Logistics Strategies
Supply Chain Management: When Does It End?
Environmental concern has become far more prevalent in recent years, spawning legislation and certification programs that rival ISO 9000 in their scope and complexity. Packaging material, previously considered to be an acceptable byproduct of manufacturing, was generally disposed in the conventional manner at the local landfill without many options available to minimize the environmental impact or associated cost.
The typical response to the packaging issue has been the use of returnable containers with the thought that the cost of purchasing the packaging and disposing of it far exceeded the cost of the containers and subsequent transportation to move them back to the supplier. This has not eliminated expendable packaging altogether because within industry, maintaining the integrity of these returnable programs is difficult due to the complex number of container types, the vast supplier base, product and sourcing changes and multiple using plants. Consequently, there is always some expendable packaging that must be managed. In addition to the exterior packaging, many parts utilize plastic caps, expendable trays etc. to ensure the product’s quality integrity during shipping and processing. These are difficult to recycle because of their relatively low volume and resulting tonnage.
In my experience there are two major factors that can negatively impact a successful recycling program. One is the outlook of the company that handles the waste and the second is the logistics of transporting the various commodities from the generating facility to the recycler’s. At the Brampton Assembly plant, we are taking a new approach to improve our management of this issue and ultimately reduce the effect on the environment. Our waste handler was a company whose core business was waste disposal. They viewed recycling as byproduct of disposal. This placed them at odds with the results that we were trying to achieve, therefore we sought out a service provider whose core business is recycling with the disposal of waste as a byproduct. As simple as this may sound, the fundamental difference in the focus of these companies has a huge impact on their operations, which in turn affects the service and associated costs.
We have since engaged Metro Waste Recovery to partner with us and handle the disposition of our expendable packaging waste. The first phase of the program was to evaluate our handling of corrugated waste. With the changes made as a result of the interaction between TNT Logistics (operator of Brampton’s material processing centre) and Metro Waste Recovery, we have experienced a 75 percent reduction in the tonnage going to the landfill as well a dramatic reduction in cost. We have achieved a reclaim rate of 80 percent of the packaging waste generated.
The second phase is attacking the remaining 20 percent that are primarily plastics. As previously stated, these volumes are significantly lower and the issue of logistics is more difficult to overcome. The volumes being smaller make it difficult to develop a program that does not incur additional cost over and above landfill disposal. Compounding the tonnage issue is the various types of plastics in use.
In order to maximize the return on sales, it is necessary to determine the level of sorting required prior to shipment. To this end, Brampton Assembly working with Bruce Westaway of Metro Waste Recovery have established a team, including TNT personnel and Brampton’s material handling engineer, to explore pooling recyclable material with our supply base. The intent is to overcome the cost obstacle while at the same time reducing the amount of waste finding its way to the landfill. One of the initiatives is transporting the recyclable materials to a single accumulation point by integrating it into the logistics infrastructure.
In my last article, I discussed the supply chain toolbox and how the various logistics options available to us are constantly being reviewed and adjusted to ensure we are at optimal efficiency. The same mentality must be applied to packaging waste. When optimizing routings within a specific geographic region, the effective use of available cube on conveyances travelling between the supply base and the end user may be applied to the movement of recyclable material to the accumulation point. This accumulation point may be at the end user’s facility or at one of the participating suppliers in the program. The recycler, in this case Metro Waste Recovery, will then coordinate the pick up, delivery and sale to the appropriate recycle location, apply the revenue to the costs and report the status to our goal of a cost neutral program. Ideally the sale of the commodity will pay for the incremental costs of handling it.
Brampton Assembly and Metro Waste are currently in the process of defining the suppliers that would be candidates for this program based on the types of waste they produce, their location relative to Brampton and the availability of cube on these lanes. Metro has taken the lead in determining, through negotiation, the optimal arrangement within the recycling sector as well as pick up/delivery requirements. Ultimately we would like to achieve 100 percent reclamation of packaging waste for the Brampton Assembly plant and assist our suppliers in their recycling programs.
When does the supply chain end? When all aspects of the material supply to the point of use have been identified and accounted for. This includes packaging waste and the disposal or sale of it. We must all be cognizant of the environmental impact of the industries in which we work. To this end, environmental concerns must be integrated into the total management of the supply chain.