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Is Your Supply Chain Producing Too Much Waste?

Michael Wilson | Jul 26, 2017

Unilever has officially achieved zero waste, and now it wants to help other companies follow suit. But what exactly is zero waste? Zero waste is primarily known as a sustainable ...

sustainable-supply-chain-management.jpgUnilever has officially achieved zero waste, and now it wants to help other companies follow suit. But what exactly is zero waste?

Zero waste is primarily known as a sustainable supply chain management technique that describes when there is absolutely no extraneous material produced that must be sent to a landfill. However, the term “waste” in the supply chain is also used to identify other wasteful factors, including extraneous worker time, packaging waste, and storage waste. Companies aim for zero waste not only because it is an environmentally conscious practice, but also because it is financially sound: Unilever saved $227 million by eliminating waste.

Despite the obvious benefits of eliminating extra waste from your supply chain, the question remains: is zero waste really the only way to go? If zero waste seems impossible for you, we’ll discuss how to tell if you’re producing too much waste and how to limit your waste production.

Types of Waste

There are seven types of waste found in a supply chain:

  1. Overproduction occurs when a supply chain builds or creates a product based on speculation; orders have not yet been placed for the product.
  2. Worker time is wasted if a product is produced earlier than necessary or if a worker must work overtime to meet demand.
  3. Transportation time and expenses are wasted when any part of the raw material or finished product are shipped without cause.
  4. Processing waste occurs wherever unnecessary work is performed in the supply chain; these wastes often occur with poor plant layout or extra machinery costs.
  5. Packaging waste happens when the wrong type of good in the wrong packaging is produced or excess inventory must be repackaged.
  6. Space waste occurs when space is required in storage facilities or plants for products that are finished before being required.
  7. System complexity waste arises when there is a mismatch between workers’ schedules and the actual demand for products. 

Identifying Waste in Your Supply Chain

With so many kinds of waste described above, it can be difficult to make your supply chain so streamlined that you produce zero waste. However, identifying places to eliminate waste can be useful to improve your sustainable supply chain management, as well as your supply chain efficiency.

Supply chain waste has many consequences. For example, the United States Department of Agriculture (USDA) notes that 53% of fresh vegetables and 63% of fruits were lost somewhere in the supply chain. The USDA announced a plan to cut food waste – now a whopping $165 billion annually – in half by 2030. While there are no federally binding standards for food waste reductions, food supply chains aim to reduce waste in many ways. Software solutions help food manufacturers configure their orders to buy exactly what they need; specifically, automated food waste tracking programs that determine what is being overproduced and what is being scrapped help supply chains create more streamlined plans.

Another key problem with waste is extra packaging. For a particularly wasteful packaging solution, see Whole Foods’ plastic packaged oranges – oranges already have a natural packaging – a peel!

While physical production wastes are often the focus of zero waste campaigns, logistical wastes are also costly and problematic. 80% of logistics work takes place outside of supervision, so implementing different solutions is paramount. Some logistical waste solutions might include: 

  • Streamlining employee processes. Employees do better if they are informed about best practices.
  • Eliminating extra motion, like walking around and searching for materials, expedites processes.
  • Value-stream processing. One of the ways that time can be wasted in extra processes. To streamline processes, use a value-stream map, a pen-and-pencil chart that maps out every step in material and information processing. If you can see all of these processes in one place, you’ll be able to more simply streamline them.

Some supply chains have regulatory guidelines put onto their waste supply, forcing them to comply with standards. Regardless of industry though, if you’re trying to roll out sustainable supply chain management the goal should be to reduce waste, save money, improve efficiency, and reduce the amount of unnecessary product in landfills.

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