Reshoring Operations: Reducing E-Waste and Improving ESG Performance in Electronics Manufacturing

Misha Govshteyn, CEO, MacroFab

The global use of high-tech electronics continues to expand at an unprecedented rate, for both personal devices and the connected devices that have permeated nearly every industry. The market is predicted to grow by 13.11%, resulting in a projected market volume of US$1.50tn by 2027, intensifying an already growing problem: manufacturing waste. 

While end-of-life PCBs (Printed Circuit Boards) do qualify as manufacturing waste, that only scratches the surface of the issue. In addition to expired raw materials and inventory, time, transport and motion waste resulting from poor supply chain practices are all forms of electronic waste that the sector must understand and address.

Each type of waste significantly inflates business expenses and has a negative impact on a company’s environmental, social and governance (ESG) reputation, but decision makers can take steps to minimize all forms of waste.

The Importance of ESG Initiatives

The global pandemic and subsequent supply chain disruption were major instigators of a reimagined and revitalized approach to moving goods and helped ESG initiatives to gain more traction worldwide. Electronics manufacturers have a greater understanding of the necessity of making ethical decisions that benefit workers, the environment, and society as a whole, in order to pave the way for a sustainable future.

Monitoring actions related to environmental protection and social responsibility can have a multifaceted impact on future business success. These include:

• Solidifying relationships with customers: Creating and documenting ESG policies ensure that customer interests in ethical dealings are supported.
• Enhancing reputation: By proactively addressing ESG priorities and compliance, organizations can align their leadership team and business decision-makers. This reduces the likelihood of costly mistakes and strengthens reputation.
• Impact on funding and strategic alliances: Lenders’ policies are evolving, and potential or active borrowers may be required to meet specific ESG policies or related metrics. Additionally, potential business partners may reconsider mergers or acquisitions if a company’s reputation is tarnished by the absence of ESG actions.

Controlling E-Waste Factors

Electronic waste is a multifaceted challenge, but understanding the various aspects can help manufacturers better address these issues with a comprehensive plan. 

Manufacturers are likely most familiar with inventory waste and defects waste. The first results from the inadequate management of inventory incurring expenses, including poor management of raw materials or product components. The second is waste due to product revisions, destruction of defective products, product recalls, loss of reputation, and replacing defective units. Working with vetted manufacturing partners that prioritize process control can enhance operational efficiency and minimize both types of waste.

Transport waste refers to the myriad transportation costs associated with unnecessary movement of components, materials, and products. Minimizing transport waste involves optimizing transportation routes and methods to eliminate rush orders caused by poor planning or unexpected bottlenecks. Nearshoring or onshoring of electronic components can reduce transport waste, especially as more domestic U.S. factories come online under the CHIPS Act.

Motion waste pertains to expenses, including lost time, associated with excessive movement of tools and people in the production process. The increased levels of automation in manufacturing inherently help to limit this type of waste, which can be taken into consideration when planning any additional automation.  

Waiting waste is the idle time, downtime, and inefficiencies resulting from equipment failures, waiting for materials, or production bottlenecks contribute to waiting waste. Reshoring production can streamline supply chains, reduce bottlenecks, and improve operations, thereby minimizing waiting waste.

Managing E-Waste Through Reshoring

These different types of electronic waste can be addressed at once by enhancing efficiency, which will eliminate wasted time and reduce overall environmental impact, two of the primary uniting factors across all types of e-waste. Reshoring is one of the most effective strategies to achieve these objectives. The ESG benefits of reshoring include:

Minimizing defects waste: Reshoring to work with manufacturing partners that prioritize process control improves operational efficiency. Proximity and effective communication facilitate quality control, tracking changes, and documentation. Reshoring operations enable businesses to manage inventory more effectively, reducing the risk of overbuying and resulting waste.

Reducing transport waste: Reshoring ensures finished products are closer to end users when they leave the factory. Localization increases transportation efficiency and can improve on-time delivery, eliminating the need for rushed orders due to poor planning or unexpected bottlenecks. 

Minimizing motion waste: Motion waste can be minimized by optimizing repetitive tasks through automation. Reshoring production closer to home in American manufacturing facilities, which boast superior automation capabilities, can substantially reduce motion waste.

Streamlining waiting waste: Relocating production closer to home creates shorter supply chains, fewer bottlenecks, and increased operational efficiency. By eliminating the risk of unforeseen events caused by weather, political disruptions, or changes in international transportation, waiting waste can be minimized. Visibility improves with closer operations, reducing downtime and idle time.

By reshoring operations domestically, businesses can reduce all relevant types of e-waste and address supply chain issues. As environmental concerns continue to be prioritized by businesses and consumers alike, electronics manufacturers can improve ESG compliance by prioritizing e-waste reduction, identifying its sources, and exploring ways to mitigate it. Reshoring offers an opportunity to resolve logistics problems, reduce transportation costs, eliminate unknown risks, and better meet end-user expectations.

Since 2018, Misha Govshteyn has served as CEO at MacroFab, the world’s first full-service PCBA cloud manufacturing company. Prior to MacroFab, Misha co-founded Alert Logic and helped build it into one of cybersecurity’s largest SaaS companies. While serving as Alert Logic’s founder, CEO, CTO, and CSO, he led several R&D, security research, and corporate development efforts, helping the company become a pioneer in cloud security for Amazon Web Services, Microsoft Azure, and Google Cloud. Through Techstars, he has mentored several successful startups, primarily in product and go-to-market strategies.