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Adopting a Closed-loop System: Recycled Plastics in Your Supply Chain

Reduce your carbon footprint, maintain quality, and reduce operating costs.

Today’s consumers have more choices than ever before and have become increasingly particular with their selections. At the retail shelf, many consumers now make decisions based not only on quality, brand recognition and price, but also on a product’s perceived environmental impact. Consumers want products that are responsibly and sustainably made, and are remarkably responsive to the media’s perception of the products they consume.

Historically, the industry perspective has been that although sustainability efforts are important, the cost benefit would not justify the changes in production methodology. However, with industry advancements in alternative and recycled plastics, the cost limitations are suddenly moving in the opposite direction. With consumers demanding sustainable goods and the media backing these preferences, companies can no longer afford to ignore creating environmentally friendly products.

One industry that can benefit a great deal from changing consumer preferences and reduced costs of recycled plastic is the manufacturing industry. Manufacturing companies can now mandate changes in their raw materials choices, and in turn, can increase their supply chain effectiveness. Our belief is that new alternatives to traditional packaging – such as cellulosic ethanol based plastics – can bring opportunity to the industry as a whole in the near future. Some examples of companies that have committed to the use of such technologies include Coca-Cola1, Nestlé2, Danone3, Heinz4, Toyota5, Ford6, and Proctor and Gamble7, to name a few. However, another strategy that is available to fulfill the current market need is recycled plastics.

Manufacturing companies are missing an opportunity to decrease their carbon footprint while also reducing their operating costs. By teaming with Capgemini Consulting and specific alternative resin manufacturers, manufacturing companies can design and implement a closed-loop supply chain system. This process improvement can provide a significant portion of cheaper, recycled raw materials in order to decrease costs, increase operational effectiveness and decrease environmental impact.

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The OpportunityThe future is a closed-loop system that allows the waste from the end-product to be reintroduced through recycling into the beginning of the process. By implementing a closed-loop system, manufacturing companies can reduce one of their largest costs — raw materials.

Additionally, some virgin plastic resin has become more expensive than some recycled plastics. Virgin plastic resin is derived primarily from oil derivatives and therefore, fluctuates in price accordingly. Recycled resin offers a product with comparable quality at a price reduction of 10-30% depending on the polymer, and additionally protects against significant price fluctuations.8 For a manufacturing

company that generates $5 billion in revenue per year, this can equate to an annual savings of $10-20 million in packaging and resin costs for companies that use PE, PP or PS plastic resins.9

Capgemini and ManufacturingTo help companies capitalize on these savings, create further brand loyalty and increase sales, Capgemini works with manufacturing clients to enhance their operations, discover cost-saving opportunities and create relationships with their strategic recycling partners to implement a closed-loop supply chain.

With these processes, technological advancements, and the right partnerships, manufacturing companies can realize significant

savings by utilizing quality recycled resins rather than traditional, virgin plastic alternatives.

Capgemini and Retailers/ End UsersManufacturers are not the only companies that can directly benefit from the closed-loop system. Retailers and end users also stand to realize significant cost savings by working with Capgemini. Traditionally, these companies and institutions have had to pay for their waste to be removed. With Capgemini and a closed-loop system, retailers and other organizations can now sell their plastic trash to haulers, who then take it to a recycling partner and convert what was previously an expense into a revenue stream.

Capgemini and Recycling Billions of pounds of plastics are consumed in the U.S. each year, and a very small percentage is recovered for recycling efforts.10 However, that statistic is changing and more recycled plastics are being developed thanks to the efforts of many recycling companies. One such company, and one of Capgemini’s strategic partners, is NextLife®, a leading provider of sustainable solutions for the consumer packaged goods (CPG) industry.

NextLife® produces FDA-approved recycled resins for food grade plastics and other purposes. A recent, independent life cycle analysis on NextLife products showed a 70-80% reduction in carbon footprint on plastic resins purchased from their plants. It is estimated that 10-30% in average savings can be obtained through the use of strategically-sourced recycled resins, in comparison to virgin resin alternatives, when accompanied by the right partnership.11 The company, currently led by the former CEO of the world’s largest plastic cup manufacturer, supplies its recycled resins to some

Figure 1: Closed Loop Eco-System

Capgemini Consulting manages the relationships involved in analyzing, planning and successfully implementing the above closed-loop system.1. CPG company sells end product to retailer/vendor/end user2. Retailer/vendor/end user collects packaging from its customer/client/patient, accomplished through various methodologies specific to each business case3. Hauler/waste company collects plastic waste for transport to recycling partner, saving retailer/vendor money on disposal costs4. Recycling partner goes through proprietary processes to develop FDA-approved recycled plastic resins that are sold back to CPG company to produce end product

Closed-Loop System:

4Adopting a Closed-loop System: Recycled Plastics in Your Supply Chain

of the largest plastic producers in the world, including Styrolution and other industry leaders.

