Posted: August 3rd, 2022
This case presents a structured approach towards developing and selecting environmentally responsible packaging. The approach identifies and categorizes the environmental impacts of packaging in supply chains to determine its potential to reduce them. A study of the environmental performance of packaging in a global food supply chain of grapes from South Africa to Sweden illustrates the approach. The study analyses the environmental impacts of the material in the packaging system and the environmental impacts of packaging on logistics, on transport efficiency and on product waste.
The way supply chain practitioners manage packaging has a direct impact on the financial and environmental performance of their organizations, their suppliers and their customers. The decisions taken by packaging decision-makers affect the cost and environmental performance of operations in the company, as well as the performance of the suppliers and customers in terms of efficiency of transportation, replenishment, material handling and other logistics operations. It is important that practitioners can understand the impact of their decisions on both specific operations and overall supply chain performance. This supports holistic decision-making and a competitive supply chain. This chapter discusses how a circular economy can be used as an instrument for decision-makers to move a business or a supply chain towards sustainable packaging.
The chapter highlights the potential of packaging logistics for effective and efficient supply chains and categorizes the environmental impact areas of packaging. It uses the case of a global supply chain of table grapes to illustrate the challenges and dilemmas of environmentally sustainable packaging. The aim of this case is to describe and illustrate a structured approach towards identifying the environmental impacts of packaging on supply chains.
Sustainable packaging should fulfil economic, environmental and social dimensions. Sustainability can be defined as ‘the balanced integration of economic performance, social inclusiveness, and environmental resilience, to the benefit of current and future generations’ (Geissdoerfer et al, 2017: 766). From an economic perspective, this means that packaging should save more than it costs in terms of enabling supply chain efficiency and supply chain effectiveness. Efficiency can be obtained by facilitating efficient replenishment, transportation and material handling. Packaging affects the costs of purchasing material as well as the costs of converting, material handling, processing, picking, printing and transport. Effectiveness can mean that the packaging increases sales, through attractiveness or by making products available, and that it enhances the consumer value of the packed product. Packaging can help to extend shelf life and increase sales through communication and marketing as well as by providing convenience for consumers.
From an environmental perspective, sustainable packaging should minimize the packed product’s environmental impact in terms of the use and reuse of resources for material, product waste, and logistics and transport operations. For instance, the selection of packaging material affects the environment, and packaging affects energy consumption and emissions from various activities, such as converting packaging, material handling, processing, picking, printing and transport. The protection that packaging provides can reduce the amount of waste and damaged products, for example food waste.
Finally, the social perspective of packaging is about helping consumers and users modify their behaviour in the direction of sustainability. For instance, packaging can foster unsustainable consumption habits by making it easy for consumers to adopt a ‘throw-away mentality’ or to disregard the value of materials (Lewis, 2005). However, by understanding consumer perceptions of sustainable packaging and factors that determine purchasing decisions, it is possible to influence their behaviour by developing packaging in a sustainable direction that consumers appreciate (Nordin and Selke, 2010). This can potentially induce proper disposal and facilitate sustainable behaviour for different lifestyles, for example single-household portions and large packs for families. The social dimension of packaging also covers the fact that packaging provides employment and can enable food availability in both disaster areas and developing regions.
Circular economy and sustainability
A circular economy is an approach, or an instrument, for moving a business or a supply chain towards economic and environmental sustainability. Geissdoerfer et al (2017: 766) define a circular economy as: ‘a regenerative system in which resource input and waste, emission, and energy leakage are minimized by slowing, closing, and narrowing material and energy loops. This can be achieved through long-lasting design, maintenance, repair, reuse, remanufacturing, refurbishing, and recycling.’ Thus, sustainability can be seen as the objective, while the circular economy can be an instrument for achieving this objective.
The characteristics of sustainability and a circular economy have many similarities, and some differences. According to Geissdoerfer et al (2017), some typical similarities include integrating non-economic aspects into business development, using a systems approach and innovation as a core idea, the need for collaboration between different stakeholders, and the key role of private businesses’ resources and capabilities. A vital difference is that in sustainability, responsibilities are shared but not clearly defined, whereas in a circular economy the responsibility by definition lies with the private businesses as well as with regulators and policymakers. Another noted difference is the ultimate goal. A circular economy aims for a closed loop that eliminates resources going into and leaking out of the system, whereas sustainability focuses on an open-ended system with multiple goals for various stakeholders and interest groups. A third difference is who has an interest in applying sustainability or a circular economy. With sustainability, the view is that the stakeholders’ interests align; for example, less waste is good for the environment, organizational profits and consumer prices. In the circular economy, the view is that there are financial advantages for businesses on the one hand, and less resource consumption and pollution for the environment on the other.
