Reverse Logistics Optimization in Plastic Industry

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Abstract

In the globalized world, the supply chain of products and services calls for a range of management efforts targeted at transferring a product from its place of origin to the final destination of meeting the consumer. However, the concept of reverse logistics is often overlooked by many businesses because it takes additional costs. Reverse logistics is associated with the returns of products, their maintenance or repairs, dismantling or recycling. When it comes to plastic products, reverse logistics are crucial for maximizing efficiency because the material can be recycled and reused up to six times.

Reverse logistics in the supply chain of plastic materials is predominantly associated with the process of recycling and waste management that maximize the cost-efficiency of the manufactured plastic products. Because the environmental costs of waste management and plastic recycling are high, the global business community should come up with a range of innovative components of reverse logistics. Reverse logistics at a large address the problem of sustainable development of the global supply chain while sustainable development implies meeting the needs of consumers without putting the next generations’ developmental needs in danger. This research is targeted at presenting a full picture of the costs and values of plastics as sustainable material as well as the methods that can positively influence its supply chain. Furthermore, the research outlines effective methods of plastic recycling in a range of businesses ranging from plastic packaging production to remanufactured automotive parts. Future research is needed on reducing the gap between the quality of virgin and recycled plastic and the development of innovative solutions that will positively impact the process of sorting and recycling of plastic products.

Introduction

The issue of sustainability of plastic has been raised numerous times due to the spreading popularity of the material in manufacturing. Plastic products surround every aspect of people’s lives; however, it has a negative reputation because of its lack of sustainability. Therefore, it is importance to explore plastic as an organic product that has some attributes that will make it cost-effective and environmentally sustainable.

The production of plastic and plastic products has increased exponentially over the last fifty years – from 15 million tons in the 60’s to 311 million tons in 2015 (Ellen Macarthur Foundation, 2016, p. 17). Furthermore, the volumes of plastic production are expected to increase twice in the next twenty years, because of the increase in the need for its application. For example, nowadays, plastic is largely used for packaging production as constitutes twenty-six percent of application for all of the produced plastic. Plastic is widely used not only for providing specific economic benefits of cost reduction but also because of the possibility to increase the productivity of other resources such as food. Plastic packaging is effectively used for food wastage reduction using extending the ‘shelf life’ or reducing the costs of transportation through lowering the weight of products.

Despite the mentioned factors, the plastic industry has a range of drawbacks that create a negative impact on the industry that becomes more apparent with the state of the global environment. For example, ninety-five percent of the plastic packaging’s material value is lost after the first use of the package, making up from eighty to one hundred and twenty billion annual loss to the economy. Furthermore, only fourteen percent of the plastic packaging is being recycled since the launch of the recycling symbol forty years ago. It has also been reported that only five percent of the plastic packaging is retained to be used subsequently (Ellen Macarthur Foundation, 2016, p. 17). The plastic that is recycled is of much lower quality that cannot be recycled again. The recycling rate for plastic products other than packaging tends to be much lower; however, the rates for plastic recycling are much lower than the recycling rates of iron, steel, and paper. Additionally, plastic packaging is multi-use for the majority of the time, especially when it comes to the business-consumer affairs.

On the other hand, the alternative materials to plastic such as glass, aluminum, and tin are much higher in environmental costs as well as require much higher quantities for replacing plastic packaging or any other products. According to the research conducted by Lord (2016) for American Chemistry Council, the estimated costs for substituting plastic for alternative materials such as glass or tin is 533 billion dollars compared with the cost of plastic of 139 billion (p. 7). In the majority of cases, the environmental cost per one kilogram of any alternative material is much lower than the environmental cost of plastic. However, on average, up to five times of alternative materials are needed to serve the same function as plastic. For instance, an average bottle of a soda drink usually contains thirty to forty grams of plastic material. However, to replace plastic for a material such as glass, it would be necessary to use a minimum of one hundred and forty grams (Lord, 2016, p. 7).

Environmental Costs of Plastic

In 2015, the cost of plastic products and packaging consumption made up one hundred and thirty-nine billion dollars, which is equal to the twenty percent of the revenue of the entire manufacturing revenue. If the current rates continue to remain, it is expected that the consumption of plastic products and packaging will make up to two hundred and nine billion dollars within the next ten years (Lord, 2016, p. 7). The mentioned costs include the costs the society has to pay for reducing the impact of greenhouse emissions, environmental pollution, the depletion of land waters, as well as the negative impact on the oceans. Because the costs are very high, there is an increased risk posed to the profitability of the plastic industry that pressures the public that cares about the negative impact of plastic. Therefore, enhanced actions are needed on the part of the plastic industry manufacturers, governments, as well as consumers to raise awareness of the issue of high environmental costs of plastic.

