White Paper Example

Here is an example of a previously submitted white paper. Some keys to consider in writing your paper:

Do's:
1) Use a hypothesis and support your argument with facts and a logical framework.
2) Highlight key findings and the implications of these findings
3) Identify strategic and tactical ways the company can improve
4) Be mindful of using clear, concise business writing with clean grammar
5) Use section headings to better outline your paper
6) Include as many visuals and graphics as necessary with a comprehensive appendix

Don'ts:
1) Simply summarize what a company is doing
2) Submit papers with grammar and/or spelling errors
3) Be afraid to take a stand

Feel free to contact me via email directly with any specific questions you have.


HP Supply Chain Analysis

INTRODUCTION
HP, the largest worldwide vendor of PCs and printers, recently has introduced several programs aimed at making all aspects of their production from “cradle to grave” more sustainable. These programs extend to include issues in the supply chain, product development, and post-consumption recycling. In the following pages, we will evaluate the successes of these programs, the areas needing improvement, and how they stack up against other players in the high-tech space.
Interestingly enough, we found that our hypothesis and our focus shifted a bit during the course of our research. Originally, we had hypothesized simply that HP’s efforts outpace those of other firms, but fall short of ideal. Ultimately, we found that HP’s competitors are doing a lot in this space as well (although perhaps with less fanfare) and decided to seek out the best ideas from each company, and analyze the strategies behind them, to propose a life cycle framework from which the entire consumer electronics space, not only printers, can benefit.
And we found one particular aspect that merited its own case study within our paper, but certainly is specific to the printer industry: printer ink and toner cartridges. We got ourselves involved in a mini wild goose chase, calling vendors and trying to determine just what it is that happens to those cartridges after you drop them in a recycling bin at Kinko’s. For this aspect of the industry, we offer recommendations that are more specifically targeted to HP.

HP CORPORATE OVERVIEW

Bill Hewlett and David Packard started the partnership that would become the Hewlett-Packard Corporation in a garage in Palo Alto in 1939. Initially, the company was focused on scientific instrumentation and had their first major success with the HP200A oscillator. During the 1960s, the company began developing computers and in the 1980s, it unveiled a series of printers.
Today the company is the worldwide leader in both the personal computing and printing categories. In their 2007 Annual Report, HP reported overall revenues of $104 billion, representing a 9% share in the $1.2 trillion market for information and media storage, analysis and delivery. The company is composed of six different pieces within the Personal Systems Group, including personal computing, which represents the largest percentage of overall revenue (35%). It is followed by the Imaging & Printing Group (27%), Enterprise Storage & Servers (18%), HP Services (16%), HP Software (2%), and HP Financial Services (2%). The company has established a global reach with two-thirds of sales occurring outside the US.
The Imaging & Printing Group earned the company $28 Billion in 2007, largely on sales of the Inkjet and LaserJet lines of products. Future growth is largely focused on better device integration in the corporate world to mirror the popularity of the “All-in-One” products sold to the home consumers, and expansion into developing markets, particularly the BRIC (Brazil, Russia, India, China) countries.


PRINTER INDUSTRY ANALYSIS
The printer industry, a multi-billion dollar field, caters to both consumer and business markets, and both segments are very mature in the United States. On the consumer side, printers enjoy 80% household penetration and on the business side, the penetration is nearly 100%. In both sides, we are seeing a trend toward increasing all-in-one functionality, with printers bundled with copying, scanning, and faxing capabilities.
It is rare for a firm to produce only printers; most of HP’s competitors (like HP itself) are engaged in multiple product offerings. While some competitors are focused on serving the consumer side of the business (like Dell), others are focused on serving the business side (like Xerox). Still others are focused on both (like HP). While the list of HP’s competitors could include a wide and extensive range of players in the high-tech space, for the sake of our research we have identified a handful of firms whose scopes and activities are representative of the average and, also, the industry leaders. The firms that we thusly consider are: Dell, Samsung, Xerox, and Lexmark. Dell and Samsung are both high-tech firms with a wide range of product offerings, but aren’t necessarily the leaders in the printer space. Xerox and Lexmark, however, both are known for the quality of their printing devices and are two of the stiffest competitors that HP’s printer division faces.
The level of competition is high, and printer manufacturers in particular are forced to compete on price. Many players, such as Dell, follow a practice of bundling a printer for free with computer purchases. Brand leadership is also highly important, so it is critical that each of these firms engage in activities to enhance their reputations beyond the approximately $20 million per year spent on advertising. As the green movement has gained more traction and consumers have demanded to be more informed, we have found that all of these firms have made increasing investments in their environmental activities. While all would argue that such investments are invaluable in boosting the perception of their brands and may actually save them money in the long run, each of these four firms has demonstrated a varying level of commitment and follow-through. While some are pushing for legislation, others are resisting. While some are analyzing the entire life cycles of their products and taking pains to improve them, others are settling by simply meeting government regulations. In a later section, we will take a more in-depth look at the activities of each, and see how HP measures up.
Barriers to entry include distribution networks, technology learning curves, large capital investments in manufacturing capacity, and brand recognition. However, Dell’s recent success of garnering 20% market share in only two years in the consumer space indicates that the technology learning curves are probably minimal at best[1]. Brand recognition is the most difficult of these barriers to overcome, and a commitment to environmental issues may help make that barrier even higher.
There are poor substitutes for printers. While more and more offices are becoming “paperless” and storing an increasing number of documents online, for the foreseeable future, printers will be a necessary part of the workplace. Employees need to print out documents for meetings, legal documents must be printed before they’re signed, and calendars are printed out and carried around the office throughout the day. Consumers may have less of a need to print in volume, but as the penetration of home PCs and digital cameras increases, the cumulative number of printer users is steadily (even if incrementally) increasing.[2] Printers are not going away anytime soon, and manufacturers are incentivized to make investments to drive innovation.
Supplier power is low. Inputs are, for the most part, commoditized, and print manufacturers like HP can obtain them at or near opportunity cost. HP also can exert significant influence over these suppliers to green their own supply chains. Buyer power varies from the consumer to the business segments. For the consumer segment, retailers generally are the middlemen between the manufacturer and the end buyer and they are driven exclusively by sales. To ensure eco-friendly products shelf space, a printer manufacturer must drive consumer demand for them through advertising and awareness campaigns. Businesses, who buy frequently directly from the manufacturer, may have green procurement policies in place and may be more concerned about energy consumption, recycled content, and sourcing issues. Google famously turned down Intel’s processors in favor of AMD’s because their energy consumption was much lower. In situations like this, with large corporate buyers, there can be pressure from downstream to make products more environmentally sensitive. Please see Figure 1 below for the value chain for the printer industry.

