CASE STUDY ANALYSIS & BUSINESS

REPORT FOR REVERSE LOGISTICS OF

PLASTICS: PlastCo LTD
Student ID: 2008854581
Module Name: Sustainable Logistics
Module Leader: Professor David B. Grant
Module No. 56359
Word Count: 3216
Submission Date: 19/05/2009

UNIVERSITY OF HULL

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Index
Page no.

1. Assumptions..2
2. Insight on the Current Situation.3
3. Main Issues & Problems....7
4. Generation & evaluation of Alternative Solutions.8
5. Recommended policy ..........................................................10
6. Implementation & Costs & Benefits of recommendation10
7. Business Report of PlastCo 11
8. Additional information requirement for firm recommendation13
9. References..13

Assumptions
1. PlastCo dont have any purification plant for the plastic feedstock.
2. The PlastCo store the incoming stock & contaminated stock in the same warehouse.
3. PlastCo dont have any transportation system or it always rely on external
transportation.

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Insight on the Current Situation

1. Supply Chain Structures
[i] Physical Flow of Goods
The basic structure of the physical supply chain structure in PlastCo can given as,
Plastic Waste
Traders

Other plastic
Recycling
Factories

Local Utilities
(Councils)

Injection
Moulding
Factories

OthersConstructions,
Exhibitions.

Continental
European Traders

PlastCo Ltd

Transport

Plastic Granular
Production Factories

To other Plastic
Recycling Factories

Transport
Injection Moulding
Factories
Transport
Industries using
moulded plastic

Transport
End User &
Consumers of
plastic parts
Diagram 1. Showing physical flow of goods.
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[A] Fixed points in the chain

The functional stages in supply chain are,
a) Purchasing the plastic waste
b) Storing in external warehouses
c) Sorting out contaminated plastic waste
d) Blending & recycling in to usable granular or pellets
e) Selling to plastic granular production factories
f) Injection moulding factories
g) Various industries using moulded plastic parts
e) End users & consumers of plastic parts
The PlastCo is upstream to the primary manufacturers. It is the component supplier to the
primary manufacturers. Primary manufacturer is the organization producing final product as
used by end users (Taylor D., 2005).
[B] Movement patterns along the supply chain
a) Delivery of feedstock by suppliers
b) Accepting the transported material at production sites & weighing
c) Moving goods at external warehouses
d) Sending the samples at laboratory for testing
e) Moving the approved material at recycling plant
f) Transporting of recycled pellets to plastic granular production factories.
[ii] Information Management
It consists of the information which triggers the flow of goods through the supply chain to the
end users (Taylor D., 2005).
[A] Order processing information
The fixed points in the order processing for PlastCo is,
a) Purchasing department
b) Logistics department
c) warehouse
d) Laboratory and e) Production site
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[B] Demand forecasting information

In PlastCo the demand forecast is done by purchasing staff according to sales forecast,
production plans, inventory record and current status of tested feedstock from laboratory
staff. They work out feedstock needs for certain grades & colours by referring to the
production plans.
[C] Management information
The supply of required type of materials & demand often mismatch in PlastCo. This indicates
that there is low efficiency of logistics department for managing the information. Or it can be
said that, the management information needed for estimating the efficiency of the logistics is
scarcely available in the PlastCo.
[D] Computer systems
The computer software is used by PlastCos employees to update requisite information about
management systems. The Microsoft excel file contains the information regarding the stock
availability & the purchase records. Other operations such as PlastCo staff use Microsoft
Access database for purchase orders & Microsoft word database to give instructions to
hauliers about transportation. The information updated by purchase staff & logistics staff.
[iii] Organization and Management Structures which Control the Supply Chain
The PlastCo has to rely upon the local UK suppliers & continental European markets for
supply of plastic waste material. In most of the times the organizations upstream to PlastCo
control the supply chain because the quality of raw plastic local UK suppliers is not up to the
standards & often contaminated. However it is cheap & takes less supply lead time. The
quality of plastic wastes provided by continental European market is better but it is costly &
takes long supply lead time.
The purchase manager of PlastCo complains that, the laboratory staffs are not using the
appropriate raw material also there is lack of communication between senior managers &
staff members. The purchasing manager complains about the contaminated HDPE bags
which are received from the suppliers upstream to PlastCo.
The European suppliers have better recycling system & awareness also there are more buyers
from Asia especially China & other European nationals. The market is sensitive & diplomatic
due to fluctuating currency rates.