According to the research conducted by Lord (2016) for American Chemistry Council, the plastic industry has a range of opportunities for reducing the environmental costs of plastic packaging and products using optimizing the overall operational performance and the supply chain (p. 8). For instance, Trustcost made an estimation that the industry could save more than thirty-three billion dollars in the environmental costs through implementing an intervention targeted at the plastic industry sector. One of such interventions relates to increases the range of electricity sources such as hydro power, the wind and solar power, or low-carbon electricity. It was estimated that the costs can be reduced by 7.6 billion dollars through using the wind, solar, or hydro-power or by 15.2 billion dollars through completely switching to low-carbon electricity (Lord, 2016, p. 9). Furthermore, the high environmental costs of plastic products can be reduced by improving the fuel efficiency of the vehicles used for product transportation. Technological innovations, as well as employment of lower emission transportation means, could become effective for reducing environmental costs of plastic. Furthermore, changes in the procurement policies that give preference to efficient transportation means can be effective, although they are not under the direct control of the plastic industry. The plastic industry has a great potential when it comes to the reduction of environmental costs; therefore, such a potential should be explored in great depth.

Plastic Waste Management

Recycling and reusing waste management programs are targeted at managing waste after it has already been created. However, waste management can be replaced by source reduction processes that focus on the prevention of waste buildup as well as its reduction when it comes to manufacturing processes. Source reduction is sometimes believed to be more efficient because its main goal is examining how a business operates regarding waste prevention before it builds up. Source reduction is usually achieved through the implementation of a number of measures, for example, the usage of reusable materials instead of disposable, elimination of the specific components that greatly contribute to waste buildup, effective maintenance of production equipment, and the usage of durable and sustainable products (Kumar & Kumar, 2013, p. 159).

It is important to mention the environmental protection strategy developed by Royston, which can be implemented with regards to the waste management of plastic products. The first step of the strategy is cutting down waste using improving the manufacturing efficiency. Second, waste of plastic materials can be sold to another facility that manufactures products from recycled plastics. Third, a business can create an innovative facility that will convert plastics waste into reusable materials that will add value to the company or that can be sold do someone else. Fourth, it is crucial for manufacturers that deal with plastic products cooperate with local communities and governmental authorities to agree on the specific conditions and methods for disposing of plastics waste. Fifth, a business may engage in negotiations about the standards of emissions with the local governments. Sixth, another option is establishing a waste management plant jointly with another business to reduce the costs of building the plant. Lastly, it is important for a business to engage its personnel and know-how into the process of plastics waste management (Kumar & Kumar, 2013, p. 159).

Current Reverse Logistics Trends

Reverse Logistics Association is an organization that currently monitors third party service providers that a range of aftermarket supply chain services. One of the primary missions of the Reverse Logistics Association is educating and providing information to all reverse logistics professionals worldwide. Furthermore, the Association provides education and help to all industries that employ reverse logistics services (Reverse Logistics Association, n.d., para. 3).

In Europe and the United States, the generation of plastic waste is increasing by three percent annually, which is directly proportionate to the long-term economic growth. However, to deal with the large volumes of generated waste, the rate of mechanical recycling is increasing by seven percent (Hopewell, Dvorak, & Kosior, 2009, p. 2118). Therefore, to understand the current situation of waste disposal and recycling of plastic, it is crucial to examine the major trends in reverse logistics. One of the most significant trends in the current processes of reverse logistics is associated with the recognition that the supply chain of any product or service is a process that goes both ways. The already existing networks can be significantly improved through the integration of forward and reverse flow of goods.

The second trend associated with reverse logistics relates to the businesses becoming much more aware of the high costs of energy. Therefore, there is an increased need for reducing the businesses’ environmental impact and building more sustainable businesses through paying more attention to reverse logistics.

Reverse Logistics Processes in Plastic Supply Chains

With the strive towards sustainable development, reverse logistics has increasingly gained attention. Businesses that never paid any attention to an understanding of the concept of reverse logistics are now starting to invest time, funds and efforts into it. Also, third-party businesses have experienced a tremendous increase in the demand for the reverse logistics services.