Figure 1.
Consumers
Retailers
Printer Manufacturers
Raw MaterialsValue Chain Analysis for printers:





HP’S SUSTAINABILITY EFFORTS

Hewlett-Packard claims that environmental responsibility has always been a company priority, and demonstrated this as early as 1970 with the creation of an Environmental Control Coordinator position. Through the next twenty years, it implemented basic recycling, conservation, and waste minimization practices, and in 1991 reached beyond its internal processes to the end life of its products with the establishment of the Planet Partner LaserJet print recycling program. Since then, HP has continued to advance its environmental position and enhance its sustainability.

In the early 1990’s, HP was regularly vanguard in environmental efforts, taking many environmental steps at an early stage. In 1992, the company launched its own Design for Environment program, dedicated to reducing the company’s environmental impact through smarter product design and became one of the first partners of the EPA’s Energy Star program. The company also eliminated the use of ozone-depleting materials before they were banned, and took other internal steps such as reducing the use of bleached cardboard and eliminating the use of ethylene glycol ethers in its manufacturing.

In 1998, the company looked at the total environmental impact of its printers by commissioning a study of the life cycles of its LaserJet Printers and associated cartridges. Exhibit 1 shows an updated snapshot of how the company perceives the life cycle issues of its printers today. The study found that the single most environmentally damaging part of the entire life cycle was the harvesting of the paper for the printers. HP immediately took steps to reduce paper usage by its products, both with printers and cartridges. In 1999 it introduced the DeskJet 970, the first Inkjet duplexer to offer double-sided printing, allowing for the reduction of total paper use. It also began focusing on ensuring its cartridges were of the highest quality and produced the most usable printouts, reducing the number of blurred pages and cartridge based jams and malfunctions.

The emphasis on quality has paid off as studies by Quality Logic Inc. conducted in 2003, 2005, and 2007 each demonstrated that original HP cartridges printed more pages more reliably than leading worldwide remanufacturers. Unfortunately, however, this emphasis has locked HP into a mindset of not considering reuse of its own cartridges. Currently it encourages consumers to send used ink cartridges back to HP where they are recycled in HP’s facilities and the raw materials are used to create materials as diverse as automotive parts and serving trays.[3] In 2003, the recycled plastic from the cartridges was first used to build its own hardware products. HP does not accept cartridges that have been dropped off at retail locations such as Best Buy, Kinko’s or Office Depot, and does not endorse any remanufacturer of their products.
HP maintains that use of remanufactured cartridges is ultimately less sustainable due to transportation and quality issues, but an independent study of the LaserJet print cartridge life cycle suggests that this may not be entirely correct. The report studied original HP cartridges versus remanufactured HP cartridges via an HP process, local “drill and fill” operations, and international professional remanufacturing, focusing on a complete assessment of the environmental costs of the cartridge based on the categories Global Warming Potential, Acidification Potential, Eutrophication (Phosphates) Potential, Depletion of Non-Renewable Resources, Photochemical Smog Potential, Human Toxicity Potential, Total Energy, and Total Waste. When viewed across all of these categories, there was a discernible benefit to using original HP cartridges or HP remanufactured cartridges over the second-hand operations, but benefits between the original and remanufactured within HP did not bias toward either product.[4] In a later section, we will take a deeper dive into particular aspect of the printer industry and propose a solution for HP.

HP remains committed to integrating sustainability into each of its designs and has continued to release more efficient and more recyclable products. HP has also moved toward Design for Recyclability (DfR) with the product’s post-life in mind. Additionally, all HP ink cartridges are produced in facilities that are ISO 14001 certified[5].