Capgemini provides the strategic relationships and detailed execution to bring together manufacturing companies with both their downstream and upstream partners, helping to benefit all parties involved, while reducing environmental impact. Capgemini can help establish a closed-loop system by linking major CPG or manufacturing companies with their largest retailers/distribution centers, and enabling them to purchase back the recycled plastics that they originally sold to their consumer base via a third-party recycled plastic resins manufacturer. Closed-loop systems now make financial as well as environmental sense.

By incorporating a patented process, strategic relationships, and ultimately a closed-loop system, recycled plastic resins are now a viable option for the CPG and manufacturing community in a variety of diverse environments. There are also opportunities in the healthcare, government/education and automotive industries as well as major food and distribution companies. In addition, some of the

country’s largest waste management companies and haulers are poised to improve their environmental impact. Capgemini is prepared to assist CPG, manufacturing organizations and industry leaders in taking the first step to savings and sustainability.

Capgemini Consulting is a global leader in helping businesses develop strategies to improve operational effectiveness.

Capgemini provides the support to guide every step of the closed-loop system and recommends a three-tier approach to collaborating with clients in addressing the sustainability opportunity:n Opportunity Assessmentn Roadmap Development and

Organizational Alignmentn Implementation and Monitoring

Closed-loop Opportunity Assessment – Capgemini’s Approach For manufacturing companies that seek to venture beyond understanding their current sustainability profile and make a lasting organizational change, Capgemini provides the tools and support to develop a strategy that not only can reduce environmental

Environmental Footprint Assessment (EFA)

Capgemini utilizes patented approaches to calculate a company’s environmental footprint assessments. The results are intended to enable manufacturing companies to target areas for change, as well as to understand internal environmental perspectives and priorities, allowing the organization to gain a comprehensive look at its carbon usage across specific products, or its whole supply chain.

Phase 1Closed-loop Opportunity

AssessmentFirst, Capgemini conducts an assessment of the company’s supply chain, as well as an Environmental Footprint Assessment. After all the data has been reviewed, Capgemini provides a detailed analysis of the company’s operations compared to leading-practice benchmarks. Finally, a robust business case is developed to create a complete picture of the organization’s closed-loop opportunity.

Phase 2Roadmap Development and

Organizational Alignment

Once the closed-loop opportunity has shown sufficiently attractive, Capgemini works with the client to develop an actionable, cross-functional, cross-partner roadmap, and generates organizational buy-in for improved sustainability. Capgemini employs a unique accelerator called the Accelerated Solutions Environment (ASE) to help realize these objectives. Many of Capgemini’s successful client projects have leveraged the ASE for cross-organization blueprinting and organizational alignment in major transformation programs.

Phase 3Implementation and

Monitoring

In Phase 3, Capgemini is directly involved in launching and overseeing the closed-loop program detailed in the roadmap. Capgemini also monitors the initiative and recommends adjustments as necessary to promote the effective capture of expected value.

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©2012 Capgemini. All rights reserved. Rightshore® is a trademark belonging to Capgemini.

Capgemini Consulting is the strategy and transformation consulting brand of Capgemini

ContactsJeff GhitmanSupply Chain ManagementCapgemini Consulting, North AmericaNew York, New York USAJeffrey.Ghitman@capgemini.com

Adrian PenkaSupply Chain ManagementCapgemini Consulting, North AmericaAdrian.Penka@capgemini.com

1. http://www.smartplanet.com/blog/pure-genius/coca-cola-packaging-goal-is-all-beverages-in-plantbottles-by-2020/53052. http://www.packwebasia.com/sustainable-applications/1239-sugar-cane-based-plastic-cap-for-nestle-milk-brands.html3. http://bioplastic-innovation.com/tag/danone/4. http://inhabitat.com/heinz-to-use-plant-based-bottles-made-by-coca-cola/5. http://www.future500.org/articles/15/6. http://bioplastic-innovation.com/tag/ford/7. http://www.naturalcosmeticnews.com/recent-news/pg-introduces-pantene-plant-based-plastic-bottles/8. NextLife®; http://www.nextlife.com/index.php9. NextLife®; http://www.nextlife.com/index.php10. Plastics. US Environmental Protection Agency. 2012. <http://www.epa.gov/osw/conserve/materials/plastics.htm#recycle)11. NextLife®; http://www.nextlife.com/index.php

With around 120,000 people in 40 countries, Capgemini is one of the world’s foremost providers of consulting, technology and outsourcing services. The Group reported 2011 global revenues of EUR 9.7 billion (approximately $13.5 billion USD).

Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want.

A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model.

Capgemini Consulting is the Global Strategy and Transformation Consulting brand of the Capgemini Group, specializing in advising and supporting organizations in transforming their business, from the development of innovative strategy through to execution, with a consistent focus on sustainable results. Capgemini Consulting proposes to leading companies and governments a fresh approach which uses innovative methods, technology and the talents of over 3,600 consultants worldwide.

For more information: http://www.capgemini-consulting.com

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