Waste in your supply chains is a big number and growing

Roger OakdenGlobal Logistics, Logistics Management, Procurement, Supply Chains & Supply NetworksLeave a Comment

Waste is money

The challenge of waste.

Some national governments are starting to recognise the total cost of waste in their economy. Following this recognition comes a desire to ‘do something’. It is likely to include a requirement to reduce the total volume of all wastes produced per citizen and reduce the costs of handling, transport and storage for all forms of waste.

To date, the treatment of waste generated through your supply chains is typically another person’s problem to solve. However, the costs imposed on your organisation by waste reduction initiatives will not only come from government, but from businesses that can use their power in supply chains (such as retailers) by requiring suppliers to retrieve and treat their waste. In turn, powerful Tier 1 suppliers will impose the same requirement on their suppliers and so on.

An example of the challenge with waste in one industry is provided by Adam Minter in an update to his 2013 book titled Junkyard Planet. He notes that between 2005 and 2015, global clothing production doubled and in developed countries, the number of times that clothing is worn before disposal declined in the period by more than 30 percent (in China by about 70 percent).

So, the current scenario has the volume of used clothing increasing, but re-use markets contracting due to greater productivity in production. This makes the ‘ex works’ price of recycled items close to that of new products. Other examples of challenges with waste are:

  • On a short length of beach in the remote Cape York Peninsula of northern Australia, volunteers recently took only four days to collect more than 7 tonnes of plastic and other rubbish washed in by the tides
  • Australia, with a population of 24m, uses more than five billion single use plastic shopping bags per year, with an average use life of about 10 minutes. Only 10 percent of the bags produced are recycled in the country
  • Milk cartons – billions are disposed of each year after a single use. Milk used to be sold in glass bottles that were returned, cleaned and re-used
  • The EU and US only treat about 30 percent of the plastic waste generated within their borders
  • Global electronic waste (eWaste) per year was considered in a 2016 United Nations report to have at least U$80b of recoverable materials
  • Globally, food waste through supply chains is considered to be at least one third of all grown foodstuffs

This is not a sustainable situation, but who will blink first and take action?

  • Retailers and manufacturers (such as ‘fast fashion’), whose business models helps to generate increased demand
  • National and State/Province governments under pressure from constituents
  • Large city governments that have (or may develop) powers to enforce city wide restrictions on waste or
  • Internationally, through the United Nations

While some commercial organisations have implemented successful waste reduction and treatment programs, it is unlikely the whole business sectors will take the lead. Governments in developed countries do not appear to be in a hurry to implement regulations that increase the domestic treatment of waste – through imposing charges that encourage the reduction of waste and subsidising or financing its treatment.

However, although the current intention is not strong, it could become real with a change in political will. This provides supply chain risks for businesses, because there is a lack of certainty about the actions to be taken and when. Some examples of tentative steps at waste reduction are:

  • The UN has set an objective to reduce food waste in farm fields, packing sheds, warehouses and retailers by 50 percent by 2030. However, there is not an internationally agreed plan for implementation
  • Some European countries have announced their intention to ban plastic packaging from retail shelves. As the implementation date is far in the future – the UK has 25 years, the intention is more of a ‘wish list’ than a planned implementation
  • China has implemented restrictions on the import of low-quality, contaminated and hazardous waste. In 2016, China imported about 70 percent of the world’s waste plastics and 65 percent of wastepaper
    • Developing countries may process some of the diverted waste, but for example, in Asian countries it is less viable than developed countries to establish waste treatment facilities. Although some countries in the region have inadequate transport infrastructure for waste to be moved, sending waste to landfills remains low cost

Analyse waste in your supply chains

Initial efforts to reduce waste will most likely be concentrated in consumer based businesses (the Consumer Packaged goods (CPG) and Fast Moving Consumer Goods (FMCG) sectors), extending later to all sectors of an economy. As noted, Logisticians need to view initiatives concerned with waste as a risk reduction process. This will require, within the Supply Network Mapping process, an analysis and review of the materials in each supply chain:

  • the materials used in your processes
  • the origin of the materials and
  • the wastes generated at each node of each supply chain
  • the risks associated with the waste – the likelihood of action (by whom) against the waste item and the potential consequences for the business
  • identify possible solutions and profitable markets for treated wastes and
  • how achievements will be measured

Value waste as a resource to be used, rather than view it as a problem. It can be an opportunity – an old English saying tells us “Where there’s muck there’s money”. The positive aspects of waste treatment were discussed in the blog titled Reverse Logistics can be profitable for your enterprise. On the negative side, without solutions your organisation is in a poor negotiating position when your customer or waste handler demands higher fees to handle your waste.

As waste movement, treatment and storage is likely to become an increasing role for Logisticians, the Learn About Logistics definition of Logistics will be changed to read: ‘To satisfy customer needs by providing availability and the reverse flow of items, through the time-related positioning of internal and external resources, at the lowest total cost”.


Share this Post

About the Author

Roger Oakden

Facebook Twitter Google+

With my background as a practitioner, consultant and educator, I am uniquely qualified to provide practical learning in supply chains and logistics. I have co-authored a book on these subjects, published by McGraw-Hill. As the program Manager at RMIT University in Melbourne, Australia, I developed and presented the largest supply chain post-graduate program in the Asia Pacific region, with centres in Melbourne, Singapore and Hong Kong. Read More...

Leave a Reply

Your email address will not be published. Required fields are marked *