In the context of packaging, the circular economy is based on the idea of an ecocycle society where product and packaging values are maintained for as long as possible, while waste is minimized and used as a resource for recycling or energy recovery. In supply chains, consisting of a number of companies from packaging filling at a producer to the point of consumption, packaging makes a circular economy possible through packaging waste, product protection that can minimize product waste, volume and weight efficiency, and stackable and unitized packaging that facilitates logistics and transport efficiency.
The role of packaging in environmentally sustainable supply chains
The previous section described three pillars of sustainable packaging and their links to a circular economy. To analyse the environmental pillar and the roles of packaging in a circular economy, we can group the environmental impact of the packed product into three factors (Pålsson, 2018):
· packaging material;
· logistics and transport efficiency;
· product waste.
Packaging material affects the environment in terms of energy consumption and emissions from the packaging manufacturing process. This depends on the raw material and its processing. This factor also affects the environment when it is disposed of, including aspects such as energy consumption and emissions from recycling, landfill, incineration and reuse. The latter includes the washing and handling of empty packages. The logistics and transport efficiency factor refers to how well the packaging enables high fill rates in logistics processes and transport. For instance, if one packaging system enables a vehicle to carry 20 per cent more products than another packaging system, then 20 per cent fewer vehicles are needed. Similarly, the packaging system also affects the number of products that logistics equipment can handle simultaneously. Finally, the product waste factor refers to how well the packaging avoids product waste, which can occur due to product damage, obsolescence and difficult-to-empty packaging. The product waste factor is what determines the accumulated energy and emissions of a packed product. Thus, the further down in the supply chain a packed product becomes waste without being used, the greater its environmental impact. Apart from packaging filling, the environmental impact of the packed product in food supply chains originates from food supply and packaging. Food supply includes the growing, processing, production and refinement of food, which generally accounts for a substantial proportion of the total energy consumed for packed products in food supply chains.
To manage the environmental impact of packaging in food supply chains, we must first analyse the impact of each of the three factors. Figure 7.1 shows a structured analysis approach highlighting four complementary ways to tackle each factor.
Figure 7.1 Three factors that determine the environmental impact of packaging, and four ways to tackle each factor
The packaging material factor needs to balance the amount of packaging material against the amount of product waste. A product can be overpacked, using more packaging than necessary to protect the product. A product is overpacked if the environmental impact of the excess packaging material exceeds the reduced environmental impact of less product waste. Similarly, a product is underpacked if the environmental impact of added packaging material can reduce the total environmental impact of product waste plus the packaging material. In the process of finding a balance between the amount of packaging material and product waste, companies need to consider protection from mechanical shock and vibrations, chemical and microbiological reactions, and temperature variations. For some food, more packaging can prolong shelf life. For instance, with a thin plastic bag around a head of iceberg lettuce, it takes a few days more before the outer layer must be disposed of.
The next way to tackle the packaging material factor is to use as few mixed materials as necessary, which improves recycling efficiency. Mixed materials can consist of laminated layers of plastic, cardboard and aluminium foil. These materials often have excellent properties for food and beverages. They can extend the shelf life of food, provide weight-efficient packaging (as an alternative to metal or glass) and eliminate the need for refrigeration for some products, but they are challenging to recycle. Thus, mixed materials should be used to the extent that the reduced environmental impact from their beneficial properties is greater than the environmental impact of reduced recycling. For a large company, the recycling capability of their materials can vary between different markets, which also should be taken into consideration.
The third way to tackle the packaging material factor is to use energy-efficient materials. This means scrutinizing the packaging material market carefully to find materials that minimize the environmental impact of the packaging production process and the energy sources used in that process. Finally, the packaging material factor should minimize the hazardous substances in the packaging material, as these can affect both the users of the packed product and the environment.
As shown in Figure 7.1, the logistics and transport efficiency factor also need to be tackled in four ways. The volume efficiency of packaging affects the use of transport vehicles and logistics equipment. The more products that can be packed in the same volume, the more volume efficient the packaging system becomes. The same logic applies to the weight efficiency of packaging.
The next way to tackle this factor is the concept of packaging postponement, which is related to volume and weight efficiency. By postponing the final packaging system, products can be shipped in bulk to regional packing centres, warehouses or assembly sites. For instance, instead of bottling a beverage in a central production site, large barrels can be shipped to regional bottling centres. This minimizes the need for transport.