Concerns over transportation consequences have led HP to be very innovative in creating smaller, lighter products and designing packaging to be more easily palletized. HP also participates in Clean Cargo and Green Freight Groups and encourages industry-wide reductions in transportation energy use.

HP’s commitment to recycling has been very effective, and the company reached its goal of recycling 1 billion pounds of electronics and HP print cartridges in 2007. It has set a new goal of recovering (recycling or reusing) 2 billion pounds of electronic products and supplies by 2010.
In April 2008, the company made the unprecedented move of releasing a full list of its suppliers to the public. This step, highly unconventional from a business point of view, was designed to support total transparency and push for greater supply chain sustainability by putting pressure on those suppliers to be green. By holding itself and its suppliers accountable in a very public light, HP is taking a risk but hoping that the candidness will spur greater environmental and social change, and putting into the spotlight its pioneering efforts with the Electronic Industry Code of Conduct (EICC)[6], which set the standards for suppliers’ social and environmental practices.

COMPETITORS’ SUSTAINABILITY EFFORTS
To be able to get a sense of how HP’s efforts stack up, we must, of course, take an in-depth look at the efforts of the competitors that we have identified above: Dell, Samsung, Xerox, and Lexmark. We will discuss the highlights of each firm’s efforts throughout the product life cycle (design, raw materials / suppliers, manufacturing, distribution, use, end-of-life) below and we also have provided an at-a-glance scorecard that gives a breakdown of activities across the product life cycle (Exhibit 2).

Dell
Without a doubt, Dell has taken an environmental leadership role in the high-tech space. The company has publicly stated its intent to be the first carbon-neutral computer company, and has backed up this assertion with a number of initiatives that touch the entire product life cycle.
In designing its products, Dell takes a long-term approach, and designs its products with an eye toward upgradeability, reuse, and recycling. Energy efficiency is an important guiding principle; the firm aided in the development of the U.S. Eco-labels Electronic Product Environmental Assessment Tool (EPEAT)[7] standards, and has since qualified products at the silver level. A number of the firm’s products have been awarded the U.S.’s Energy Star eco-label for over a decade (as well as other nation’s eco-labels). The design of products that cut power consumption by 25% over previous models is not uncommon, as in the case of the Energy Smart Servers. The entire product development process is ISO 14001 certified.
As for the inputs that Dell is using in its products, the company is committed to going beyond what is regulated and requiring more of itself and its suppliers. All of the firm’s Tier 1 suppliers are required to have ISO 14001 and OHSAS 18001[8] certification. The firm has met the European Union Restriction on Hazardous Substances (RoHS)[9], not only in Europe but across the entire world. Dell will phase out brominated flame retardants (BFRs) in new product design by 2009. The company has expanded its use of forest friendly paper, including postconsumer recycled content and Forest Stewardship Council (FSC)-certified fiber.
Dell has made significant efforts to mitigate the impact the impact that its manufacturing operations have on the environment. All major facilities are ISO 14001 certified. In fiscal year 2007, Dell decreased its electricity usage in its U.S. facilities by 5% over 2006 usage. The recycling and reuse rate reached 94.4% compared to 91% in fiscal year 2006. Dell’s five-year goal is to attain a recycling and reuse rate of 99% (by 2011).
The company is improving the environmental responsibility of its distribution activities by improving shipping procedures across the board. Highlights of these efforts include: reducing the amount of packaging used, introducing a more accurate and forthright customer delivery notification process (diminishing the number of missed packages and repeated delivery attempts), and, perhaps most significantly, opening more manufacturing facilities closer to customers.
When PC systems arrive in the consumers’ hands, they are pre-configured with Dell’s Energy Smart settings. Consumers are also educated about features that reduce the energy required to operate Dell products, and are offered energy savings calculators on the website. Dell’s Plant a Tree for Me program. According to the press release, “Dell, in partnership with The Conservation Fund and Carbonfund.org, has launched ‘Plant a Tree for Me,’ a program that makes it easy and affordable for individuals, corporations or even entire communities to “go zero” by measuring and then offsetting their carbon emissions associated with the electricity generated to power an extended portfolio of IT products – simply by planting trees. Additionally, participants can offset the estimated total one-year carbon impact of an average person by donating $99 to the program.”
Dell offers consumers free recycling of any Dell-branded computer equipment worldwide. Products are recovered and recycled through a mail-back program and through RECONNECT Goodwill partnerships, a program that allows individuals to drop off their unwanted computer equipment a participating Goodwill locations to be recycled or reused. Proceeds from the resale of equipment benefits Goodwill Industries. This is a great partnership that engages a broader range of stakeholders beyond the original consumer.
Additionally, Dell offers free recycling of any brand’s computer or printer when a consumer purchases a Dell product. Dell-branded ink and toner cartridges are also accepted for recycling. In 2006, Dell recycled more than 78 million pounds of computer equipment, a 93% increase over 2005. Dell is thus ahead of schedule in achieving its goal to recover 275 million pounds of computer equipment by 2009. Dell uses a three-step auditing process to measure its global recycling and end-of- life disposition partners against our standards: partners must pass a comprehensive initial audit; partners are audited on an annual basis; periodic on-site spot checks are conducted throughout the year to ensure compliance. The global consultancy Environmental Resources Management (ERM) manages this program for Dell. Dell also supports Individual Producer Responsibility (IPR)[10] legislation under which all producers are responsible for proper end-of-life management of their electronics products.
Beyond its activities within the product life cycle, Dell also uses carbon offset programs to balance its emissions, which are calculated from worldwide electricity usage annually. In 2007, the firm did not receive any fines related to environmental non-compliance. In reporting emissions and all other environmental impacts, Dell uses the Global Reporting Initiative (GRI)[11] as reporting guidelines.

