This is Sunday Supply Chain Stories, where we revisit the foundations that continue to shape how inventory moves, returns and recovers value.
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On September 16, 1959, the Haloid Xerox Corporation introduced the 914 photocopier to a room of journalists and business executives in New York. It was the first commercially successful automatic plain-paper photocopier, and the sticker price to purchase one outright was $29,500 — an enormous sum for a piece of office equipment, and one Xerox had deliberately set high enough to make buying unattractive. Joseph C. Wilson, the company president who had staked the survival of his family's business on the gamble that xerographic technology could be made to work commercially, had anticipated the problem. His answer was to not sell the machine at all and, instead, lease it.
Under the leasing model Wilson built, customers paid $95 per month. That covered 2,000 copies. Beyond that, they were charged four cents per additional copy, tallied on a meter installed on every unit. Xerox supplied the toner and the maintenance. The customer got the output. The machine never changed hands. Wilson would later call the decision "the most important decision we ever made — except for backing xerography itself."
The commercial logic was precise: the $95 monthly base fee was enough to make the model profitable across virtually the entire customer base, regardless of copy volume. The meter was where the windfall came from. Law offices copying briefs around the clock, publishing houses running page proofs, government agencies processing paperwork at scale — these were not subsidizing anyone. They were generating enormous additional revenue through per-copy charges that had no ceiling, on top of a base fee that already covered Xerox's costs. The two tiers compounded. Xerox's revenues grew from $32 million in 1959 to more than $1 billion by 1970. Fortune described the 914 as the most successful product ever marketed in America and noted that the return on investment it generated was the highest ever documented for any U.S.-marketed product.
The forward model is well documented. The back end is where the story gets interesting. Because Xerox owned every machine in the field, every machine in the field eventually came home. A technician dispatched for a service call would assess a unit in the customer's office and determine whether to repair it on-site or pull it back to a depot. By the late 1960s, Xerox had been recovering leased units and remanufacturing them for reuse since the beginning of the leasing program — not as an environmental initiative, but as a natural consequence of owning the assets. A returned machine was worth more to Xerox as a source of serviceable components than as scrap metal, and the service depots had begun to work that logic even before anyone formalized it.
The exclusivity that had made the model so profitable ended on July 29, 1975. In January 1972, the Federal Trade Commission filed an antitrust complaint against Xerox, charging monopolization of the office photocopier market. A consent decree entered in July 1975 required Xerox to license approximately 1,700 of its photocopier patents to competitors at nominal royalties. Within a few years, Canon, Ricoh, and Minolta had used those licenses to build cheaper machines and take the low and mid-range market. Xerox could not compete on price in segments where it had previously set the price. Revenue from new placements was under pressure in exactly the markets where growth had been easiest.
When you cannot grow revenue easily, you defend margin by extracting more value from what you already control. And because Xerox had never sold its machines — had only ever leased them — it still owned every unit in the field. Thousands of copiers sat in law offices and government agencies and publishing houses across the country, all of them on Xerox's books, all of them generating service revenue, and all of them eventually coming back to a depot at the end of their lease. Each returning machine contained motors, optics, rollers, and electronic assemblies that were expensive to manufacture new. If those components could be recovered and reused, Xerox reduced its own production cost without needing to beat Japanese manufacturers on price for a single new sale.
The answer was in the depots, in the form of machines that were still coming back.
In 1990, Xerox launched what it called an Environmental Leadership Program, with a stated goal of producing "waste-free products in waste-free plants to help customers attain waste-free" operations. The language was environmental. The motivation was financial, and the people running the program understood this clearly.
The initiative was anchored in a new organizational unit: Asset Recycle Management, led by Richard S. Morabito as Vice President and supported by Jack Azar as Manager for Environmental Design and Resource Conservation. The ARM program's central premise was direct: all products and components owned by Xerox, whether installed at a customer site or sitting in a depot, were physical assets with measurable residual value. The job was to recover that value systematically rather than leave it to chance.