Finally, packaging should facilitate energy-efficient materials handling. This can be achieved by designing packaging systems with stacking capability, which optimizes space utilization in storage areas in the production stage, in warehouses, transports, and in logistics equipment, such as on forklifts. It can also be achieved through the modularization of packaging systems. Designing packages in modules enables co-loading and co-handling. A related concept is unitization, which means designing each level of the packaging system as units of the next level, so that a number of primary packages fit exactly in the secondary package and so on. Unitization affects the number of packages or unit loads that are handled simultaneously, which in turn affects the environmental impact of materials handling.
The final way to tackle this factor is to use packaging as an insulating barrier to sustain the correct temperature of the products. This could eliminate the need for certain logistics equipment for maintaining the cold chain, which reduces energy demand for cooling.
To address the product waste factor, food waste should be avoided in the entire supply chain. One way to tackle this is by making sure that the packaging system has sufficient protection and containment capabilities. From an environmental perspective, it is important to minimize food waste, but it is also essential to balance this against the type and amount of packaging, as the packaging material for several food categories has significant environmental impact. Figure 7.1 shows that the average energy consumption from the packaging system in a food supply chain in the UK is 23 per cent. Another way to tackle the product waste factor is to analyse apportionment. This is because the amount and size of each packaging level affects the level of obsolescence and product waste in different stages of the supply chain. For instance, having excessively large secondary packaging can lead to food waste in stores, and with excessively large primary packaging consumers may not consume all of it before the expiry date. A third way to tackle this factor is to address the communication capability of packaging. This includes track-and-trace information, which should be used to minimize takebacks, avoid unnecessary product waste and reduce obsolescence. The final way to tackle this factor is to design packaging so that it facilitates environmentally responsible consumer behaviour. Thereby, packaging can be designed to avoid product waste through easy-to-empty packaging and packaging that can be resealed, which extends shelf life.
A case: table grapes from South Africa to Sweden
A global supply chain of table grapes from South Africa to Sweden illustrates the three factors that determine the environmental impact of packaging. Table grapes are sweet berries that are sold throughout the year. They are a low-margin product, quite delicate and sensitive to heat. This case focuses on packed table grapes from farmers in the Western Cape in South Africa. The grapes are harvested from November to April. At the beginning and end of the period, an individual farmer ships 5 containers of grapes per week, and in the peak season the farmer ships 12 containers per week. The farmer grows, harvests and packs table grapes for both the domestic and European markets. This case focuses on the table grapes that are sold on the Swedish market, where the main customers are three major retailers. The total cost to the farmer of finalizing a 500g box of table grapes is less than €0.70, which includes the product (70%), labour (15%), and packaging (15%). In addition, there are shipping and handling costs. Figure 7.2 illustrates the supply chain.
Figure 7.2 The supply chain for table grapes from South Africa to Sweden
After harvesting, the grapes are transported in a plastic crate to a packhouse on the farm where they are precooled to 20–22°C. In the packhouse, the grapes are quality checked regarding size, freshness and sugar content. The quality control is conducted both by an independent South African quality organization and by the exporter. The exporter has higher quality requirements than the South African quality organization, but it is compulsory to use the quality organization to ensure that fruit from South Africa maintains a certain quality. After quality control, the grapes are packed and stored. From the packhouse, the farmer sends the grapes by truck 5km to a cooling facility where the grapes are precooled for 48 hours, and then cooled down to −0.5°C for 3 days. From the cold storage room, the pallets of grapes are moved with forklifts to a non-refrigerated waiting area for loading in a container. When the facility is busy, there is a risk of breaking the cold chain at this point.
From the cooling facility, an exporter manages the transport to Europe, which is paid for by the retailer. This cargo goes in containers by truck from the cooling facility to the port of Cape Town. The total time in the cooling facility and the port should be a maximum of 7 days, but it sometimes takes longer, as Cape Town frequently suffers from strong winds and operations are stopped at a wind strength of 80kph. As an example, 45 days were lost in 2017 owing to strong wind. This negatively affects the quality of the packed grapes, as it reduces their shelf life. Sometimes the grapes are delayed 2–3 weeks in the port, which leads to poorer quality. The negative effect of the delay is compounded by the fact that summer heat can raise the temperature in the container. A 1,000-container vessel takes approximately 30 hours to unload and load. Depending on size, a vessel usually stays in port for 6–30 hours. Containers of grapes and some other products have special instructions. Grape containers are not to be stored on top of a container stack to protect them from the sun.