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2. Supply Chain Performance

SWOT Analysis
Strengths
1. Existence of platform for sustainable development in agreement with companies
upstream & downstream.
2. PlastCo uses advanced IT & computerised systems like Microsoft Access, Excel to
record the inventory items as well as stock count & market prices of plastics so the
chance of miscalculation is less.
3. It can act as supplier as well as customer of plastic waste, in which the unwanted
plastic waste material can be sold to other recycling factories like PlastCo.
4. Optimised inbound logistics, the delivery can be available in production site or in the
external warehouse.
5. Prominent logistics staff for booking hauliers, updating orders, receiving deliveries
etc.
Weaknesses
1. Poor planning & forecasting of feedstock requirements, unreliable & volatile supply
of required raw goods, contaminated feedstock and longer supply lead time for
transportation of feedstock.
2. Fluctuating currency rates, poor storage space availability, communication gap
between purchasing manager & laboratory staff.
3. Dominance of waste plastic providing companies; which take cost advantage during
rare availability of materials of required specification.
Opportunities
1. Increasing regulation & demand for recycling as well as increasing awareness for
reuse of plastic materials so PlastCo is getting lot of sales enquiries from automakers
& other industries.
2. The main opportunity is to establish corporate strategies by optimising operational
functions, transport links, warehouse control, improving communication by computer
networking and providing efficient customer service.
3. Joint ventures, partnership & vertical integration with companies upstream &
downstream to gain control on greater part of supply chain & negotiate the
availability & quality of feedstock as well as finished goods.
Threats
1. Possibility of losing sales orders due to non availability of required feedstock or
pitfalls in forecasting the required feedstock.
2. Faster growing economies & increasing demand for feedstock from Asian countries
like China.

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Main Issues & problems

There are many problems that need to be addressed for improving the supply chain networks
in PlastCo. The major issues are stated as follows,
1. Planning of feedstock requirement is the most challenging task PlastCo is facing.
Because there is daily changes in production plan & discoveries regarding actual
contents of feedstock.
2. The supply of plastic waste is unreliable so production of finished goods cannot rely
on fixed bill of material or recipe.
3. The purchasing task is complicated because of undependable and volatile supply
market.
4. The feedstock is often contaminated from local UK suppliers.
5. Fluctuating exchange currency rates as well as price of the feedstock.
6. Shortage of required type of feedstock.
7. The supply of material is often different than what is mentioned in the contract also
sometimes there is issue regarding the packing so it leads to waste of time,
transportation cost & labour.
8. Poor availability of space for storage of feedstock as well as finished goods is the
major problem PlastCo is facing.
9. Longer supply lead times taken for receiving the feedstock.
10. Poor inventory record control management; longer times taken for updating
inventory.

Categorization of problems
Opportunities that can be seized
1. There is constant fluctuating exchange currency rates; so PlastCo can take the
advantage of it by buying the rare feedstock in advance when currency rate is
favourable & selling the feedstock at the currency exchange peak time to the higher
demanding factories in countries like China & European nationals. Most of the traders
believe in doing business in China because advancement in logistics there (Blanchard,
D., 2007).
2. The planning of feedstock requirement is cumbersome task for PlastCo, because the
required type of plastic is not available in inventory. However the purchasing staffs
make different guess about the how available feedstock can be used. Thus due to
these permutations & combinations new outcomes of procedures for obtaining the
required product are available. Ultimately, PlastCo can stick to cheapest pathway for
which feedstock is readily available.

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Symptoms Vs Causes
1. The PlastCo is facing the lack of warehouse space problem which is symptom;
however another aspect (cause) of this is that, inventory is updated by administrative
staff member which is handling many other tasks thats why he is taking longer time
for updating inventory.
2. The PlastCo is facing planning problem of feedstock requirement which is symptom;
now the cause is that laboratory staffs are using the feedstock of one product for
producing another product without telling to the purchasing manager.

Generation & Evaluation of Alternative Solutions

In this section the alternatives or solutions for the problems are suggested for the issues
described in the main issues & problems section.

