Waste Minimisation in Glass Processing - Part 1
The Business Reasons

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The first in a series of waste minimisation worksheets by Dr. Robin Kent for Envirowise to help the glass industry reduce costs through waste minimisation.

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The glass industry can save substantial amounts of money by simply not wasting it! 

The business reasons

Waste costs UK industry at least 15 billion/year - about 4.5% of total turnover. This cost could be reduced by 1% in most companies by a simple waste minimisation programme. This series is designed to help reduce your waste costs by introducing the tools and techniques of waste minimisation. Effective waste management cuts costs and raises profits.


A 'Waste Minimisation Programme' can improve profits by at least 1% from no cost and low cost measures.


The five important reasons for starting to minimise waste are: 

1. Waste is lost profit

Waste is costing real money that is lost profit. The box below gives initial estimates of the basic and total cost of waste. At a gross margin of 7%, a reduction in waste costs by 1% is the equivalent of increasing turnover by over 14%. Internal effort spent in waste minimisation produces the same benefits as substantially increasing sales.

 

The potential benefits

Calculate your potential savings based on raw materials losses

Amount of main raw material used last year, e.g. tonnes

A

Amount of product produced last year, e.g. parts

B

Amount of main raw material/unit of product, e.g. glass/part

C

Quantity of main raw material in parts last year = (B x C)

D

Wasted main raw material = (A D)

E

Purchase cost of main raw material

F

Cost of wasted raw material = (E x F)

G

The magnitude of the benefits

The calculations above only show the visible purchase cost of wasted raw material. The true and total cost will also include wasted production costs, labour, storage etc. Consideration of all areas of waste will give a much higher figure. Calculate your potential savings based on a cost reduction of 1% of turnover and compare this to your profit margin last year. A successful waste minimisation programme could increase your profits by 10 to 15%!

Turnover last year

1% of turnover

2. The hidden costs

There is a large difference between the 'visible' and the 'true cost of waste'. Direct waste costs are visible and include waste collection and disposal costs but the largest waste costs are indirect and hidden. They include:

These costs are hidden and not shown in the accounts, but exist even for efficient companies. They arise whether you like it or not, and are significant whether you realise it or not. Companies have found waste costs over 20 times the initial estimate, under-estimating the cost of waste is very common.

3. Good returns

Cost-effective waste minimisation is a valuable investment that pays dividends. Small capital spends can generate large savings and money spent on waste minimisation is a sound investment. Minimising waste has the potential to save a significant amounts of money.

4. Your Reputation

Environmental performance is becoming increasingly important and waste minimisation shows effective and efficient control of operations in this area.
Customers are asking for proof of good environmental performance. Waste minimisation shows this and is a key part of any environmental management system.
Employees know that materials and resources are being wasted and can see that cost benefits make the company more competitive and safeguard their future.
Investors want the best return on capital and dividend growth and banks want to see efficient use of any borrowed capital. Waste minimisation can help to deliver both of these requirements.

5. Legal requirements

Companies - and key directors and managers - face stiff penalties for failing to comply with legislation. Effective waste minimisation helps to prove conformance with the law and save future expensive changes.

The way ahead 

The benefits of minimising waste only come from action. To reap the benefits start to work on your own action plan based on the following:

"Waste Minimisation in Glass Processing" Series.

The "Waste Minimisation in Glass Processing" series is designed to give glass processors an insight into how to minimise wasting  valuable resources. The series is being published in Glass Age on a monthly basis and published here after the Glass Age publication. The series is:

Part 1: The Business Reasons (This Section)
Part 2: A Waste Walk Around and Action Plan

Part 3: Assessing Performance

Part 4: Improving Performance

Part 5: Waste Minimisation Tools

 

Download the complete series as an Adobe Acrobat file.

 

Last edited: 29/11/11

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