In this 3rd post in a series on Market Tensions, our expert practitioner Paul Hepworth looks at how trends and forces in the Recycling Industry are creating a need for greater focus on efficiency and productivity. View the 1st post in this series.
Profit-margin trends in the recycling industry have been on a downward path over the last 5 years. This indicates that the market is becoming more mature. To support this, industry participants are feeling an increase in the level of challenge and competition in the market, which you would expect to see. To counteract these profit-margin trends, market players must become more productive; doing more with less, whilst also adding value for the customer. Some noteworthy emerging themes that are impacting on the industry currently include:
- Bans on utilising some plastics in packaging.
- The move from Paper to digital information management and storage.
- Increased use of biodegradable plastics.
- Introduction of mandatory composting.
- Sustainable innovation – i.e. recycling buildings
- 3D printing (using recycled plastics?).
- Energy from organic waste.
- Increased corporate social responsibility.
- Increasing challenge of e-waste.
The new processes, and opportunities, that these trends present will require investment. Within this lies an opportunity to influence the trend for profit-reduction. Productivity improvement is a significant opportunity to reverse the trend.
Series Summary: Productivity, Efficiency and Profitability.
Productivity and cost effectiveness of delivery are key influences upon profit generation. But it is not just about sweating assets and making staff work harder; yes, improvements can come from those doing the work, but by doing it better and by having frontline staff solving issues and innovating at their own level. After-all, it is these staff who know the problems they face better than anyone else. This allows organisations to not only strip out costs but also increase value for the customer; thereby improving productivity via growth in the top-line, not just the bottom.
Their still remains an untapped opportunity to positively influence productivity by implementing continuous improvement across organisations and through the supply chain. To this end; engaging with teams to identify and remove waste and to resolve emerging issues at their own level can provide cost reduction, cycle time improvement and defect reduction. By transferring skills and knowledge to your teams and guiding them through practical delivery, a sustainable capability can be introduced, that continues to produce gains long after Unipart disengage. Our legacy is one of organisational capability and cultural change, not just immediate gains that subside once we move on.