Smart, circular supply chains for plastics recycling

The CPG industry is pressed to increase its use of recycled plastics, yet current recycling networks fail to provide enough material in a profitable way. A reinvention of plastic recycling is required to reach these goals.

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Editor’s Note: The SCM thesis Get Smart: Reinventing Plastic Recycling in a Collaborative, Circular Supply Chain was authored by Kenneth Critchlow and Pedro Benitez and supervised by Dr. Eva Ponce ([email protected]) and Dr. Edgar Gutierrez-Franco ([email protected]). For more information on the research, please contact the thesis supervisors.

The United States generates roughly 36 million tons of plastic waste each year, but only 8% ends up being recycled. The remainder is landfilled, incinerated, or escapes collection systems altogether and pollutes lands and waterways.

The detrimental effects of plastic pollution and overflowing landfills are well known and have been a source of public scrutiny for years, resulting in calls to action to curb the use of virgin plastics. The CPG industry is one of the largest generators of plastic waste. To answer these calls, it has committed to substitute virgin plastic with post-consumer recycled (PCR) plastic by as much as 50% over the next decade. However, due to poor recycling rates and inefficient recycling practices, the supply of high-quality PCR plastic is too little to meet the collective goals of the CPG industry.

To increase their supply of PCR plastic, CPG companies are investing in research on circular supply chain frameworks for their plastic packaging. The questions they are asking include:

How will these circular networks be structured?

Can they increase the amount of plastic waste recovered in comparison to traditional curbside recycling programs?

And most importantly, can they be profitable?

To answer these questions, a circular supply chain network supported by partnerships between CPG companies, e-commerce retailers, and recycling sorting facilities was investigated.

Package delivered, plastic collected

The advent of e-commerce and the growth of last-mile deliveries has created a network of delivery vans that visit households each day carrying packages to consumers, thus creating a valuable resource: empty backhaul space in delivery vans. Every package delivered creates space for a small amount of plastic waste which can be collected from households by the delivery driver.

Arranging this type of collection system requires not only spare van capacity but also a network for consolidating and transporting plastic waste to nearby sorting facilities. One option is to consolidate plastic waste in compaction dumpsters stationed at each last-mile delivery center. Full dumpsters can then be shipped to the nearest traditional sorting facility. However, today’s traditional sorting facilities are designed to process single-stream recycled waste and fall victim to high sorting costs and material losses.

An alternative option is to build smaller-scale, high-efficiency smart sorting facilities that accept only plastic waste. These smart facilities rely on automated sorting technology such as optical scanners and are strategically located near last-mile delivery centers. As a result, they can achieve lower sorting costs and material losses and can receive plastic through full dumpster shipments or direct drop off by last mile delivery vans.

To this end, a profit maximization mixed-integer linear programming model was developed to determine the optimal network design of last mile delivery centers and traditional and smart sorting facilities. The model was tested using a case study set in New Jersey.

Right place, right type

Results of the New Jersey case study determined that an e-commerce supported circular supply chain with smart facilities generated a net profit of $30,000 and recycled 21% more plastic than traditional curbside recycling programs.

The quantitative model also identified that the utilization of smart facilities drastically improved the profitability and plastic yield of the network. When compared to an e-commerce network that utilized only traditional sorting facilities, the addition of smart sorting facilities increased total system profits by 139% and increased recycled plastic by 21%. At the same time, the number of sorting facilities in the network was reduced from 17, to just 7 facilities.

Results of the study indicate that circular supply chains for plastic waste can be both profitable and recycle more plastic than traditional curbside collection programs, supporting CPG industry sustainability goals.

Every year, approximately 80 students in the MIT Center for Transportation & Logistics’s (MIT CTL) Master of Supply Chain Management (SCM) program complete approximately 45 one-year research projects.
These students are early-career business professionals from multiple countries, with two to 10 years of experience in the industry. Most of the research projects are chosen, sponsored by, and carried out in collaboration with multinational corporations. Joint teams that include MIT SCM students and MIT CTL faculty work on real-world problems. In this series, they summarize a selection of the latest SCM research.

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About the Author

Gary Forger, SVP
Gary Forger

Gary Forger is Digital Editor - SCMR.com, and a contributing editor to Modern Materials Handling. He can be reached at [email protected].

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