The supply chain for smartdevices is huge and complex. With an estimated 7.7 billion mobile phones and tablets currently in use around the world, and forecasts of 4.3 devices per person by 2020, a hidden threat to supply chain resilience and business continuity lies in the reverse supply chain. Billions of these devices are returned every year from businesses or personal users; perhaps reported as faulty or because they are at the end of their short lifecycle. And the data they contain is sensitive, personal and poses a security threat, not just to individuals and their identity, but also to companies and even exporting countries.

More mobile Devices in the World than People

Last year it was estimated that the total number of mobile phones and tablets in use was between 7.2 and 7.7 billion. With annual sales of mobile devices forecasted to surpass 2.6 billion next year, for the first time ever, there will be more mobile devices in the world than people. By the end of this decade over 87 per cent of the world's population will be using mobile technology and each person will own an average of 4.3 devices. Emerging categories such as the Internet of Things (IoT), smart homes, smart cars, smart meters and wearables will represent an additional 17.6 billion devices connected to the internet.

The logistical feat of supplying and managing this demand is becoming more challenging and a great deal of intelligence has been applied to streamlining forward logistics sectors. But given the unprecedented impact of the explosion of mobile technology, the reverse supply chain is becoming of critical importance. Millions of these devices are returned to retailers and manufacturers each year and they need to be fully cleansed and wiped of sensitive data to comply with country-specific security and privacy legislation.

The Vast Problem of Data Security in Product Returns

The average user tends to keep a smart phone for just 18 months before upgrading it, and these phones then go on to have a second or even third life with other users, perhaps in developing countries. In addition, as many as one in five of all mobile devices sold are returned as faulty within the warranty period, even though only five per cent of these are found to be defective. And this trend is on the increase. Up to 20 per cent of all product returns are in good working order and need to be put back into the forward supply chain; that means as many as 500 million devices to be processed every year from no fault returns alone. In both scenarios, the robust and auditable wiping of data from these devices is critical, to avoid the devastating consequences of identity theft or of personal or corporate data being compromised.

Globally, compliance with data security and privacy regulations is driven by legislation that puts the responsibility firmly in the court of the company that has purchased or taken back the returning product. This may be a recycler, buy-back company, retailer or manufacturer. The consequences of a data breach can be damaging and even irreparable to the reputation of the company and its brand and shareholder value; with serious legal costs and ramifications, not to mention the loss of trust with the customer and potential loss of business.
Processing returns currently represents a huge and unsustainable cost; in the U.S., the annual cost of processing consumer electronics returns was estimated at nearly $17 billion in 2011, which is about six percent of manufacturers' revenue. Given the exponential growth of smart devices, it will cost the industry billions to cleanse and destroy the data in this tsunami of returns. For example, it takes one operator an hour to manually wipe eight devices. On top of that are the costs of supervision, training, reprocessing errors, reworking failed devices, quality assurance (Q&A) testing amongst others. And it goes without saying that companies need an auditable trail of processes so that they have tangible proof of what has been done and that is has, in fact, been done.

Guaranteeing Unquestionable Data Security

Fortunately, smart data-wiping technology is now available to businesses to help them deliver a recycling or returns offering with an absolute data security guarantee, and extraordinary cost savings. Such technology can bring new levels of innovation, agility and flexibility into their returns processing operations, thereby adding considerable value into the reverse logistics supply chain.

Iron-Clad Security: Compliance with global data security legislation needs to be built-in to data wiping technology and independently validated. The best solutions provide data wipe certificates for each data wipe, offering tangible proof that is continuously validated by forensically certified independent bodies. This inspires absolute confidence in the security of the data wipe solution throughout the entire supply chain.

Cost Reductions: The best data wiping technology allows for bulk processing of smart devices by a single operator. For example, Pervacio's Data Wipe lets one operator process as many phones in one hour as it would take 15 operators to process manually. This reduces data processing costs considerably.

Speed and Agility: In such fast moving markets as mobile devices, with short product lifecycles, once a device is returned it is a race against time to get it back into the supply chain. The technology needs to work across multiple platforms and devices, seamlessly integrating into the architecture of existing ERP platforms and facilitating automated wipe processes from intuitive dashboards. This ensures flawless management of the whole end-to-end process of the data wipe, remotely and from one access point.

The Bottom Line That Matters

A smart investment in the right data wiping technology for returns and recycling operations in the reverse supply chain will make the processing of returns in the mobile and technology industry less costly, more profitable and, importantly, guaranteed to be secure. The bottom line, of course, is new potential for innovation and investment, enhanced competitive advantage, increased customer loyalty, greater business resilience and strengthened brand reputation.