Suggesting & evaluating Solutions for problems

For Problem no.1; There are two purchasing staff members, which purchase feedstock
generally depend up on the sales forecast, production plan, inventory record and current
status of tested feedstock from laboratory staff; which updates monthly, weekly & daily
basis. However the laboratory staffs are using the feedstock for producing another type of
plastic without concerning the purchasing manager. Also the inventory record is updated by
only one administrative staff member situated in logistics office. This staff member is having
many other tasks to complete & he updates the inventory record in Microsoft Access database
having file ACC2.
Solution: First of all there should be special staff appointed for recording data in to ACC2
and it should be updated daily. There will be two tasks given to him; first to update data by
giving RT to goods & look for which feedstock is been used or tested by laboratory staff by
daily consulting with them. The laboratory staff should look for the purchase orders in the
Microsoft Access files ACC1 & ACC2 which is updated by the purchasing staff & logistic
staff respectively; and decide whether the required type of feedstock is purchased for
utilization & whether it has got RT number.
For problem no.2, 3 &7; The supply of feedstock is very unreliable so PlastCo cannot
depend upon the fixed recipe. Volatile market & sometimes they get different material that
what is expected.
Solution: The PlastCo need to make some fixed contracts with the reliable sources to supply
the feedstock. According to the previous experience with the provided feedstock its quality &
time taken to receive it. In supply chain context maintaining good relationship with supplier
& negotiating the issues can solve the problem for getting reliable source.
For problem no.4, 5 & 6; The contamination is always been a problem in many industries
including plastic industry. The contaminated feedstock is the major problem PlastCo is
facing. The local UK suppliers mostly provide the contaminated feedstock also it is out of
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specification. Another problem such as fluctuating exchange rates & shortage of supply are
also faced by PlastCo.
Solution: The continental European suppliers are more reliable in terms of providing
contamination free plastic. PlastCo need to make some fixed contracts with the overseas
providers of feedstock from continental European countries to provide good quality of
plastic. However the fluctuating currency rates & delays for receiving feedstock are other
major problems. To deal with changing exchange currency rates PlastCo should gather all
types of required quantity of plastic in favourable currency situations by forecasting the
demand according to previous fiscal years experience. The remaining or the quantity of
plastic feedstock which is left or out of use can be sold to other overseas traders in peak
currency exchange rates. However for storing the additional quantity of plastic PlastCo need
some extra warehousing space which itself is the issue, discussed in the following solutions.
For Problem 9; The longer supply lead times in transportation is a big problem in supply
chain management. If a company reduce the lead time to zero then there is no need of any
inventory or forecast the product can be directly made available to customer at demand and at
any number of quantities however zero lead times hardly exist (Christopher M., (2005).
Solution: The delays in supply chain leads to value added delivery. To reduce the supply lead
time PlastCo needs to do reengineering of time spent in interfaces of stages in pipeline of
supply chain (Christopher, M., 2005).
For problem 8 & 10; Unavailability warehouse storage space is the major problem PlastCo
is facing. There is lot of feedstock which is not at all used & also the feedstock which is
under NCR (non conformance record). There also lack of space to store the finished goods
which is stored in the three external storage locations. The record of availability of space is
provided by an administrative staff member from logistic department & he has been given
many other tasks other than this. So there is a delay of about in providing information
regarding the availability of space. Also the inventory reduce the profitability & uncertainty
to cover the costs involved (Grant D., et al., 2006)
Solution: There should be a special staff member appointed for providing the inventory
records & updating ACC2 which is Microsoft Access file. That staff should be also given
the task of consulting with laboratory staff, updating the information regarding tested & used
feedstock and keeping record of space availability at external locations by contacting the in
charge staff there.

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Recommended Policy
After considering the main issues & the solutions suggested the recommended policy which
can be useful in terms of cost & benefit can be given as follows,
The major tasks involved in PlastCo are purchasing, inbound logistics, material testing,
production, warehousing & dispatch to downstream consumers needs to be synchronised by
proper planning of work distribution among the staff members. The PlastCo should prefer the
feedstock supply from European suppliers, because higher supply lead time is always better
than contaminated feedstock. There are many additional processes for contamination removal
like manual, flotation, dissolution, spectroscopic identification etc (Aguado, et. al., 1999,
pg.20). PlastCo should employ some additional staff members to sort out the contaminants
(wooden pieces or other unwanted materials) from existing feedstock which pending in
excess amount at its warehouses. If the contamination problem is persistent then PlastCo
should purchase the machinery for contamination removal. So it can also sell the
contamination removed plastic feedstock to the other recycling factories in UK & overseas.

Implementation & Costs & Benefits of recommendation

The management authority of PlastCo may be responsible for the implementation process of
recommendations. The factories upstream & downstream can be benefited by this change in
structure. The cost & timescale of the implementation depends upon the scale of modification
in to its existing structure. It will be better if the implementation occur from downstream to
upstream in the flowchart of PlastCos recycling process. Monitoring of cost & benefits is
crucial part of the implementation process. Cost monitoring can be done by profit ratio in
companys financial statement. Benefit monitoring can be done by comparing the previous &
current status of company in both business & economical perspective. Also staff opinion,
various surveys, individual interviews, meetings should be organised to evaluate the
improvement in performance of PlastCo.