After loading, the vessel goes to the Port of Rotterdam in the Netherlands, which takes about three weeks. On arrival in Europe, there is a 72-hour quality control before the grapes are transported by truck to a wholesaler warehouse in Sweden, where they are stored and repacked from one tertiary packaging to another tertiary packaging. Thereafter, the grapes are transported to a retailer distribution centre (DC), which stores and repacks them into smaller quantities based on the demand from the retail stores. This is followed by transport to a retail store, where either the secondary or primary packaging is replenished. Finally, consumers buy primary packages of grapes and bring them home.
The primary packaging is a plastic tray made of PET, which weighs 500–540g when filled with grapes. The primary package weighs about 24g and measures 190 × 115 × 80mm. The biggest challenge with the plastic trays is the risk of pressure damage to the grapes. For this reason, the packages must not be filled too high. There is also a risk of getting moisture on the grapes in the primary packaging. The secondary packaging consists of a plastic bag, corrugated board packaging, and a sheet, which slowly emits sulphur to reduce any water on the grapes. Ten primary packages are put into the plastic bag, which then is put into corrugated board packaging. The dimensions of the standard secondary packaging are 400 × 600 × 90mm. The producer also uses secondary packaging measuring 300 × 400 × 120mm, which better protects the grapes from pressure from above. The secondary packages are put on pallets (1,000 × 1,200mm) to a height of 2,400mm. This means that the lowest layer of packaging bears a weight of 90kg. A full pallet has stabilizing material on the corners and straps to hold them together. The pallets are loaded into a container in the cold storage facility. This packaging system remains unchanged until the grapes reach the port of Rotterdam, where the pallets are loaded onto a truck for transport to the wholesaler. At this point, the secondary packaging is transferred to Euro pallets (1,200 × 800mm). In the retailer DC, the secondary packaging is repacked onto yet another Euro pallet.
Packaging-related challenges in the supply chain
The supply chain contains a number of challenges, many of which can be influenced by the design of the packaging system. Packaging waste occurs in several stages of the supply chain – in the filling process, in each repacking process, and when emptying a primary, secondary or tertiary package. The volume efficiency of the packaging system affects the efficiency of the logistics operations and transportation. Primary packaging uses approximately 80 per cent of the volume of secondary packaging, which means that some 20 per cent is not used. Furthermore, there are 10 primary packages in secondary packaging, which affects handling efficiency in the wholesaler DC, the retailer DC and the retail store. If it were possible to include more primary packages in the secondary packaging, it would increase handling efficiency. However, there are trade-offs owing to other supply chain requirements, such as weight restrictions for ergonomic reasons and pallet utilization.
Product waste is a general problem in table grape supply chains (Clarke, 2012). Generally, temperature variations can result in up to 25 per cent loss of table grapes in transportation per day (Kader and Rolle, 2004). This case identified a number of supply chain challenges that can lead to damage and waste. If the table grapes are in contact with, or too close to, the lid of the primary package after the manual filling process, there is pressure damage. This occurs quite frequently. Another potential for pressure damage is on the secondary packaging in the bottom layer on the pallet, which carries 90kg when fully loaded. Further, one of the biggest challenges is moisture in the packaging. If the packaging solutions prevent effective ventilation, moisture can be produced in the primary packaging, which will negatively affect the quality of the table grapes. To prevent moisture, the current packaging solution includes a sulphur sheet. Unfortunately, there is a risk that the sulphur can burn the grapes. Vibrations and shock to containers are other challenges in the supply chain, particularly in the loading process in the port, which can be affected by strong winds. Still, damage to the grapes cannot be tracked to the port, as the containers are never opened there.
The risk of food waste is highly subject to time and temperature. Table grapes should be consumed within about 50 days after picking if they are handled correctly (sometimes longer is acceptable). A time challenge in the case study is that in the peak season, the cold storage facility can be full, and the farmers must store the table grapes in the packhouse at approximately 22°C, instead of cooling them down to −0.5°C in the cold storage facility. This significantly cuts the grapes’ shelf life. The effect of temperature on shelf life is such that they deteriorate more in one day at 4°C than a week at 0°C (Thompson et al, 2008). Maintaining the cold chain is also challenging in other parts of the supply chain. In the container loading process in the cold storage facility, the temperature is about 22°C, which is much higher than that of the cooled grapes. Usually, this process is fast, but in the peak season it can take more time, leading to a negative impact on the grapes. Further, the placement of pallets of grapes in cargo containers affects the temperature of the grapes. A study by Freiboth et al (2013) showed that grapes on pallets closer to the door had higher ambient temperatures than those closest to the refrigeration unit. In the outdoor storage area at the port, the sun can warm the containers. To reduce this effect, cargo containers with grapes in them should not be stored on the top of the stack.
