The Infosys global supply chain management blog enables leaner supply chains through process and IT related interventions. Discuss the latest trends and solutions across the supply chain management landscape.

« Going Lean and Staying Agile | Main | True Truckload optimization - Opportunity for leading supply chain products »

Green supply chain - Reverse logistics and Package-less for Quick-wins

This is continuation to my previous blog. In this blog we can see Reverse logistics and Packaging in detail, which can give quick results to the green vision.

What have you done after finishing Pepsi, Coke or Dominos? Yes, tossed the can/bottle/box into litter-box. You do not need it once the contents are over. At the same time you cannot have drink alone without can or bottle, or Pizza delivered without a box.

There are certain functions you expect the packaging to meet - like protecting products for distribution, storage, sale, and use. It is never intended to end in landfill or to be a burden to nature.The bottle you dump in Recycle bin or giving back to the shopkeeper goes back to the manufacturer via reverse logistics. This saves a lot for manufacturer and plays its role in greening the supply-chain.

Pepsi has already started installing Reverse vending machines called - "Dream machines" where individuals can recycle their cans and bottles and earn reward points. With only 34 percent of non-alcoholic bottles and 25 percent of PET plastic bottles recycled annually, Pepsi aims to boost that number to 50 percent through increased recycling at reverse vending.
The Coca-Cola Company made a hit when it announced a new "plastic" soda bottle that is made 30%, in part, from sugar cane and molasses-based materials , and which is 100% recyclable. Dubbed the "PlantBottle," Coke will use the new material in a variety of package sizes for its drinks, mainly for its Dasani water brand.

Why manufacturers re-cycle or re-use the packaging? Greening is not the only motivation, this reduces the packaging cost considerably for them.The % of recycled component in bottles and cans is already a KPI for the beverage manufacturers.

Consider cement transportation- Dry cement powder is packed in paper bags of 50 kilo-grams each. However even for a small construction you need lots of such packs. Then why are they packing it in 50 kgs packs? Why can't it be packed in bigger packs or rather deliver on the spot without packing?
Popular answer is that there are problems for storing it. Again, Why do you want to store it, when all you want is Just in time? Looking from this angle smaller packs are driven by convenience to store factor, and inability to meet Just In Time requests. There is a scope for greening via just in time, package-less delivery of goods.
 
Let's see what's happening in paint industry. Whenever paint is poured into a container,  around 5% of it will stick to the walls of container . This is generally referred as skin losses. This loss pinches the industry not by the amount of paint lost, but by the cost involved in safely disposing the "paint skins". It has gone to a level that many times the safe disposal cost of paint skin with heavy metals is much more than the gains from it. This resulted in the classical Economical Order Quantity (EOQ) formula itself tweaked to accommodate cost of disposal in the cost side.

Automobile paint shops also faced this problem, initially the containers and skins were send back from plant to the paint supplier via effective reverse logistics, who can reuse or effectively dispose the skins utilizing the economies of scale. Later the car manufacturers found it more sensible to outsource entire paint shop to the paint company. The Skin losses and environmental costs  which were part of automobile paint shops a decade back got totally eliminated by outsourcing the entire paint shop to the paint manufacturer. The automobile manufacturers can concentrate more on their core competencies, leaving paint management to experts . This not only saved the disposing head-aches, but also the inventory worries - greening the supply chain along with other merits.
 
There is a big scope for greening the supply-chains from a packaging perspective - the hierarchy is Prevent > Minimize > Reuse > Recycle > Dispose.

Two main enablers for achieving this are
1) Just in time delivery (Minimize packaging ) and
2) Reverse logistics for packaging materials (Reuse and Recycle)

More and more KPIs are emerging day by day  to track the reverse logistics and to measure the recycle effectiveness of reverse logistics . Also now manufacturers started capturing the packaging cost separately and higher managements are looking these as increased opportunities to reduce costs.

Overall the perception about packaging  is changing from cost sinks to opportunities.

I would like to hear your thoughts and views on these.

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Please key in the two words you see in the box to validate your identity as an authentic user and reduce spam.

Subscribe to this blog's feed

Follow us on

Blogger Profiles

Infosys on Twitter