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Business Report of PlastCo

Executive Summary
The demand for reverse logistics of plastic is increased dramatically in last two decades.
PlastCo is the local UK based plastic recycling industry which collects plastic waste in terms
of feedstock & reprocess it in to pellets or granular & sell it to granular & injection moulded
plastic factories. Since PlastCo can act as buyer as well as supplier of plastic waste, it sort &
blend large size of plastic waste & sell it to other recycling factories. Due to increased
regulation & awareness for using recycled plastic PlastCo is getting more & more sales
orders.
However PlastCo is facing some unique problems regarding the purchasing & inbound
logistics operations, which are needed to be solved. The PlastCo cannot source right type of
plastic due to poor planning & forecasting of required type of feedstock. The local UK
supplier of feedstock is convenient, faster & cheaper option for PlastCo, but it is very
contaminated & quality is hard to predict. The continental European suppliers are more
reliable in terms of quality & the feedstock is contamination free, however it is costly & takes
long time. Other issues are fluctuating currency rates, shortage of supply & poor availability
of storage space are other problems PlastCo is facing.
The recommendations to PlastCo include improving planning & resource management.
Making fixed contracts with its overseas suppliers which can be stated as vertical integration.
Hedging can be used for reducing effects of fluctuating currency rates. And for dealing with
storage problems PlastCo need to reduce the contaminated pending stock in its warehouses
by selling or sorting out the contaminated feedstock.
The benefits for implementing the recommendations can be observed in long term
perspective. The cost benefits can be observed in terms of increased profit due to adopting
vertical integration & hedging strategies. The proper planning of human resource will
improve the various operations in purchasing & production phases.

Contents
1.
2.
3.
4.
5.
6.

Resume on current situation

Statement of main issues & problems
Outline of alternative policies & options
Recommendations
Implementation
Analysis of benefits & cost of recommendation

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Main Body of Report

1) Resume on current situation
The current situation can be explained by flow chart of fixed & moving phases in supply
chain of PlastCo.
Purchasing the plastic waste
Delivery of feedstock by suppliers
Accepting the transported material at production sites & weighing
Moving goods at external warehouses
Storing in external warehouses
Sorting out contaminated plastic waste
Sending the samples at laboratory for testing
Moving the approved material at recycling plant
Blending & recycling in to usable granular or pellets
Selling to plastic granular production factories
Injection moulding factories
Various industries using moulded plastic parts
End users & consumers of plastic

2) Statement of main issues

There are some major symptoms in PlastCo which are poor purchasing planning &
shortage supply of feedstock, contamination with feedstock, lack of storage space etc.
3) Outline of alternative policies & options
Strategic planning of purchasing & forecasting, vertical integration with reliable
suppliers, coordination among staff members & hedging for dealing with fluctuating
currency rates.
4) Recommendations
Suggested recommendations would be proper work distribution among employees,
preferring the European suppliers for obtaining feedstock. PlastCo should invest in
purification plant for dealing with contamination problem, so it can buy contaminated
plastic at cheaper rates & sell purified plastic to other factories in UK & overseas.
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5) Implementation
The implementation process will be the deciding factor for successful operation in
PlastCo. The efficient planning by logistic staff will improve the inventory record as well
as storage capacities of warehouses. Vertical integration & fixed contracts with upstream
traders will improve the supply quality.
6) Analysis of benefits & cost of recommendation
The cost of storing & transporting back the contaminated feedstock to the supplier will be
reduced. The effect on cost can be observed by profit ratios of PlastCo in current fiscal
year. The improvement in purchasing forecast will be because of efficient use of existing
feedstock.

Required Additional information for making firm

recommendation to PlastCo
1. The customer service & logistics cost tables might be useful for analysing the
additional information regarding overall performance of PlastCo.
2. Management information & vertical flow information was required.
3. Internal corporate policies & external business environment was essential.
4. Previous financial statements would be useful for analysing the profit & loss due to
issues in the planning & contamination problems.

References
Aguado, J., Serrano, D. P., (1999), Feedstock recycling of plastic wastes, Cambridge, Royal
Society of Chemistry.
Blanchard, D., (2007), Supply Chain Management: Best Practices, Hoboken, New Jersey,
John Wiley & Sons Inc.
Christopher, M., (2005), Logistics & Supply Chain Management: Creating Value-Adding
Networks: 3rd Edition, Harlow, Financial Times Prentice Hall.
Grant, D.B., Lambert, D.M., Stock, J.R., and Ellram, L.M., (2006), Fundamentals of
Logistics Management, Maidenhead, McGraw-Hill.

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