Although bioplastics are becoming cost competitive in packaging and durable applications, they're often more expensive than petrochemical-based polymers. So it can be surprising to find out that, in at least one instance, they can be cheaper than cardboard.
The key is in the reusability of plastic packaging, which pushes down the overall cost. But it's also in a closed-loop/reverse logistics setup between Ecospan, the manufacturer of bioplastic shipping containers, and its customer, a very large consumer electronics manufacturer. This setup reclaims and recycles bioplastic material and puts it back into the manufacturing loop.
Originally, the electronics manufacturer sent cardboard shipping containers to its customers so they could send back small electronics, such as smartphones, for repair or exchange. Typically, the cardboard boxes can't be reused, Jeff White, Ecospan's president, told us. "Due to wear and tear and the amount of relabeling when the box is packaged and unpackaged several times in a repair instance, it can't structurally withstand multiple repair instances."
Bioplastic shipping containers used for consumer electronics repair may cost more per unit, but they can be cheaper overall because they're reusable and can be recycled back into the supply chain in a closed-loop/reverse logistics setup. (Source: Ecospan)
Under Ecospan's closed-loop reuse and recycling model, its BioFlow plastic containers can be reused through six complete repair instances. Even though the bioplastic-based box might cost twice as much to purchase as a cardboard box, its cost of ownership is several times cheaper. At the end of its lifespan, the container's material is reclaimed, reground, and turned into a new container, keeping these materials within the supply chain.
In the closed-loop system, on the front end of the cycle Ecospan provides customized design of bio-based plastics for both durable goods products and product packaging. On the back end, the company makes bioplastic shipping containers and manages reverse logistics operations that incorporate reuse and regrinding of both containers and products made from its plastics.
"We make the material, and we certify third-party mold makers and others that process the material, run the molds, and make the parts for the customer," said White. "Or we can help guide the customer to do all this themselves as the general contractor. We have centers around the world where used products are picked up, cleaned, and sorted for processing, so they can be reclaimed and reused."
The consumer electronics company's annual repair volume is 10 million units. The company was spending about $27.5 million per year on cardboard packaging, labeling, and transporting the cardboard, including buffer stocks and fallout from damage. After implementing the closed-loop/reverse logistics cycle and switching to a bioplastic shipping container, the company figured it would spend $6.6 million, saving $20.9 million.
"The cost of our container and cleaning, labels, etc. was higher per piece, but because we could get at least six full repair instances per Ecospan box, we could provide an enormous annual ROI," said White. "The actual savings is higher because they're getting more than six."
BioFlow is 100 percent petroleum-free and can be blended with other petroleum-free ingredients or with petroleum-based polymers. In January, the US Department of Agriculture (USDA) certified BioFlow as 94 percent biobased, under the agency's BioPreferred program. The remaining 6 percent represents carbon that's not petroleum-based.
Reverse logistics has become important in recent years, especially with consumer eletronics. While most of the return packages I see are cardboard, I wouldn't be surprised to see plastics become popular.
Reverse logistics has its own trade magazine now, as well as conferences. For decades, most companies saw it as a necessary expense and shrugged it off. Then a few companies -- like Dell -- revamped their reverse logistics and saved millions. Now it's a niche study within supply chain managementm with its own professors. My years of supply chain management coverage are showing.
It's gone through its own outsourcing pattern. Off to China, and now "near-shoring" is all the trend.
Rob, that's interesting feedback. What's your understanding of how common reverse logistics is? And do you have a sense of how often it's being combined with close-loop recycling? My understanding is that closed-loop recycling still isn't common for any plastics.
Well, the timing seems right Ann. In just the last few years, companies have started to track their reverse logistics costs. They're started to appoint reverse logistics executives to keep the costs trim. Any savings is going to get their attention.
CL, I believe that more of the savings involved in this case study were due to the shift to plastic from cardboard, than due to the closed-loop recycling. Thanks for sharing your experience with us, especially for the perspective on issues surrounding the sourcing of recycled materials. The market for same is so new that there aren't many controls in place yet. Work is going on to change that.
The "bio" part of the plastic is certainly a unique variable in the story but the closed-loop nature of the system is the critical piece that allows this program to work. By itself, this aspect eliminates a lot of the uncertainty and costs of using recycled material because the entire material stream is controlled and verifiable.
Part of my employer's business is injection molding. Because of the recent climbs in resin prices, we have had to increase our use of recycled plastics the last few years. While using more recycled material was always an altruistic goal, it is a costly process if one has to go outside the company for recycled material. This is because there are few controls on the delivered regrind, even from long-term partners in the recycled plastic consolidation business. In any given delivery, we can have gaylords of PP or HDPE that perfectly match our specs, while others on the same truck have contaminants, i.e. ABS mixed in, PP and HDPE intermixed, metal shavings.
As our injection molding machines cost over a million dollars each, and the molds can easily top $200,000, it is critical to catch these impurities before they can cause any damage. Therefore, an on-site test lab had to be set-up and personnel trained to check each individual gaylord.
"Unfortunately" our products' durability preclude the ability to count only on our own waste stream. The closed-loop system in your article eliminates the necessity of these checks for this company.
Interestingly enough, even without the recycled plastic component, most of our customers show similar savings cited in the article when they switched from paper cardboard to our plastic returnable material handling products.
bobjengr, I agree: the "bio" part is the most unusual part of this story. But closed loop/reverse logistics systems that recycle products and packaging materials are not exactly typical, either. Thanks for telling us about GE's system. It's my understanding that bioplastics don't have a shorter life than petro-based ones; that's a common misconception.
Rob, good point. The bioplastics companies are very interested in building separate, alternative infrastructures like this closed-loop reverse logistics system. But OEMs must be convinced first. Persuading them to engage takes clear ROI savings, as in this case.
Excellent article Ann. General Electric experienced the very same circumstances in realizing that moving from cardboard to plastic "returnables" was a tremendous savings—tremendous. At GE we used to compress our cardboard boxes and resale to a company that reprocessed the material. Now, GE requires the use of plastic and recycles those containers to the OEM sending components and other parts. GE basically owns the returnables or coops the cost with the OEM. What's unique about the article you posted is the Bio part. This is really interesting and I can see how cost reductions could further be realized with this accomplished. The containers we used measured 40 inches by 48 inches and had interpack suitable for insuring the parts did not rub together during shipment. Other returnables or "totes" measured 28 inches by 6 inches by 9 inches tall. Same concept. I suspect bioplastics have a shorter "life" than basic plastic; even so I can see a great cost savings when applied to the manufacturing and procurement process. Again—excellent article.
Actually, I don't think the confidentiallity need is all that unusual. Given that it is a big company, we are probably talking about some substantial savings, even if it's just pennies per container. Basically, unless you have a substantial development, it's these incremental savings that can translate into the bottom line. Until this technology is more widely known and implemented, the company in question probably does not want its competitors to know how it got those few extra cents out of the cost.
Thanks Ann-Maybe it's the tone of the quotes taken out of context. There's a repeated referral to a single big customer, who's using this very innovative approach. The need for confidentiality is unusual under the circuntances touted in the article. Maybe there's something more that I'm missing.
I understand that the key to the savings is the re-use of the shipping container. The article briefly mentions recycling and I wanted to know more. Thanks for the info.
New versions of BASF's Ecovio line are both compostable and designed for either injection molding or thermoforming. These combinations are becoming more common for the single-use bioplastics used in food service and food packaging applications, but are still not widely available.
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