Samsung
While Samsung’s website boasts of the environmental progress that the company is making, it is abundantly clear that their efforts are nowhere close to being on par with Dell’s. Their initiatives do not extend throughout the entire product life cycle, and where they are focused, they are somewhat half-hearted.
Rather than boasting of its compliance with a whole host of national eco-labels, Samsung writes of its own eco-label, the Eco mark. As the firm writes, “Samsung's Eco mark is used to effectively communicate Samsung’s environmental friendly product activities to the interested parties such as the consumers, NGO, buyers, etc. by labeling the product’s environmental friendly characteristics on the product or package with a simple symbol.” While it is of course promising that Samsung is committed to promoting environmental issues from within, the creation of an additional label adds a level of uncertainty. The onus is on each consumer to understand how this label stacks up with his or her own country’s sanctioned label. Samsung does note, however, that the U.S.’s Energy Star label was awarded to Samsung TVs and monitors in 1994, and that TVs and monitors have displayed the Korean Energy Saving mark since 1999.
Like Dell, Samsung has requirements that its suppliers (known to them as Eco Partners) must meet, such as being ISO 14001 certified. The firm is committed to reducing the number of parts for its products, and has made progress with this reduction in its LCD TVs and VCRs. Currently, Samsung is investigating ways to phase out BFRs, but unlike Dell, has not made a specific commitment to a deadline.
While Samsung meets regulatory requirements in those U.S. states that require take-back and recycling, the firm has demonstrated resistance to proposed IPR legislation.

Xerox
Xerox, a member of Dow Jones Sustainability North America Index, is making significant strides toward environmental sustainability in their printer products. By addressing all aspects of the printer’s product life cycle, the firm is tackling environmental issues from every angle and not merely resorting to greenwashing.
It begins with the design of Xerox’s products. One of Xerox’s product goals is to achieve the Energy Star label (under the more stringent 2007 requirements) for at least 90% of its products by 2010. (100% of Xerox’s eligible products met the Energy Star requirements under the 2006 guidelines.) The company has estimated that the energy saved in 2006 through Energy Star product features was enough to keep about on million U.S. homes lit for an entire year. Products are designed around modular architecture and a common set of core components (approximately 60% of parts will be common from one generation to the next). These products are designed with easy disassembly and use fewer parts; in short, they are designed for multiple product life cycles. Each unit is coded with instructions on how to dispose, reuse, or recycle each part. Xerox is also investing in new print technologies that produce less waste. The firm’s solid ink imaging process uses compact, cartridge-fee solid ink sticks that produce 90% less waste than comparable laser printing products. Xerox is also looking into disappearing ink technologies—the ink will disappear after a few hours, encouraging the re-use of the paper on which it was printed.
Like both Dell and Samsung, Xerox asks its suppliers to meet specific environmental and safety standards. By adopting the EICC, Xerox has further strengthened its commitment to ensure that its suppliers are operating according to accepted industry standards for environmental management. And, like Dell, Xerox’s products meet RoHS standards worldwide, not only in Europe. Since 2005, Xerox has been working toward eliminating the use of mercury and lead in new products, and the company has committed to phasing out any mercury-containing lamps as soon as a viable alternative is identified. Xerox is also working to reduce the use of Persistent Bioaccumulative Toxic Substances (PBTs) in its supply chain by 90% of its suppliers by 2012. Xerox paper is sourced from sustainably managed forests: suppliers must demonstrate actions to safeguard forest areas of ecological and cultural significance and that all fiber comes from legal sources. A partnership with The Nature Conservancy has further improved forest management.
All Xerox manufacturing operations are ISO 14001 certified, and all major U.S. facilities have earned membership in the National Environmental Performance Track[12], an EPA program for facilities that achieve top environmental performance. The firm’s goal to reduce greenhouse gas emissions 10% between 2002 and 2012 was achieved in early 2007, and the firm will be releasing a new goal shortly. The reuse of parts in manufacturing new products has saved the company 6 million therms of energy (170,000 megawatt hours) in 2006, or enough to light 136,000 U.S. homes for a year. Through treatment, recycling, energy recovery, or fuels blending, 91% of hazardous waste generated by Xerox in 2006 was beneficially managed. The remaining 9% was incinerated or disposed in landfills permitted to accept hazardous waste.
The company is perhaps not as innovative in the distribution part of the life cycle. Beyond minimizing packaging and expanding ISO 14001 certification to include supplies warehouses, it is unclear precisely what efforts the company is making to address issues stemming from distribution.
At Xerox, remanufacturing and recycling practices diverted over 107 million pounds of waste from landfills in 2005. Xerox’s Green World Alliance program provides a collection and reuse/recycling program for spent imaging supplies, and resulted in more than 2.7 million cartridges and toner containers being returned in 2006. Xerox processed 1.3 million pounds of post-consumer waste toner for reuse, and the nearly 100,000 plastic bottles customers used to return waste toner to Xerox have been recycled. Xerox’s Product Takeback and Recycling program manages equipment at end of life. Since 1991, remanufacturing and recycling have given new life to more than 2.8 million copiers, printers and multifunction systems, while diverting nearly 2 billion pounds of potential waste from landfills.
The firm is also committed to making its activities transparent to stakeholders. Xerox is planning to share its findings and best practices from supplier partnerships in late 2008 / early 2009. The company is also investing in a greenhouse gas emission inventory, and is registering its emissions via the California Climate Action Registry[13] and participating in the U.S. Climate Action Partnership (USCAP)[14]. In 2006, Xerox was not subject to any compliance penalties for environmental, health, or safety violations.