When it comes to the size of reverse logistics, it accounts for a large portion of the global costs of logistics. Although, it is complicated to account for the exact costs of reverse logistics because the majority of businesses do not have an idea of how large these costs are. According to the research conducted by Rogers and Tibben-Lembke (1998), only one of the firms included in their study was able to account for its logistics costs, and reported that the costs for their reverse logistics made up four percent of their total logistics costs (p. 5). However, this number has multiplied in the recent years, given that the research was conducted almost twenty years ago, and the pace of the global economy has changed dramatically.

When it comes to specific industries, activities associated with reverse logistics can become integral parts of the business. In the majority of cases, the larger the product value of a business or the larger the return rate, the more effort a business puts into improving the process of reverse logistics. An example of this can be associated with the automotive industry of parts manufacturing. According to Rogers and Tibben-Lembke (1998), it is estimated that the market for remanufactured automobile parts costs thirty-six billion dollars (p. 6). For instance, ninety percent of all replacement alternators or starters is sold remanufactured. In the United States alone, there are more than twelve thousand automobile remanufacturers.

According to Babcan, Vidova, and Babcanova (2010), logistics is defined as the product, services, or information flow from the point of its production to the point of the consumption or usage for meeting the needs and requirements of potential customers. Thus, quality is the most important aspect when it comes to the supply chain and every step of the logistics process (p. 56). Activities within the logistics systems imply appropriate levels of environmental efficiency for meeting the demands of the sustainable industry functioning and development. Because of the complexity and the increased attention to the logistics processes reverse logistics area has become a major focus for the rise of eco-efficiency. Therefore, it can be observed that to increase the eco-efficiency of reverse management the businesses in the industry begin implementing a range of new solutions. Reverse logistics is a new trend in the sphere of logistics that is associated with eco-logistics, waste logistics, and recycling logistics. Therefore, reverse logistics is targeted at reducing the negative impact of the supply chain due to the increased awareness of the issue of waste management.

Reverse logistics at large address the problem of sustainable development of the global supply chain. Sustainable development implies meeting the needs of consumers without putting the next generations’ developmental needs in danger. According to Graczyk and Witkowski (2011), sustainable development does not only relate to environmental sustainability but also encompasses a range of developmental dimensions such as economic and social sustainability (p. 44). Therefore, reverse logistics take into consideration three pillars of sustainable development: social, economic, and environmental. Social sustainability is defined as a framework of actions that do not interrupt the stable flow of the human and social resources. Economic sustainability implies economic growth without undermining the environmental integrity while environmental sustainability suggests the ability of the environment to continue its function. The goal of reverse logistics within any industry is targeted at minimizing the negative impact businesses have on the economy, social sphere, and the environment at the same time with maximizing the benefits offered by the industry.

Reverse logistics includes a variety of processes such as planning, performance, and control of the materials flow that is cost-efficient. Thus, reverse logistics combines a range of actions and processes that imply transporting or moving products from their original place to the final destination with the aim of achieving the most value and subsequent appropriate waste disposal. Also, reverse logistics can also include some remanufacturing and refurbishing activities that extend beyond recycling materials or reusing containers. For example, the remanufacturing or refurbishing activities may include the redesign of the packaging for using less material. It is important not to confuse it with ‘green logistics’. In reverse logistics, product or material should be sent ‘backward’ because of damage, recalls, restock, and excess inventory (Graczyk & Witkowski, 2011, p. 45). Reverse logistics may also be associated with a range of recycling programs, disposition of obsolete materials and equipment, asset recovery, or programs for reducing the impact of hazardous materials.

Supply Chain of Plastic

A sustainable and efficient supply chain implies a strong business that employs a stable circulatory system. The supply chain of plastic products implies a similar scheme. Although all types of plastics can be recycled, economic and logistic factors predominantly dictate the level to which extent the products are recycled. Because plastic is a valuable resource the wastage of which causes the increase of costs, the optimum use of the post-recycling plastic is that it can be turned into a product that can be then recycled even further. Plastics products that have already gone through a full circle of recycling (up to six times) can be even further recycled in post-consumer settings. In additional, heavily contaminated and dangerous plastic calls for specialized washing and drying that ensure the safest possible disposal.

The most successful efficiency-oriented approach when it comes to plastic recycling and disposal is not generating any waste at all or generate as little as possible. Another option for plastic recycling is its reuse. In cases when it is not possible to reuse the product, it should be recycled, making sure that it would be a much more efficient way of recycling than recovery. If recycling is not eco-efficient, a plastic product should be disposed of, although the act of disposal should be taken down to a minimum. Nine countries (Switzerland, Germany, Denmark, Sweden, Austria, Belgium, Netherlands, Norway, and Luxembourg) have the highest results of plastic products recovery because of the strict guidelines on how to dispose of plastic waste and how to implement an embargo on the disposal of plastic waste. Thus, a successful resource management on a governmental level implies a two-tier approach. The mentioned countries are now successful at recovering up to 90% of the used plastic products, which makes up twenty-four million tons of post-consumer plastic products and materials.

