Arrow Electronics is in the midst of building a product end-of-life services program to help the distributor and its channel partners capitalize on the opportunity to expand their managed services and create stickier customer relationships.
"We are always looking for new ways to broaden the area in which we can play in the supply chain," said Andy Bryant, president of Arrow's enterprise computing solutions. "Managed end-of-life is one of the additional services that we can bring to our channel partners. So, look for us to roll out new programs around IT asset disposal and electronic asset disposal that our partners can package up as a service and then offer to their customers."
Bryant says the objective is to provide new opportunities for partners to enhance their existing customer relationships and profit opportunities in ways that help the partner increase customer stickiness, leveraging a wide variety of business models, including fee-for-service and annuity streams, as well as traditional resale.
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Ernie Keith, Arrow's vice president of global operations and value recovery solutions, will be leading the forthcoming program development.
"Arrow has invested a lot in this reverse logistics space with an emphasis on asset disposition," said Keith. "So as our clients refresh their hardware at a data center level or a client level, or mobility level, we are working with them to take back those assets, and ensure that the asset is tracked by serial number, that we are maintaining data security for any device that might still have data on it, eliminating that data, and ultimately looking to optimize the value recovery."
The program is being developed in a way that eventual asset reclamation can be positioned as part of the initial product sale, or as part of a tracking asset over an extended period of time. The financial opportunity will either be based on a service fee or potentially upon sharing the recovery value of the assets.
In some cases, the gear can be cleaned, refurbished and resold in the secondary market. In other circumstances, the equipment may have high-value parts that can be harvested. According to Keith, about 50 percent of the gear will go towards recycling, but that percentage varies based on the product category and age of the equipment.
"Typically, people are replacing with new equipment," said Keith. "So the redeployment piece is usually pretty limited with those clients, but there are secondary markets where the value does hold up and the economics work out quite nicely. The secondary markets could be reached through large brokers, through an online presence, or through similar remarketing channels."
NEXT: Security And Environmental Protection
While some of the gear may end up in developing countries, Arrow intends to follow regulatory restrictions to ensure that the equipment does not end up in a foreign landfill causing environmental issues. Much of it is expected be used in other networks, serving clients who are looking to access that particular piece of gear at a lower price point.
Security and privacy continue to be primary issues at this part of the lifecycle, and the Arrow program is being designed to ensure that those needs are properly met.
"A lot of these devices still have disk drives and flash drives on board that are carrying customer data," said Arrow's Bryant. "And they're very interested in working with partners who can preserve confidentiality and make sure that all of that data is properly purged before the unit is disposed of. This security aspect combined with the economic aspect and the green aspect to provide a huge service to Fortune 5000 companies that can leverage the service to track the processing of displaced gear by serial number."
Bryant also added that the retired devices go well beyond laptops and PCs. Arrow has already had some customer wins in this space that involve servers, storage and networking gear. Each of those product categories carries more of a high-end disposal value, he noted.
The formal program, which is currently under development, is expected to be rolled out to Arrow channel partners by the end of the first quarter, according to Arrow's Keith.
"It is going to be packaged in a simple and robust way that clearly presents the value to their customers," he said. "It is an opportunity to take the conversation to a higher level and help the customers travel the learning curve. This is really synergistic for our partners."
PUBLISHED JAN. 30, 2013