Lexmark
Lexmark is taking steps toward becoming an environmentally minded printer producer, but its progress lags behind that of its rival, Xerox. Its activities extend throughout the entire product life cycle, but they are not as expansive.
Lexmark is “dedicated to developing innovative design solutions that maximize the function and value of our products while minimizing the impact on the environment.” Lexmark was a charter member of the Energy Star program, and the company has elected to meet the more restrictive German Blue Angel power limits worldwide. To this end, the firm has introduced instant-on fuser technology that increases the efficiency of power adapters and has introduced means of eliminating standby power in inkjet printers.
Like the other companies we’ve discussed, Lexmark is committed to meeting the requirements of the European Unions RoHS regulations worldwide, but their commitment to eliminating other toxins like PBTs and BFRs is unknown. Likewise, it doesn’t appear as though there are as strict supplier regulations in place as, say, Xerox.
All Lexmark manufacturing facilities have achieved ISO 14001 certification, and nearly all have achieved OHSAS 18001. Lexmark is a partner in the EPA’s WasteWise program[15], a voluntary program through which organizations partner with the EPA to eliminate industrial and municipal solid wastes, increase reuse and recycling of materials, and encourage the buying and manufacturing of products with recycled content. Through recycling and waste minimization efforts at its corporate headquarters, Lexmark was able to keep 5 million pounds of paper and cardboard waste and 2 million pounds of scrap metal our of the solid waste stream in 2007.
Again with Lexmark, we see relatively little attention paid to the distribution methods that are employed. Packaging is made of 20-25% recycled material and efforts to minimize the total amount of packaging are undertaken. To that end, the packaging team works hand in hand with the product development team to make sure that optimal designs from a shipping perspective are achieved.
Recycling efforts address both the toner cartridges that Lexmark’s printers use, and on the printers themselves. Lexmark offers consumers three toner options: (1) Lexmark regular cartridges that anyone can remanufacture or recycle; (2) Lexmark Return Program cartridges that provide customers with an up-front discount in exchange for their agreement to return the cartridge only to Lexmark (at our expense) for remanufacturing or recycling; and (3) High-quality Lexmark factory-reconditioned cartridges. Lexmark also offers customers an environmentally sound choice for disposal of their end-of-life printers: the Lexmark Equipment Collection Program. Through ongoing efforts, Lexmark has recycled 4 million pounds of electronics.

While each of the competitors assessed above has made strides, the efficacy of each manufacturer’s program varies. Nonetheless, the bar has been set rather high. Both Dell and Xerox have demonstrated leadership in the space, and it is abundantly clear that any program designed to green a product must act in each stage of the product life cycle and offer transparency for to the consumer.