Containers can be delayed in the port because of strong winds and because of delayed vessels, which also affects their temperature. A delayed vessel must wait for a new time slot, which leads to a further delay. Table 7.1 shows the time and potential delays in different supply chain stages. If all potential delays occur, the shelf life in the retail stores is significantly reduced. If such delays are combined with temperature rises inside the packaging, the shelf-life reduction is even greater.
Table 7.1 Time and potential delays in different supply chain stages (grapes should be consumed within 50 days after picking)
Table 7.2 summarizes the challenges regarding packed table grapes. Based on these challenges, the environmental impact of the packaging can be described in the three areas of packaging waste, logistics and transport efficiency, and product waste. Packaging waste occurs in the packhouse, as excessive material is wasted. After repacking and emptying, there is waste and used tertiary packaging at the wholesaler DC, retailer DC and the retail store. Some accidents in the forklift operations in the cooling facility lead to repacking. The secondary packaging becomes waste at the retail store, and the primary packaging at the consumer end.
Table 7.2 Packaging activities and challenges regarding packed table grapes in different supply chain stages
Furthermore, the volume efficiency of the packaging system affects storage space and transport efficiency in the different road transport stretches. Logistics and transport efficiency as well as product waste are affected by the packaging design and material. It can:
compensate for moisture by providing sufficient ventilation, which affects the packhouse, the cooling facility, the port of Cape Town, and the sea transport;
minimize the risk of breaking the cold chain in quality control in the port of Rotterdam by helping to ensure that as little fruit as possible is exposed to the outer environment;
protect from shock and vibrations in the port of Rotterdam, at the wholesaler, at the retailer DC, in the retail store and at the consumer end;
increase the stability of the pallets in the cooling facility;
facilitate rapid loading in the cooling facility to minimize the exposure to a higher temperature.
Furthermore, the design and placement of containers can protect from the sun’s heat and cooling technology in containers can compensate for heat in the port of Cape Town. Labelling can minimize identification time through track-and-trace capabilities in road transport, in the wholesaler DC, in the retailer DC, in the retail store and at the consumer end. With the addition of a temperature sensor, it can also indicate whether the cold chain was maintained.
This case presented the potential of packaging logistics for effective and efficient supply chains. It also defined and distinguished between sustainable packaging and packaging for a circular economy. It showed that packaging practices and decisions influence logistics operations, transport efficiency, product waste and the effectiveness of the packaging material. Thus, they influence the financial and environmental performance of focal companies, their suppliers and their customers.
With a focus on environmentally sustainable packaging, the case presented a structured approach for identifying the environmental impacts and the reduction potential of packaging in supply chains. A study of packed table grapes in a global supply chain from South Africa to Sweden illustrated the approach. The study analysed the environmental impacts of the material in the packaging system and the environmental impacts of packaging on logistics and transport efficiency and on product waste.
This case emphasized the importance of understanding the impact of packaging decisions on both specific operations and overall supply chain performance, which can lead to a competitive advantage for the supply chain. A key issue of the approach is to apply a system perspective, which supports holistic decision-making.
Answer the questions below. Keep questions with the answers
1) Discuss packaging material challenges in the case of table grapes. Based on Figure 7.1, what can be done to reduce packaging material waste?
2) Discuss logistics and transport challenges from a packaging perspective in the case of table grapes. Based on Figure 7.1, what can be done to improve logistics and transport efficiency in the global supply chain of table grapes?
3) Table 7.2 describes challenges regarding packed table grapes in different supply chain stages. How can the packaging system address these challenges? What potential trade-offs do you foresee?
4) How should a farmer or producer select a packaging system for table grapes? How can different supply chain requirements be identified and included? How should costs and benefits be shared when sustainable packaging is accomplished?
5) In what way can a packaging system for table grapes add competitive advantage?
Introduction and context
This case investigates the issues of complexity and efficiency in reverse flows of multiple-trip packaging systems and recyclable materials from retail units back to points of distribution. Academic literature around reverse logistics (RL) is abundant in theoretical and conceptual modelling identifying efficiencies of scale and scope. This case aims to identify practicalities, feasibility and readiness for multiple retailers to incorporate or adapt these principles of best practice. We augment this case by reviewing the combination of just-in time (JIT) and a lean philosophy within RL systems. We address whether implementation of JIT is feasible within a multi-trip system and what the possible performance implications of such an implementation might be, especially for information availability, flow and use.