When it comes to the effective recycling methods implemented by countries that have high indicators of plastic weight reduction, mechanical and feedstock recycling methods are used in the majority of instances. Mechanical recycling is considered the least complex method and implies softening the plastic through applying heat on it, reforming it, and subsequently making a new product. Feedstock recycling is a process that is targeted at turning the recycled plastic products into chemicals or new compositions of plastic. This method of recycling has proven particularly effective when the recycled plastic has been contaminated or mixed with other types of plastic. Lastly, it is important to mention another alternative to plastic recycling – recovering the plastic thermal content with the aid of waste incineration to provide an alternative energy source.

Value and Costs of Plastic within the Supply Chain

Plastic materials greatly contribute to the global economy as is crucial for successful sustainability and development. Furthermore, the plastics industry is dedicated to the research in the sphere of innovation, development, and research for achieving sustainability. The value of the plastic products is associated with significant savings when it comes to the supply chain; for example, plastic materials reduce the consumption of fuel during transportation because of the light weight, they reduce the requirements for their maintenance, reduce the required energy for heating, as well as reduce the wastage of food for increase the ‘shelf time’ (Graczyk & Witkowski, 2011, p. 54).

Reverse logistics is targeted at improving the process of waste management and reduction of the buildup of plastic waste. Countries that effectively implement strategies for reducing plastic waste implement a range of waste prevention programs for diminishing the connections between the country’s economic growth and the amount of the generated plastic waste.

Plastic wastage that arises from the transport vehicles, product packaging and industrial processes can be considered a valuable resource. For example, the plastic used for packaging manufacturing is much more environmentally efficient than the packaging produced from paper. According to the research conducted by Wong (2010), the production of one ton of paper bags consumes four times more energy resources than the production of plastic packaging (p. 21). Additionally, the recycling of paper products consumes eighty-five times more energy than the recycling of plastic packaging. Applying plastics for producing packaging has the longest history of this material application. Furthermore, plastic makes approximately ten percent of the waste produced by a household, and only half of this waste is collected at landfills.

Apart from packaging, wasted plastic is collected from end-of-life vehicles that are commonly sent to specialized recycling facilities. Furthermore, in the recent decade, automotive manufacturers underline the sustainability of their plastic parts that can be easily recycled. Despite this, the current rates of plastic automotive parts that are recycled are low in comparison with the rates of plastic packaging recycling. The sector of electronic products also faces challenges with plastic parts recycling similar to the issues that the automotive industry is trying to resolve. Electricals and Electronics develop and manufactures products that are complex in their design, so it is hard to sort between the materials that should be recycled in different ways. In such cases, mechanical recycling is inefficient, so the recycling facilities resort to feedstock recycling.

Plastic materials are also very valuable for the farming industry. However, the wastage of plastic packaging, film, parts from the farming equipment, and other types of materials presents a major challenge to farmers around the world, especially in the areas where farming is widely spread. It is expected that the number of farmers starting to recycle their plastic wastage will increase despite the major difficulties of its implementation. One of the major difficulties of recycling farmers’ plastic waste is associated with the fact that farms in the majority of areas are large and scattered across different areas within the country. Therefore, the logistics costs for collecting plastic waste are high. The second difficulty is the small amount of plastic waste that is collected from farms. Lastly, because of the large variety of the collected plastic materials, it would be very difficult for the recycling facilities to sort through the collected waste.

Current Advancements and Issues in Plastic Recycling and Waste Management

The current advancements in the sphere of plastic recycling and waste management are associated with the development of various waste detector technologies, recognition software, and decision-support systems that enhance the efficiency of the automatic waste sorting solutions (Hopewell et al., 2009, p. 2120).

A new area for innovations is associated with the development of higher value solutions for polymers recycling in the closed-loop processes that can become replacements for non-recycled polymers. Nowadays many European countries collect plastic products such as pots, tubs, trays, and post-consumer packaging. These types of non-bottle plastic packaging are nowadays possible to recycle because of the significant advancements in the technologies of waste washing and sorting, as well as the growing demand for the recyclers’ services. The potential opportunities when it comes to the sphere of mixed plastics recycling associated with the efficiency of the resources and diversion from the savings from emissions and landfill are expected to rise because of the increase in the production of non-bottle plastic packaging (Hopewell et al., 2009, p. 2121).

