendor is capable of accepting and properly processing. Streamlining your various electronic devices and materials generated for recycling to one vendor will in turn provide for decreased management cost for multiple vendors and service categories. On the other hand, if the opposite approach is taken, you may begin to see the “snowball effect” of managing numerous vendors, pricing structures, geographic service limitations and processing capabilities. If your service requirements request ITAD provisions outside of your primary vendor’s geographic service area, allow them to partner and manage (a) 3rd party vendor(s) who may be better suited for a specific project requirement. Your primary vendor should evaluate and approve any 3rd party vendor in the same way that you did with them. Require that your primary vendor can prove, via organized documentation, that the 3rd party vendor they intend to use meets your specific vendor requirements.
The most effective and established ITAD vendors, known throughout the electronics recycling/remarketing industry, should maintain proper processing to accept almost any electronic device that uses batteries or a power cord. Don’t allow your vendor to be selective or “cherry pick” high value equipment only. The service you need involves taking the desirable equipment/materials along with those that are not.
3: Geographic Service Capabilities
Whether you work in an organization that has locations locally, regionally, nationwide, and/or internationally your ITAD vendor should have no issues in accommodating your disposition requirements across your designated locations. The fluctuation in costs to accommodate disposition projects within your different locations will be a prominent factor to consider. It is important to understand the value of these varying costs versus the comfort of knowing that your materials is processed under one roof, your primary vendor’s. If you’re working with a vendor in that area, leverage small quantity pick-ups needed within your locations outside of the core service area. Look to your vendor to cover the transportation cost for random/smaller and rarely re-occurring pick-up requests.
If you require services globally, which may pose too much of a financial burden to ship back to your primary vendor’s location, place the responsibility on your primary vendor to do the leg-work. Have them audit, evaluate, and approve of a 3rd party vendor identically to how you have audited them. Require your primary vendor to provide you with the completed evaluation/audit documentation so that you can give the last stamp of approval to move forward in utilizing this 3rd party vendor’s services.
4: Pricing Structure for ITAD Service
Quite possibly the most debated area of focus is the pricing structure provided to the customer for the desired services. Many people will argue that the quality of service should take priority over getting competitive pricing. The right answer is that you deserve both aggressive, “true” pricing structures accompanied by an industry leading customer service experience. In this case, don’t be afraid to want your cake while being able to bite off a large chunk of cost savings and likely increased profitability. In order to achieve this procurement “nirvana,” you must first understand a few underlying pieces of information.
First, understand that there is a demand for newer used electronics. With your permission to resell, the vendor should offer a profit share pricing provision. A typical and fair profit share pricing structure should be around 40%-60% of the profits earned from the resale of your qualified electronic equipment (percentage of profit shared should be assumed after processing costs are assessed). The term “qualified” means that the unit must maintain a certain value, typically $50-$60 per unit, to enable shared profits once the unit or units are resold. The financial threshold establishes a cut off where the value of the unit exceeds the average labor hours put into preparing it to be eligible for resale.
As a customer, you must know that from a non-resale perspective, there are many materials found within your IT equipment that have value. Commonly, the value of these materials such as circuit boards, wire, disk drives and power supplies are used to pay for the labor involved in handling, packaging and processing. The residual value of these materials when sold as scrap commodities should allow you to receive a zero cost pricing structure, for all electronics to be recycled. Sometimes if CRT devices are of limited quantity, they too should be taken, free of charge with the subsidization of other commodities. If you are not currently receiving electronics recycling at “zero cost” you may want to ask your vendor for a detailed explanation.
5: On-Site Audits
One of the most important criteria when making your final decision on an ITAD vendor is going to be their success in passing your on-site audit. On-site audits can be viewed as making sure that your vendor is “walking the talk.” The list below is a few important items that you should look for in evaluating your potential vendor’s processes, standards, and facility or facilities:
- Surveillance cameras inside and outside covering all angles of daily operations
- Keycard access to all main entrances
- Make sure that all of their company marked pick-up vehicles are locked at all times, while in the dock or parked in their lot. The security of your data is important and these vehicles will be transporting it
- Guest sign-In sheet
- Complete Employee Records (take a sample of three employee files), and make sure all information within the files is consistent and complete (W-9’s, background checks, employment verification)
- Ensure that all employees are wearing uniforms, name tags, and utilizing personal protection equipment (safety glass, gloves, etc.)
- Cleanliness and organization (materials are properly packaged and labeled, and in rows; notice any significant amounts of loose electronics in forklift lanes or outside the facility)
- ***IMPORTANT***Ask them to walk you through their data destruction/sanitization area and describe their processes in detail
- If possible, meet the President, CEO and General Manager. They should make time to talk to you during your visit as you are important to their success
This list has example criteria to assist you in conducting a successful on-site audit of your potential ITAD vendor. We can all make the argument that conducting an on-site audit involves a great deal of time away from your day-to-day responsibilities and initiatives, but it is important that you have complete assurance that your primary ITAD vendor is doing what they have committed to and that they are completely transparent about all processes, standards, and environmental initiatives.
The Customer Side
I understand that the information provided here is only one segment of your ITAM processes. As a professional in the service side of the ITAD industry, I hope that this information helped increase your understanding and involvement so that your approach ensures that your company’s ITAD vendor(s) are acting with integrity and providing the transparency that you deserve. The service delivered should consider your company’s needs first and the vendor’s second. As Mahatma Gandhi once put it:
“A customer is the most important visitor on our premises; they are not dependent on us. We are dependent on them. They are not an interruption in our work. They are the purpose of it. They are not an outsider in our business. They are a part of it. We are not doing them a favor by serving them. They are doing us a favor by giving us an opportunity to do so.”