Waste disposal costs are rising. Heightened attention is
being turned to dealing with it cost-effectively, diverting it from landfill
and getting the best possible income stream from recycling or re-using it. This attention to waste is a good thing. We
want to reduce the cost of it, to make our businesses more competitive. However the truth is that most managers are
missing 95% of the cost of their waste.
If your facility’s waste costs were 20 times higher than you thought,
what action would you take?
The answer is obvious – you would stop trying to maximise
the recycling and re-use value of your waste stream. Instead, you’d try to stop producing it in
the first place.
Let’s look at a hypothetical manufacturing company[i]. Imagine a firm that produces high quality
ready meals. Our firm has operating
costs of £50 million a year, and runs two shifts a day. They produce 500 tonnes of waste per year,
and it costs them £100 per tonne to dispose of it (fees and handling costs). So this firm believes that its cost of waste
is £50,000 per year. This is significant
enough to get attention, but at just 0.1% of total cost, it is not the highest
priority.
Now, imagine that each day, an average of 10 minutes of each
8-hour shift produces waste. This takes
two main forms:
- Occasional quality failures (e.g. too little product in one tub, or a run with wrong dates)
- Planned waste, while a new run is started, and the machines are adjusted to get the machines aligned perfectly
So for an average of 20 minutes per day (10 minutes for each
of two shifts), the facility is producing waste. That’s roughly 2% of a 16 hour day. In other words, 2% of the operational time,
and therefore 2% of the operational cost (electricity, people, facilities
costs, materials, etc) is waste. In a
facility that costs £50 million per year to run, that’s a cost of £1 million, spent on
producing product that will never be sold.
This is just a hypothetical example. Is it typical? In fact, this is close to the average
for the UK economy as a whole. As I’ve reported elsewhere,
DEFRA estimates there are £23 billion of resource efficiency savings with a
year payback or less, just waiting for firms to take advantage of them – about
1.6% of GDP.
A million pounds of a £50 million budget is a substantial
sum – it could be better spent holding off the next round of unwanted redundancies,
investing in new capital equipment, or developing new products. If this were your firm, wouldn’t you do
whatever you could to stop the waste?
So... just how much of your operational time each day is
spent producing waste?
[i]
This could apply just as well to a service company. For example, in a call centre, it might
include outbound calls to wrong numbers, and times when the computers or phone
lines are down.
No comments:
Post a Comment