SO WHAT DOES THIS MEAN FOR THE HIGH TECH SECTOR?
With the question of how established industries will address sustainability concerns at the forefront of the business community’s collective consciousness, it is unsurprising that the high tech industry is attacking this challenge in the same manner it has applied to churning out new technological advances. Philosophically, the high tech industry is primed to be an exemplar of social intrepreneurship. Successful companies in the high tech sector have missions predicated on continuous improvement of human life through technological innovation and have defined competitive advantage through fluid responses to rapidly changing business environments. This corporate mindset is ideal for the conversion of established companies into what Jeffery Hollender or Karl Schultz would consider ethical brands because these companies do not see the sustainability challenge that necessitates an overhaul to their core missions as much as a change in the boundary conditions associated with what defines a quality, sellable product. So essentially, the challenge becomes analogous to just another shift in technology to which the companies must adapt and assimilate their business processes in order to remain competitive.
Many high tech product lines, including printers, are built on the principles of rapid innovation as detailed above and juxtaposed with wide ranging environmental challenges currently integrated into the life cycle of the product. Product design is at the core of high tech competitive advantage and strategically many companies subjugate all other operational functions to this process because it is usually the most R&D intensive and where the company expends most of its specialized labor and industrial resources. Historically processes like manufacturing, logistics, customer distribution and reverse supply chain logistics were optimized individually and feedback was not integrated back into design initiatives. Successful companies found ways to build feedback loops from all of these operational processes that allowed products that supplemented margins as well as increased operational efficiency. The same evolution of thinking is being implemented across the high tech industry through the all but standard practice of Design for Environment (DfE)[16] product development. This framework is one by which companies not only design the product for sustainability, but also integrate feedback from the processes downstream dependent in the product lifecycle to refine the sustainability of the product and alter those processes to minimize their environmental impacts. The DfE process serves as an operational backbone for corporate conversion and higher consciousness of ethical intrepreneurship. As such, trends in sustainable improvements have emerged throughout the product life cycle upon which high tech should benchmark their efforts. As we have shown through our research, these trends are prevalent in all five subsequent aspects of the life cycle: material supplies, manufacturing, distribution, product use and end of life as well as the overarching aspect of transparency.
Logically, leading companies first begin implementing DfE practices in manufacturing operations where the most direct impacts of changes in design occur. Additionally, because of the history of complex manufacturing procedures and potential for health and safety issues associated with mismanagement of high tech manufacturing processes, many environmentally conscious practices have long been standard operating procedure. All five industry leaders have ISO 14001 standard manufacturing procedures and recycle well over 90% of manufacturing materials. While this is often cited on CSR documents, ISO certification in this industry essentially has become a base requirement of defining a quality product similar to ISO 9000 compliance. These companies have also found that reuse and efficiency of manufacturing resources helps directly cut costs and have dedicated industrial engineers to optimizing these processes. As a result, many of the environmental improvements from manufacturing are incremental tweaks based on changes to the individual product design.
The area where industry leaders have begun to show their proactive influence is through using their supplier power to demand more environmental compliance from their Tier 1 suppliers. Increasingly there is public expectation to be able to prove the environmental quality of ones products. For example in the case of RoHS compliance standards companies are liable if they sell a product in which one of the subcomponents from a supplier is not compliant. In lieu of this expectation, many industry leaders are beginning to make ISO 14001 a requirement of becoming a supplier to the company. They continue to use this tactic for voluntary goals such as eliminating the use of other toxic materials such as PVCs and BFRs.[17] Moreover, the companies stipulate independent auditing of their suppliers for environmental standards to assure results.[18] Recently the bar for accountability was set higher again by HP when it made its entire Tier 1 supplier list open to the public for scrutiny.[19] This surge in supplier accountability is an extremely important shift in leadership within the industry as one cannot make environmentally sound products without environmentally sound inputs.
One area where no company clearly outlined leadership was in distribution. While reducing and using recyclable packaging seems to be a standard[20] much of the efforts seem to steam merely from cost cutting exercises. Referencing back to a question of whether intent to perform sustainably, the lack of progress in this area compared to other areas of the value chain indicates that the high tech industry has prioritized their intent and efforts to those areas of the life cycle that have the highest environmental and fiscal rewards for their efforts. This is in part because logistics is not necessarily a core competency or competitive advantage of many companies in the high tech industry. The industry margins are structured around distributing relatively high value to weight ratio products so they collectively have spent less time investigating and developing best practices as compared to a company like Wal-Mart, which has focused much of its sustainable intrapreneurial development on logistics and packaging issues.[21] In light of this dynamic, the high tech industry should consider leveraging developing methodologies in sustainable logistics from CPG and distribution based industries to continue to augment their progress.
Once the product is in the customer’s hands, the effectiveness of the company’s DfE efforts are most noticeable. The environmental impact of high tech product usage is essentially restricted to energy usage (for the purposes of scope this paper will bypass discussion of paper products used in printing). Industry leadership is hallmarked by compliance with and active participation in definition of Energy Star labeling. More of the effort is being placed defining the reverse supply chain for end of life products. All industry leaders have electronics recycling exchange programs where customers can give back their old products and pay a nominal fee to have them recycled. In many cases fees are waived if the customer is purchasing a new product. All programs also have robust recycling processes for printer cartridge that require the customer to ship the cartridge back to the company. There are various examples of innovative leadership in all aspects of reduction, reuse and recycling. Xerox has created solid ink toner for its high use printers which require no cartridges for recycling[22]. Lexmark is the industry leader in reuse of their printer cartridges[23], while HP leads the industry in reclaiming and reselling raw materials from recycled printer cartridges[24]. The presence of and necessity for, reverse supply chains in the industry are ultimately an interesting indicator for the effectiveness of the DfE efforts. There is a balance between a product being complex enough that it requires a specialized reverse supply chain and one that requires no post consumption consumer recycling efforts. As responsibility for reverse supply chains increases through programs like the IPR legislation, not only will the number of reverse supply chains increase, but they will become a quintessential source of feedback to the DfE process. Given the industry trends in terms of robust and effective alteration of the manufacturing and design processes compared to distribution processes, one can expect that high tech companies will likely choose to develop products that require less reverse supply chains and are designed for disposal through normal established channels.