However, despite many opportunities and advancements in the sphere of plastics recycling, there is still a range of issues that should be eliminated for efficient plastics recycling and reverse logistics. Plastics waste management is greatly challenged by economic issues, such as the price of the recycled polymers compared with non-recycled (virgin) material or the costs of the recycling compared with alternative methods of plastics disposal. Additional issues are associated wth the quality and the quantity of the recycled plastic supply in comparison with the costs of virgin material. Recycled material can also receive less attention due to the lack of available information about the availability of recycled material.

Historically, landfill and incineration have been the most commonly spread methods of waste disposal. However, the costs of landfill can differ significantly between different areas depending on the land-use patterns and geological characteristics that can alter the viability of recycling as a method of waste disposal. For instance, in the study Hopewell et al. (2009) stated that in Japan, excavation procedures that are essential for landfill are very high in cost due to the hard characteristics of the volcanic bedrock while in the Netherlands similar excavation procedures are expensive because of the soil permeability caused by the sea (p. 2123). Therefore, the high costs for plastics disposal force businesses to make a decision of whether to choose recycling or energy recovery.

Another issue for plastics waste management is associated with the fact that the collection of post-consumer plastics from households is only efficient in areas with high population density. Effective schemes of households’ plastic collection vary dramatically on the basis of the local characteristics, the type of housing, as well as the types of the available sorting and recycling facilities. For example, it has been proven that in rural areas schemes where the public brings the plastic waste to be recycled are much more efficient in comparison with the curbside waste collection. For this reason, many local authorities establish ‘bring banks’ that facilitate the high rates of post-consumer plastics collection.

The last issue associated with plastics waste management relates to the direct relationship between the price of oil and the price of non-recycled plastic. Because the quality of the recycled plastic is lower than the quality of virgin material, the price for recycled plastic cannot overcome the benchmark set by the non-recycled material. In the last decade, the price of oil has risen significantly; therefore, despite high oil costs increasing the costs of recycling to some degree, recycled plastic is nowadays more attractive when it comes to financing.

Conclusion

To conclude, the current technological advancements in the sphere of plastic waste management can significantly reduce the economic challenges. By improving the efficiency of the recycling process, technological advancements such as sorting solutions can significantly decrease the costs of recycling. Furthermore, the improvements in recycling technologies can decrease the quality gap between virgin and recycled plastic. This point can be achieved particularly with the use of the technologies that turn recovered plastic into the food grade polymer through eliminating contamination, and, therefore, sustaining the closed-loop recycling solutions. Thus, while over ten years ago the process of plastics recycling was only possible from the post-manufacturing waste or the costs of alternative waste management were significantly higher, nowadays the recycling of plastic is available on a larger scale.

The current increase in attention to reverse logistics is directly associated with the need to maximize efficiency at the same time with minimizing the waste that negatively affects the supply chain of a product or service. With the growth of the various recycling methods and techniques, the reverse logistics channels in the sphere of recycling still require further research. The future research is necessary because the capabilities of reverse channels can greatly influence the effectiveness of recyclable material processing to remanufacture them into recycled products. Furthermore, increased attention should be targeted at reducing the quality gap between processed and virgin plastic for reducing the costs associated with the increased prices of oil.

References

Babcan M., Vidova H., & Babcanova, D. (2010). Logistics and its impact on the environment. Prague, Czech Republic: Proceedings 12th Annual International Conference of Ph.D. Students, Young Scientists and Researchers.

Ellen Macarthur Foundation. (2016). The new plastics economy: Rethinking the future of plastics. Web.

Graczyk, M., & Witkowski, K. (2011). Reverse logistics processes in plastics supply chains. Web.

Hopewell, J., Dvorak, R., & Kosior, E. (2009). Plastics recycling: Challenges and opportunities. Philos Trans R Soc Lond B Biol Sci, 364(1526), 2115-2126.

Kumar, N., & Kumar, R. (2013). Closed loop supply chain management and reverse logistics: A literature review. International Journal of Engineering Research and Technology, 6(4), 455-468.

Lord, R. (2016). Plastics and sustainability: A valuation of environmental benefits, costs, and opportunities for continuous improvement. Web.

Reverse Logistics Association. (n.d.). Company mission. Web.

Rogers, D., & Tibben-Lembke, R. (1999). Going backwards: Reverse logistics trends and practices. Reno, NV: Reverse Logistics Executive Council.

Wong, C. (2010). A study of plastic recycling supply chain. Web.

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