A case study methodology provides a comparative analysis of two UK multiple retailers. The systems deployed by these retailers are described in relation to gaps that emerge between what may be theoretically or conceptually possible, according to the literature, and what was actually observed. We reason why these gaps might occur in a real-world setting, synthesizing the primary data with the extant literature to suggest improvements that could realistically be made to the systems observed. We conclude by suggesting how real-time data may be better employed for RL systems in order to enjoy improved operational effectiveness. Finally, through further synthesis with the literature, this case offers a set of options for improved lean reverse logistics systems and the introduction of an inclusive tripartite ‘walk through’ model to create action that will address system sub-optimization and drive sustainability.
Selection of the retailers examined was driven by a need to comprehend ‘same but different’ supply scenarios, whereby a comparative analysis could determine to what extent advantage, if any, is gained in the management of reverse flows that result from higher levels of vertical integration being present in Retailer A. The adoption of case study research enabled the comprehension of practices present within the daily operations of both organizations A and B, as well as understanding the perspectives of internal stakeholders (Cassell and Symon, 2004; Stake, 2000; Yin, 2003). This case presents four operational levels of analysis, these units of analysis being the small, medium and large retail units and distribution/logistics sub-units of both organizations.
A purposive sampling technique was utilized (Easterby-Smith, Thorpe and Jackson, 2015; Saunders, Lewis and Thornhill, 2009), commencing with a ‘bottom-up’ retail sub-unit activity, back up the supply chain to the point of distribution. The retail units studied were indicative of common store footprints, ranging from small convenience store to large supermarket. Three managers from each retailer would offer sufficient depth of perspective, and these included both logistics and warehousing managers from the distribution/logistics sub-units as they were of equal and critical importance to the case. Table 10.1 shows the themes explored during interviews.
Comparison of the case study retailers
It is common practice for multiple retailers to utilize returning vehicles (the retail backhaul) for the purpose of collecting recyclables and offloading them within a dedicated recovery area within their regional distribution centres (RDCs). Notwithstanding this, it is apparent that system differences can emerge at this distribution node and at the retail unit nodes. Industry initiatives in these areas include: improving space utilization and fuel usage, optimizing road transport, including vehicle design, engine type and fuel type, as well as developing inter-modality and the ongoing building and retrofitting of warehouse facilities to improve sustainability. In the organizational analysis between Retailers A and B, the key similarities between their distribution and fulfilment strategies include continuous 24-hour cycles to minimize stocks and maximize network efficiencies for ‘in store’ fulfilment, while managing access restrictions borne of unitary authorities’ local transport plans.
A and B differ significantly in that there is a higher degree of vertical integration within A. The key characteristics of A and B are detailed in Tables 10.2A and 10.2B.
On arrival at the RDC, the packaging systems, RPCs, full roll cages and empty roll cages are collected at a central point for deconsolidation/first stage disposition, commonly referred to across the sector as ‘De-Kit’ areas. Here, packaging systems, RPCs and recyclables are sorted and recyclables are baled, while packaging systems/reusable containers typified by roll cages and crates are sorted; some types are also cleaned before being redistributed to support forward flow operations. Differing levels of sortation and sortation quality occur depending upon the size of the retail unit, with larger units baling recyclables and smaller units storing recyclables in roll cages.
Differences of opinion emerged between DC and retail interviewees. The retail level considered the quality of baling and sortation to be of low priority, having no relevance to performance evaluation metrics, whereas at DC level it is considered a key process, although this is not reflected in the forward-facing strategy of the DCs despite the necessity of retrieving reusable systems equipment and reducing driver hours, both critical to store replenishment activities.
Low priority being given to return flows from retail units relating to sortation, quality, quantity and integrity of materials returning to the DCs is twofold in impact. First, it is difficult to plan effective deconsolidation as varying levels of sortation are present but may also change on a daily and/or route basis. Further, this lack of RL management is also evident in the analysis of interactions between the DCs and recycling companies, more so with Retailer A, where the main focus is reducing moisture penetration in card bales and identification of contaminated plastic bales. This has led to opportunistic practices by recyclers, for example recyclers declining payment for, but continuing to process, contaminated bales (plastic bales with evidence of cardboard contained within them) on an individual bale-by-bale basis. Where short-term improvements in bale quality emerged, recyclers then started to decline payment for entire loads if just one contaminated bale was found. Such opportunistic behaviour overlooks vested ‘win–win’ sustainable relationships and would be quite unthinkable in forward flows.
Characteristics of materials acquired for upstream disposition
Multi-trip systems and packaging waste differ from unit to unit; waste and returns were influenced exclusively by replenishment activities. Common to both retailers is the apparent limited or lack of control at the retail level with regard to deciding the amount of packaging systems and recyclable materials to be returned, as this is dependent on available vehicle capacity.