A SPECIAL CASE FOR THE CONSUMER PRINTER INDUSTRY: CARTRIDGES
As has been uncovered in our above analysis, the recycling of ink cartridges is key to any printer manufacturer’s environmental policy. We’re now going to break from our analysis of the broader high tech life cycle issues, and turn to the very specific problem of cartridges, and propose a unique solution.
Firms within this industry follow the “give away the razor, sell the blades” approach. Printer manufacturers compete heavily on price to get their printers in the home, and then make the bulk of their profits on the ink or toner. Printers are given away at a substantial discount, and sometimes for free[25]. As manufacturers seek to recoup research and development expenses for the printers, the cost of the printer itself, and marketing expenses in the profits garnered by ink, the cartridges are priced at a substantial markup[26]. Ink and toner cartridges are unique to each printer in shape, size and connection. Thus, a printer will only work with its brand and variety of cartridges. This creates a lock-in mechanism, enabling the printer manufacturer to charge and capture high rents on the ink, and to effectively subsidize the printer hardware.

Current Environmental Impact of the Business Strategy
Given the “give away the razor, sell the blades” strategy, it is critically important for HP and other printer manufacturers to tightly control the flow of ink cartridges through the supply chain so that consumers and remanufacturers do not refill them independently. Having empty cartridges find their way back in would be hugely detrimental to the business model that the printer manufacturers have created for themselves.
When consumers are encouraged to recycle their ink cartridges (as they are by most of the major printer manufacturers now), the process is inefficient and the results are far from transparent. Very little personal incentive is offered; for instance, HP encourages consumers to recycle their ink cartridges by mailing them back to HP, but it offers no economic incentive –only the self-satisfaction of having done the right thing. Efforts by retailers like Kinko’s and Staples to collect used cartridges are similarly ineffective and perhaps even murkier.[27] As a result, the majority of ink cartridges meet their fates in trash cans.
The cartridges that are recycled are either sent to and handled by their original manufacturers, or are recycled by third parties. These third party remanufacturers are in a constant race with the printer manufacturers to find ways to remanufacture their ink cartridges and get them back into the supply chain without the original manufacturer’s involvement (and profit-sharing). Conversely, the printer manufacturers are constantly trying to find ways to lock out the third party remanufacturers. (See Figure 2 for the print cartridge value chain.) The most notable development that exemplifies this strife is the introduction (by Lexmark and others) of a chip that ostensibly monitors ink level, but actually functions as an ink authenticity chip. If the cartridge has been tampered with in order to be refilled, the ink level monitor will not reset and the printer won’t use the cartridge (as it believes that it is out of ink). Despite these innovations, third party remanufacturers find ways to emulate the chips quickly and get around the barrier.[28]

From an environmental perspective, the unfortunate part about the current method of printer manufacturer value capture is that it incentivizes the printer manufacturers to behave in a manner that is at odds with environmental responsibility. Even when original manufacturers collect cartridges to be recycled, they generally destroy them and downcycle the materials into plastics to be used in hardware construction. As we’ve discussed above, this is precisely what HP does. While this is better than sending the ink cartridges to the landfill, there is no question that from an environmental perspective, it would be better to simply reuse the cartridges. Reuse requires less energy and is superior to downcycling the cartridges into diminished raw materials.
This begs the question: why do printer manufacturers not simply design their cartridges for easy reuse? The answer is multi-fold. Such an approach would make it even easier for remanufacturers to operate. Furthermore, it would mitigate the value in consumer’s minds for new ink and new cartridges. Most likely, consumers would be unwilling to pay the same price for new and reused cartridges, and this would open to the door to lower price points and decreased profits. And as we’ve illustrated, cartridges are the lifeblood of printer manufacturers, so it is in their interest to design a system that causes the cartridges to be priced at as high a premium as possible.

Recommendation: Environmentally Conscious Value Capture
An environmentally conscious method of value capture, as the description implies, seeks to both capture value and to do so in an environmentally conscious way. As applied to HP’s computer printer business strategy, a successful strategy will produce far less waste while still maintaining generating significant profits.
Our recommended approach for the ink segment is for HP to develop an cartridge refilling system with major retailers like BestBuy, Office Depot and Staples. Consumers would be able to walk into their local store, empty cartridges in hand, and re-fill them at a kiosk. The environmental benefit of such a refill system is that ink cartridges will be reused, saving a substantial amount of plastic waste from landfills. Such a system also has the benefit of eliminating the energy costs associated with producing new ink cartridges.
From a value capture perspective, we would insure continued (and perhaps increased) profitability in a variety of ways. First, we would install microchips in each refillable ink cartridge (similar to the ones Lexmark developed) that would need to be scanned and reset at the ink refill stations. An added bonus to manufacturers is that these chips allow them to track consumer behavior and gather a wealth of invaluable data. By offering a variety of inks at the kiosk, we would encourage consumers to upgrade to new, more fun, and more expensive inks that are compatible with their particular printer. For example, LCD screens could entice refillers to try out glittery inks, resumé black, or vibrant neon inks, and perhaps even tempt them with cost-saving coupons. The pricing system would ensure that consumers pay more for the initial refillable ink cartridge purchase and less per refill. Due to the cost advantage of refills, we would expect to make higher margins on the new process versus the old. Nonetheless, we also expect intense price competition to place an upper bound on margins.
A risk associated with this strategy includes, of course, the continued presence and chip emulation of third party remanufacturers. For this reason, a critical part of the value capture in this strategy includes vigorous legal enforcement of patents. It is vital that infracting third parties are sued publicly to discourage other imitators.
A second risk stems from the necessary involvement of retailers. However, the proprietary chip should discourage retailers from offering their own kiosks and, furthermore, we expect that retailers will have multiple incentives to cooperate with the new system: increased store traffic, the rental income generated by the kiosks, and the publicity engendered by initial adoption of the new technology. Exclusive deals with certain big box outlets may also be an option. The fact that the manufacturers will bear the full responsibility of marketing the refill stations should also be attractive to retailers.
Some questions around cost remain, which we were forced to leave unanswered given the information we were able to obtain. (Unsurprisingly, printer manufacturers were completely unwilling to share any cost or margin data with us.) Some additional points to ponder are: How much would such a system cost? How much of a cut would retailers demand in order to make the idea palatable to them?

