"Packaging input to gross product ratio would assist in reporting for the Australian Packaging Covenant (APC)."
"The forum will be a powerful part of DIRECT, where companies share best practise and collaborate on managing waste."
Select Harversts, 2014
Select Harvests is situated 18 km north of Melbourne CBD, and supplies food retail across Australia for both private label and home brand lines. Input ingredients include spices, fruit, salt, sugar, oats, grains, nuts and prepared ingredients such as honey and seeds. These ingredients are generally packaged in cardboard boxes, paper bags, polymer bags, polymer films and tubs. Converted product is packaged in polymer films and cardboard boxes for distribution to customers. With high volume products with a consistently long shelf life, storage occurs in dry racked warehouses prior to shipping. The production process is as presented in the diagram below:
Select Harvests runs a large production area to create a range of product lines turning over more than $100 million in 2013. General waste and material from the cardboard recycling compactor is picked up every day. The recycle dumpster for polymer input packaging and film offcuts is picked up every two days. Used oil containers are picked up on call, whilst scrap metal from factory repairs is recycled.
There is waste occurring for the two major ingredients (i.e. unavoidable waste, some waste off machines, etc.). Packaging start-up and mistakes can also cause waste too for all constituent ingredients. The majority of product that is spilt in packing is generally collected in spill buckets and re-entered into the packing lie, saving waste product. Some foods are reworked, however if fallen on the floor or packing bed (not in spill buckets) they are wasted.
The bins located outside indicated that a range of organics are wasted in food preparation as described above, but the main constituent observed was unavoidable waste from the two main ingredients, all of which is sent to landfill. If a product is at the start or end of a run, or stopped mid run, a small amount of packaging material (laminates) are generally wasted and sent to recycling. A number of sacrificial packaging items such as paper bags, polymer laminates/ bags and cardboard box waste is recycled.
Opportunities identified from audit visits and using DIRECT
It is estimated that 10% and 1.5% respectively of the two major input ingredients is wasted. With negligible waste of other inputs (0.1 to 1.5% for each ingredient, some in much smaller quantities, thus minor ingredients), using DIRECT the cost of input material waste is around $2.93 million per annum. The true cost of waste (taking a proportion of all business costs relative to this input material waste) is around $3.29 million per annum. Much of this material waste is unavoidable, however $324k is estimated to be avoidable, which makes for a good area to focus on waste and cost reduction. Of the true cost of waste, a large opportunity exists for this food manufacturer to divert organic waste from landfill that could save the organisation a proportion of the $103k in collection and disposal fees per annum. Separate bins would be required to separate the organics going into the general waste stream. Identifying industrial ecology routes for the segregated fractions (e.g., animal feed, composting, and biomass for energy) would be required. Oil and water could also be cleaned for reuse rather than discarded after one use. A compactor could be implemented to reduce the number of bins lifts per annum, and save the company money.
There may also be opportunities for energy efficiency measures. This is particularly evident with the boilers/ ovens insulation, and afterburner odour management, where currently 18,000 MJ of gas per hour is burnt in an EPA directive. This heat could be diverted for process heat, space heating, waste drying, etc.
Business value of DIRECT – Positives and opportunities for improvement
Select Harvests believes DIRECT could be used to get an idea of the costs of particular areas of waste or resource use, and help ideate what could be produced or tightened up. The identification of hot spots would be helpful. Breaking down their comprehensive list of production inputs further to a line level could also be beneficial (i.e. more of a particular ingredient may be lost in one part of the process than others). This would work well with the bill of materials the group uses, which is managed through an inventory and costs management platform that can produce company balance sheets, cash flow, and inventory reports. The main concern is that there needs to be a level of “comfort” with the accuracy of the data, particularly the waste percentages. This is the key to getting the best value out of the tool.
The ratios and true cost of waste figures seem to be logical and complimentary to production reporting for the group; however packaging input to gross product ratio would assist in reporting for the Australian Packaging Covenant (APC). A description (possibly in a fly out) briefly explaining what each ratio means in the tool would be helpful for users according to the group. These need to be simple and to the point. Access to the ratio formulas may be useful also.
The macro driven interface helps usability according to the group, however again a Visual Basic form based input screen or online form based interface would enhance the usability further, and is of interest to the group. The report output and graphical results were good conclusions of the work done with the tool.
A smart system to identify opportunities linked to hotspots would be ideal, however it is acknowledged that this could be done by interpreting and benchmarking results internally. An industry wide benchmarking ranking would be of interest to the group if DIRECT was to be developed as a centralised online version. The online website is a good compromise at this stage in terms of providing information on opportunities for the company based DIRECT results interpretation. Information on waste up front which details a waste hierarchy, waste destinations/options, and waste types is essential for the group. Select Harvests think the forum will be a powerful part of DIRECT, where companies share best practise and collaborate on managing waste.