The program identified something the older remanufacturing practice had not confronted squarely. Xerox had been taking machines back and remanufacturing them since the late 1960s, but those machines had not been designed with that process in mind. Housings were assembled by ultrasonic welding; the only way to access the components inside was to break the housing open, destroying it in the process. Photoreceptors could often be recovered. Everything else was ground down for raw material. The machines came back. Most of what came back could only be recycled at the lowest tier of value, because the design hadn't anticipated any higher use.
The design-for-environment approach the ARM program established changed this at the product concept stage. Xerox engineers were given a set of formal requirements that ran alongside the standard performance, configuration, and cost requirements: easy disassembly using common tools; fewer and simpler fasteners; reusable or resupplied connecting hardware; a reduced set of plastic resin types across the entire product line (the target was fewer than 50 resins, down from more than 500, with fewer than 10 expected to cover 80 percent of applications); common parts shared across product families so that a component pulled from a retiring model could be used in a machine currently in production; and convertibility, so that a copier's electromechanical elements could be configured as a printer rather than requiring a new build from scratch.
The first customer-replaceable copy cartridge designed to these standards was built for the 5300 series of convenience copiers. Where older cartridge designs required breaking open a welded housing to reach anything inside, the new design used a few standard fasteners. The whole unit was remanufacturable, with more than 90 percent of the material recoverable. It carried the same warranty as a newly manufactured cartridge.
The financial result in the first year of the program: $50 million saved in logistics, inventory, and raw material costs. Over the life of the ARM program and its successors, Xerox's remanufacturing, reuse, and recycling operations saved the company more than $2 billion. Since 2009 alone, Xerox has diverted more than 600,000 metric tons of returned equipment, parts, and supplies from landfill through those same processes. The environmental performance was real, but it followed the financial logic rather than driving it. Xerox built a circular model because the margin was there, and the leasing model had created the conditions to capture it.
The deep mechanism behind this was ownership. Xerox could design for return because Xerox controlled the asset from manufacture through field use to end-of-life. The design engineers, the service technicians, the depot workers, and the remanufacturing teams were all operating within the same cost-and-revenue structure. When a product was designed to require 500 different plastic resins, the cost of that decision landed on the remanufacturing team. When the design shifted to 50 resins, that team's cost structure changed. The incentive was aligned because the same organization bore the consequence on both ends.
The Xerox model is frequently cited as a proof of concept for what is now called the circular economy, and that framing is accurate as far as it goes. But the framing tends to emphasize the environmental outcomes and understate the structural precondition that made the whole system viable: Xerox never gave up the asset.
That precondition is precisely what most of the electronics industry did not maintain as it scaled through the 1980s and 1990s. Consumer electronics moved on a sale model, not a lease model. The unit transferred to the customer at point of purchase, and Xerox's tight loop between product design and end-of-life processing was replaced by a much looser system in which the manufacturer's responsibility ended at the dock.
The consequences of that divergence are now measurable. The world generated approximately 62 million metric tons of electronic waste in 2022, an 82 percent increase compared to 2010, with less than a quarter of that e-waste properly collected and recycled. The recoverable natural resources left unaccounted for in that stream are estimated at roughly $62 billion annually. Inside that e-waste stream sits exactly the kind of value the Asset Recycle Management program was designed to capture: usable components, recoverable materials, and machines that in many cases still function, embedded in a system that was not designed to receive them.
The regulatory response to this has been building for years. The European Union's Right to Repair Directive, which came into force in June 2025, requires manufacturers to provide access to spare parts, repair manuals, and tools, and to design products in ways that allow independent repair. Apple redesigned the battery attachment system in its newer MacBook hardware in response to those requirements, moving from bonded adhesive to electrically induced debonding that makes battery removal accessible without specialized equipment. The direction of the regulation is toward what Xerox built from the inside — a product that can be serviced, maintained, and extended across multiple life cycles.
The difference is that Xerox built its system around ownership, and the regulatory approach is building around access. Xerox's ARM engineers could reduce plastic resin types from 500 to 50 because they controlled the production line. An independent repair technician given access to spare parts under a right-to-repair mandate is working with whatever material decisions the manufacturer made upstream, for reasons that had nothing to do with repairability.
