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The Value of Distribution Channels to Reverse Supply Chains

Reverse Supply Chain, Emerging Markets

August 9, 2018

 

One of the goals of any good IT asset management plan is to recover the maximum value of used data center equipment to have seed funds to reinvest in new equipment or software upgrades. To do this effectively, you have to consider your reverse supply chain. 

Most companies focus on the traditional supply chain, which moves goods from the vendor, often a manufacturer or reseller, to the customer, a reseller or end-user. The reverse supply chain refers to the movement of products from the customer, in this case, your organization, to a vendor. In some cases, that vendor is the original equipment manufacturer. But you can often recover greater value by working with an ITAD partner. 

Here are three questions to ask prospective ITAD partners:

1. What is the optimal time in the lifecycle of an IT asset to sell to ensure the best value recovery?

Data center equipment is a significant investment for your company, so you may think it’s best to get as much value out of your IT assets as possible before you retire those assets. However, that isn’t always the case. In many instances, you will realize more value by selling those assets while they still have a useful second life. The trick is to balance depreciation, which allows you to allocate the acquisition cost of the equipment over time, with market demand. Your ITAD partner should be able to help you determine the optimal time to sell your used data center assets.

2. How do you determine market demand for used data center equipment so you can recover the most value for these assets? 

Market demand for used data center equipment ebbs and flows. To recover the most value for your assets, you need an ITAD partner who understands worldwide market demand. Look for an ITAD partner with a physical presence in strategic locations around the globe. They will have connections with feet-on-the-ground resellers who have their fingers on the pulse of the local market. While there is a secondary market in the United States and other developed countries, demand for used IT equipment is highest in emerging markets where the latest technology is cost-prohibitive. 

3. Do you have established distributed channels with emerging markets?

To be truly valuable, an ITAD partner must have well-established distribution channels that reach the global market, especially emerging markets. Distribution channels are rarely discussed but critically important to effective ITAD. A strong distribution channel allows your ITAD partner to respond quickly to market demand and move large batches of used data center equipment onto the global secondary market, helping you secure the highest possible return. 

The existence of these distribution channels is not enough. Your ITAD partner should have a formal distribution strategy. A recent article in Supply Chain Management Review found a direct correlation between a company’s ability to respond to the global market and the extent they have implemented a distribution strategy. Your ITAD partner’s distribution strategy, and the extent to which they have applied it, directly impacts the value you can recover from your used IT assets. 

As you develop your reverse supply chain, keep in mind everything you will need from an ITAD partner so you can recover the most value from your IT assets. Your ITAD partner needs to serve as a true partner — a resource that can help you plan the best time to sell your used IT assets. Equally as important, your ITAD partner must have access to and experience working in the global market, especially emerging markets. 

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