There are two main capacity issues common to both A and B. Storage capacity by design is intentionally limited at retail units in order to drive stock replenishment and inventory throughput. This naturally leads to limited storage space for returns, resulting in reverse flow materials commonly being stored outside and thus impacting paper and board quality. The other capacity issue common to both is related to excess capacity at the DC baler, which is not optimized as flow velocity and volumes are dictated by driver availability, dock availability and staff availability. Consequently, this also leads to inefficiencies, such as excessive ‘slack’ in the system at certain times of day, queues at other times, and a degree of empty running across the network. Holistically this creates an unbalanced network, whereby DC capacity is both greater than the total demand placed upon it, and significantly impacted by the peculiarities of forward- flow optimization.
Dynamics of ownership and capabilities
Prevailing process conditions at both A and B’s retail units and DCs are characterized by task/time orientation; this stifles dynamic task orientation in support of RL and can be clearly linked to the low priority of reverse flows at the retail level. At DC level, lack of flexibility to support dynamic responses to RL peaks can be clearly evidenced through regular usage of agency staff within ‘De-Kit’ areas.
Inhibiting factors and potential system improvements
The principal issue that emerges for enhanced RL efficiencies in a leaner system is related to cost control in relation to duplication of vehicle movements. Other issues recorded as potential barriers included:
· internal focus on the day-to-day activities;
· lack of support for existing projects;
· upstream RL not seen as a priority in servicing customer-facing flows;
· limited internal collaborations, lack of holistic insight and poor legacy management/swift ‘post-project death’ where RL initiatives have been trialled;
· reactions to reverse flows rather than generation of simple, extensible data to allow anticipation to influence demand planning and collaborations;
· non-sustainable and opportunistic behaviours by recyclers.
Table 10.3 summarizes inhibiting factors and system potential.
Case discussion and actions
Measuring success factors
As with forward flows, the basic requirements to have the right materials in the right places at the right time are compelling factors for network efficiency. Any RL system improvement allowing for efficacious development needs to commence with the retail unit as supplier. This issue can be considered as a compelling need for supplier development and supplier relationship management. The overriding need to ensure customer satisfaction means that there remains a primarily forward focus on movement, whereby RL remains as non-value-adding from the retail perspective. Nevertheless, this attitudinally driven behaviour and mindset at the retail unit end could be considered as ‘low-hanging fruit’ and an easily attained win within the paradigm of the theory of constraints (Mabin and Balderstone, 2003).
Imbalances between staff availability and dedicated tasks at DCs hinder system change, with teams needing to react rather than proactively manage both forward and reverse flows. This is a shorter-term attitudinal/operational constraint rather than a longer-term operational reality. To this end, this case introduces a conceptual road map, based upon the prioritization of issues emerging from the primary data analysis to drive collaboration between supply partners from retail, logistics and DC operations sub-units, presented in Table 10.4.
Access to retail units for planned retrieval beyond simultaneous drop-off and pick-up is currently restricted by both local authority time and access restrictions imposed on some of the retail units. This issue is only relevant to smaller retail units (in urban and residential areas) and makes assumptions around current fleet type/fleet availability. Nonetheless, it negatively affects both the retail unit as supplier in its ability to feed the system as well as other critical factors such as network design and supplier delivery timing, as local conditions create levels of unconditional inflexibility within an existing network and fleet. While there are differences in provision of logistics service ownership between A and B, there are prevailing characteristics that can act as facilitators in each of the current networks; these include current empty running and excess capacity at certain times of the day.
The networks and systems investigated in this case are internal, part of the same organizations, enabling collaboration between retail units and DCs driving system viability. This leaves DCs in an operating environment where they must anticipate retail unit RL demand and manage that demand by behaving with a degree of flexibility, albeit in a closed network system.
The role of supporting elements
Centralized communications prevalent within both systems work against direct articulation between retail units and DCs. However, this indicates that the essential IT infrastructure is present in both organizations but is not currently utilized for RL. In considering the possibility to ‘do more with less’, current information systems can support both RL development in the short term and JIT-RL practices in the longer term, providing efficiency benefits without an incremental escalation in current node and network complexity.
There are obvious lessons to be learnt from the boom in online retail and the challenges successfully overcome by these organizations and third-party logistics service providers. An example of this is given anecdotally by online fashion retailer ASOS, who report a return rate of 56 per cent of downstream being returned by customers, with all returns requiring central collation, 100 per cent inspection, repacking, relabelling and reassigning to a central stock control system. Our investigation revealed that each retail unit has the ability to ‘write on’ and ‘write off’ stock at store level, thus it would seem remiss not to simply identify empty packaging systems and recyclable wastes as types of stock with a zero value stock keeping unit (SKU) descriptor but a variable SKU component value. Each retail unit would thus create dynamic visibility for DCs and vertically integrated suppliers within systems, allowing for dynamic planning to supplement stable material flows back to DCs as well as providing valuable information, informing disposition strategy and execution further on in the RL supply chain.