This gap matters for ITAD operators, refurbishers, and anyone processing commercial returns at scale. The most common framing in the industry is that the problem is a lack of processing infrastructure, or a lack of downstream markets, or a lack of consumer awareness. Those are real constraints. But Xerox's experience suggests the binding constraint is upstream: a product designed without recovery in mind will be expensive and incomplete to recover regardless of how sophisticated the downstream operation is. The ARM program solved a design problem, and the logistics improvements followed from it.
The operations doing the most sophisticated component-level recovery today — grading boards, harvesting capacitors, routing screen assemblies to secondary markets — are doing what Xerox's depot workers were doing in the late 1960s: working with materials that were not designed for what they're trying to do with them, making the best possible decisions in a design context that didn't anticipate their role. Xerox resolved that tension by redesigning the product. The electronics industry is being pushed in the same direction, more slowly, from the outside, through regulation and market pressure rather than through the clean logic of a lease model where the manufacturer's cost structure extended all the way to end-of-life.
Where design does cooperate with recovery — in product families built with modular components, common fasteners, and labeled materials — the throughput advantage is measurable. Parts come out intact. Grading is faster. Reuse rates are higher. The operations with the best recovery economics are almost always working on product categories where the original design either anticipated multi-cycle use or was simple enough that disassembly is straightforward. The ones with the hardest economics are working on product categories where the original design was optimized for production cost, cosmetic appearance, and forward-sale appeal, with no weight given to what happens when the unit comes back.
That is the design problem the ARM program was built to answer, fifty-odd years ago, by a company that had no choice but to think about it because it retained ownership of everything it put into the field.
For practitioners: What percentage of the products or components moving through your recovery operation were designed in a way that actively supports what you're trying to do with them, and what percentage are you working against the design to recover value from? If you had direct input into a supplier's or OEM's design requirements, what three physical characteristics would most improve your cost-to-serve per recovered unit? Where in your operation does the recovery economics break down specifically because of a design decision made upstream — bonded components, non-standard fasteners, unlabeled materials, non-modular assemblies — and have you quantified what that design gap is costing you per unit processed? And for the equipment categories moving through your operation where reuse rates are lowest, is the binding constraint really downstream capacity, or is it a product that was never designed to be recovered in the first place?
Sources
Jack Azar. "Recycling at Xerox." EPA Journal, July–September 1993. U.S. Environmental Protection Agency, Office of Pollution Prevention. https://p2infohouse.org/ref/26/25669.pdf
Stephen Hicks. "Betting the Company: Joseph Wilson and the Xerox 914." Forbes. http://www.stephenhicks.org/wp-content/uploads/2012/01/forbes-xerox.pdf
Xerox Corporation. "Pioneering a Circular Economy." Accessed June 2026. https://www.xerox.com/en-us/about/ehs/pioneering-a-circular-economy
Xerox Corporation. "The Circular Economy in Our Manufacturing." 2018. https://www.xerox.com/corporate-social-responsibility/2018/environment/circular-economy.html
Institute for Manufacturing, University of Cambridge. "Xerox Case Study." Accessed June 2026. https://www.ifm.eng.cam.ac.uk/research/industrial-sustainability/resources/case-study-examples/xerox/
A.M. King and S. Barker. "Remanufacturing at Xerox: Evaluating the Process to Establish Principles for Better Design." Semantic Scholar. https://www.semanticscholar.org/paper/Remanufacturing-at-Xerox:-Evaluating-the-Process-to-King-Barker/7f56450612591c139ad94e95764fd78234dd5d0a
Harvard Business School. "Xerox: Design for the Environment." Case 794-022. 1994. https://www.hbs.edu/faculty/Pages/item.aspx?num=23384
European Council. "Right to Repair Products." Accessed June 2026. https://www.consilium.europa.eu/en/policies/right-to-repair-products/
AppleInsider. "EU repair laws start June 20 — How compliant is Apple." June 2025. https://appleinsider.com/articles/25/06/06/eu-repair-laws-start-june-20---how-compliant-is-apple
Thank you for reading Sunday Supply Chain Stories!