CONCLUSIONS
To think that we can tackle all of the issues surrounding environmental responsibility in the high tech industry in this brief a space would be naïve, but we have put together some basic guidelines that can guide any company’s thinking about the life cycle of its products, not just those involved in the printer industry. By looking to each others’ practices, there is much to be gained; ideas should be shared and environmental stewardship diffused throughout the sector. Ensuring that any plan incorporated each phase of the product life cycle (material supplies, manufacturing, distribution, product use and end of life) is essential.
Furthermore, with our in-depth discussion of cartridge refilling stations for HP inks, we have demonstrated that profit and environmentalism do not have to be at odds. High tech companies are in a unique position to leverage their histories of innovation and their structure that fosters rapid development to tackle problems head-on and effect change for the greater good.

[1] Mintel
[2] Mintel
[3] From a 2007 Report from HP titled “How Environmentally Responsible are your print cartridges”
[4] “LaserJet Cartridge Environmental Comparison”, prepared by First Environment, Inc. of Boonton, NJ. October 2004.
[5] ISO 14001 is the international specification for an environmental management system (EMS) and confirms global relevance for organizations wishing to operate in an environmentally sustainable manner. It specifies requirements for establishing an environmental policy, determining environmental aspects and impacts of products/activities/services, planning environmental objectives and measurable targets, implementation and operation of programs to meet objectives and targets, checking and corrective action, and management review.
[6] The EICC is a code of best practices adopted and implemented by global electronics brands and their suppliers with the intent of improving conditions throughout the supply chain.
[7] The Electronic Product Environmental Assessment Tool (EPEAT) is a procurement system that assists purchasers in evaluating desktop computers, notebooks, and monitors on the following environmental attributes: reduction/elimination of environmentally sensitive materials; materials selection; design for end of life; product longevity/life cycle extension; energy conservation; end of life management; corporate performance; and packaging. There are three tiers of environmental performance – bronze, silver, and gold.
[8] OHSAS 18001 is an international occupational health and safety management system specification that requires third-party certification.
[9] RoHS restricts the use of six hazardous materials in the manufacture of electronic and electrical equipment: lead, mercury, cadmium, hexavalent chromium (chromium xxx or Cr6+), polybrominated biphenyls (PBB), and polybrominated diphenyl ether (PBDE).

[10] http://www.iprworks.org/
[11] The GRI provides sustainability reporting guidelines for organizations to use as the basis for their performance disclosure, and also provides stakeholders a comparable framework in which to understand disclosed information.
[12] Performance Track encourages facilities with strong environmental records to go beyond legal requirements. Members set four public measurable goals to improve the air, water, and land quality.
[13] The California Climate Action Registry provides leadership on climate change by developing and promoting credible, accurate, and consistent GHG reporting standards and tools for organizations. Registry members voluntarily measure, verify, and publicly report their GHG emissions, and are leaders in their respective industry sectors, actively seeking solutions to climate change. California offers its best efforts to ensure that Registry members receive appropriate consideration for early actions in light of future GHG regulatory programs.
[14] USCAP is an alliance of major businesses and environmental groups that together are calling on the federal government to enact legislation requiring significant reductions of GHGs.
[15] The WasteWise program is not prescriptive; it is a flexible program that allows partners to design their own waste reduction programs tailored to their own needs.
[16] http://www.epa.gov/dfe/
[17] http://www.greenpeace.org/international/press/reports/guide-to-greener-electronics
[18] http://www.hp.com/hpinfo/globalcitizenship/environment/supplychain/compliance.html
[19] http://www.socialfunds.com/news/article.cgi/2496.html
[20] http://www.hp.com/hpinfo/globalcitizenship/environment/productdesign/supplies.html
[21] http://www.environmentalleader.com/2006/09/25/wal-mart-packaging-reduction-plan-could-save-11-billion/
[22] http://www.office.xerox.com/solid-ink/enus.html
[23] http://www.lexmark.com/lexmark/sequentialem/home/0,6959,204816596_659906191_0_en,00.html
[24] http://www.hp.com/hpinfo/newsroom/press/2003/030422c.html
[25] Mintel
[26] PC World
[27] anecdote about our primary research
[28] Forbes.com