Case consequences, creating actions and options
Separate JIT systems flowing forwards and backwards utilizing the same vehicle and driver pool would appear to contradict two of the seven classic muda wastes: unnecessary movement and waiting. Running two JIT systems can largely remove pick-up requirements in forward flows, significantly shortening delivery times and increasing dock availability while reducing turnaround/route fulfilment times and increasing route planning options in an integrative system, allowing for increases in RL efficiency pursuant to forward flows. Further, the use of real-time data on types and volumes of recyclables at retail units would in turn allow for load maximization and levelling of process capacity for RL flows into the DCs, ensuring more efficient employment of DC and driver staff. Medium- to longer-term benefits potentially extend to re-profiling vehicle fleets (size and type) and a reduction in DC operational running costs (ie agency staff), while increasing throughput (Table 10.5).
This case assesses the feasibility of increasing RL efficiencies to benefit positioning of packaging systems and recyclable materials. Our analysis of the RL systems prevailing in retailers A and B reveal commonality in ‘same but different’ network systems. While no definitive conclusions are stated for either A or B in relation to their current systems, it is beyond doubt that there are sufficient indicators of RL system sub-optimization to act as a barometer for change through RL system adaptation.
The case does not suggest that wholesale investment is required, since there is evidence of excess capacity in the networks. RL systems are borne of historical development of store replenishment, in which retailers’ reuse and recycling practices are present, formalized but informally managed. Both A’s and B’s systems lend themselves to increased RL efficiency through facilitating IT infrastructure elements already embedded across operations to generate and mine extensible RL-relevant data from forward flows. Increased accountability of materials flowing back up the supply chain can also address opportunistic behaviours; for example, it is possible for A and B to develop a more sustainable, integrated RL system where queue management begins at retail units, not at often congested DCs.
This case reveals a low priority of packaging system/recyclable materials/RPC ownership regardless of retail unit size or concerns over ‘dead hauling’ common across both retailers. Notwithstanding these issues, and critical to the case, there is a consistent throughput and a great degree of commonality in DC fulfilment practices, indicating the predictable volume and low combinatorial complexity typical of ‘lean’ flows and JIT. What is missing from both is locally generated and extensible exported/mined data which would reposition queue management, occurring earlier and more efficiently (Figure 10.1).
Under traditional lean paradigms, demand generates processing, which provokes supply to meet demand. This stands counter to the RL systems revealed here, in which capacity imbalances exist and outstrip supply, amassing multi-trip packaging systems leading to stockpiles in the wrong place at the wrong time.
Revealing RL sub-optimization, barriers to increasing RL efficiency and potential benefits of lean/JIT-type RL system adaptation, this case indicates that extensive and sweeping changes to current network structures are not always required. Alternative overarching systems and strategies can be developed to allow better decisions utilizing existing infrastructures.
Alternatively, an independent third-party system provides a potentially complementary strategy (refer to Table 10.5) if the ‘low-hanging fruit’ prevail, or when there is already a degree of third-party integration in logistics and DC activity. This would allow either retailer to continue to focus on forward flows, while inviting third-party logistics providers to build value into RL systems. Forward distribution’s transport and warehousing operations are highly visible parts of the multiple retailer supply chain, key to delivering system efficiencies for multiple retailers. Therefore, in this regard it is lackadaisical not to investigate areas of RL optimization to extract further value from these networks.
We acknowledge that this case is not beyond circumspection in its relatively narrow analysis of two multiple retailers in a geographically defined area of the UK. However, the method of analysis lends itself favourably to creating improvement actions and generalizable applicability to other sectors where RL flows are relatively deterministic and consistent. Such possible future research applications could be reasonably tested among other retailers, food service organizations and third-party logistics providers managing forward and reverse flows. We believe that this novel comparative analysis case advances RL system comprehension beyond conceptual mathematical models, serving to stimulate further actions and investigations into the operational management of RL systems, to the point where RL is an efficient, reciprocal phase in a circular logistics system where last-mile logistics criteria can prompt mimicking in first-mile recovery decisions.
Answer the questions below. Keep questions with answer
1) Of all of the design factors taken into consideration, which was the most significant from a business perspective?
2) It would seem that there were multiples of databases/sets included in the exercise, rather than, say, the inventory systems. In your opinion, why was that?
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