Waste Minimisation in Plastics 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 plastics industry reduce costs through waste minimisation.

UK Government Environment and Energy Helpline 0800 585 794

Introduction

Waste is estimated to cost UK industry at least £15 billion/year - or some 4.5% of total turnover. In most companies the cost of waste could be reduced by 1% through the implementation of a simple but formal 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. Even when investment is required, the payback period is generally short and the returns can be high. There are five important reasons for starting a waste minimisation programme are:

Waste costs real money

Waste is costing you real money and this is coming directly off your profits. The box below will give an initial estimate 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 can produce benefits equivalent to substantially increased sales.


Cut waste, and you will boost profit.

Money saved from waste minimisation goes straight to the bottom line.


The true costs are hidden

The numbers from the box show that there is a difference between the visible and the true cost of waste. Waste costs are either direct or indirect. Direct costs are visible and include waste collection and disposal costs. The bulk of the waste costs are indirect and hidden. They make up the largest portion of the total waste costs in any business and include:

These costs are hidden in the accounts and are not shown as separate items, but they exist even for efficient companies. They arise whether you like it or not, and are significant whether you realise it or not. Some companies have found their waste costs were over 20 times higher than they thought and under-estimating such costs is very common.

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. polymer/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

£

Profit margin as % of turnover

%

Good investment returns

Cost-effective waste minimisation is a valuable investment that pays dividends for any company. Large savings can be made from small capital spending and money spent on waste minimisation is a sound investment. Waste minimisation has the potential to save a significant amount of money for any manufacturing company.

Protecting your image

Customers, employees and investors all have a growing interest in environmental performance, waste minimisation shows how effectively and efficiently you control operations.

Customers are increasingly asking for evidence of good environmental performance. Waste minimisation proves this commitment and is a key part of environmental management. Employees know where materials and resources are being wasted and can see the cost benefits that will make the company more competitive and safeguard their future. For companies involved in waste minimisation, increased employee satisfaction was among the top five benefits of the process.

Investors want the highest possible return on capital and high dividend growth and banks want to see efficient use of borrowed capital. Waste minimisation can help to deliver both of these requirements.

The legal requirements

Companies - and key directors and managers - can face stiff penalties for failing to comply with environmental legislation, which gets tougher year by year. Effective waste minimisation helps to prove conformance with existing laws and to save rapid, disruptive and expensive changes to keep within the law in future.

The way ahead

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

"Waste Minimisation" Series.

The "Waste Minimisation" series is designed to give plastics processors an insight into how to minimise wasting  valuable resources. The series is being published in British Plastics and Rubber on a monthly basis and published here after the BP&R 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: 11/03/10

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