Team 15 Caroline Liu Sally Mills. Ya Hui Huang

Transcription

1 Team 15 Caroline Liu Sally Mills Ishu Tayal Ya Hui Huang

2 How can we change this painful end for the glass bottle supply chain?

3 Agenda The Current Situation 5 Part Recommendation Questions

4 Current Situation Central Issues Meet retailers sustainability requirements Help OEMs increase market share Highlight g the superiority of glass SGS Challenges Promote Create growth sustainability opportunities Enhance operations efficiency Benefit supply chain Current Proposal #1 #2 #3 #4 #5

5 Recommendation Expand Strategically by Building on Core Competencies Integrate Cullet Processing Participate in Sustainability Advocacy SGS SGS Industries Leverage Sustainability Index Provide Packaging Solutions Establish Partnership in Bottle Reuse Current Proposal #1 #2 #3 #4 #5

6 Summary of Recommendations 4 Challenges: Leverage Sustainability Index Promote sustainability Create growth opportunity Enhance operations efficiency Benefit Supply Chain Integrate Cullet Processing Provide Packaging Solutions Establish Partnership in Bottle Reuse Participate in Sustainability Advocacy

7 Leverage the Sustainability Index COMMON CRITERIA Energy Saving: production and transportation Community: less need for landfills, healthier Material efficiency: potential unlimited reuse Transparency of supply chain: virgin raw materials and cullet used Emissions: reduced carbon footprint Natural resources: simple and abundant and non hazardous BENEFITS Make glass desirable to retailers Use index as a marketing tool to consumers Improve bottlers index as a Tier 1 supplier Current Proposal #1 #2 #3 #4 #5

8 Competitive Advantage Energy Saving Community Old SGS Plastics Aluminum NEW SGS Material Efficiency Transparency Emissions Natural Resources Current Proposal #1 #2 #3 #4 #5

9 Summary of Recommendations 4 Challenges: Leverage Sustainability Index Promote sustainability Create growth opportunity Enhance operations efficiency Benefit Supply Chain Integrate Cullet Processing Provide Packaging Solutions Establish Partnership in Bottle Reuse Participate in Sustainability Advocacy

10 Closed Loop Supply Chain SGS Id Industries Filler/Bottler Distributors Retailer Consumers Virgin Material Suppliers SGS Bottle Manufacturer Cullet Processor Waste Hauler LEGEND Backward Flow Forward Flow Manufacturers of other glass products Land Fill Current Proposal #1 #2 #3 #4 #5

11 Closed Loop Supply Chain The Future SGS Industries Filler/Bottler Distributors Retailer Consumers Bottle Reuse Facility (washing) Virgin Material Suppliers Bottle Manufacturer SGS Cullet Processor Waste Hauler LEGEND Backward Flow Forward Flow Manufacturers of other glass products Land Fill Current Proposal #1 #2 #3 #4 #5

12 End Regional Cullet Transport Current Distribution Proposed Distribution Northeast 76,000 tons Northeast 57, tons Northeast 76,000 tons Northeast 76,000 tons Southeast 27,000 tons Southeast 57,500 tons Southeast 27,000 tons Southeast 27,000 tons Midwest 58,000 tons Midwest 57,500 tons Midwest 58,000 tons Midwest 58,000 tons South 18,000 tons South South South 57, tons 18,000 tons 18,000 tons West 108,500 tons West 57,500 tons West 108,500 tons West 108,500 tons Save $3 million on shipping Save 34,000 Tons of CO2 No Cost Proposal Assume SGS acquired 25% of the 40% usable available cullet in each region & cost of 3 cents per ton per mile (1/07 Assn of American Railroads). Current Proposal #1 #2 #3 #4 #5

13 Integrate Cullet Processing Capabilities Acquire cullet processing facilities strategically located near each of the SGS plants Implement CulChrome glass separating technology 3 color cullet used for amber bottles Current Proposal #1 #2 #3 #4 #5

14 Benefits of Integrating Cullet Processing Increase cullet availability through acquisition 100% of Recycled Glass 40% Usable Cullet 40% Landfill 20% Other applications 25% SGS 10% of Total Recycled Glass Landfill rates range from $ per ton nationally Massachusetts rates averaged $94 per ton in 2008 Current Proposal #1 #2 #3 #4 #5

15 Benefits of Integrating Cullet Processing Increase cullet availability through acquisition 100% of Recycled Glass SGS 25% Recycled Glass Other Cullet Processors 75% Recycled Glass 80% SGS* 20% of Total Recycled Glass *Using CulChrome Technology Landfill rates range from $ per ton nationally Massachusetts rates averaged $94 per ton in 2008 Current Proposal #1 #2 #3 #4 #5

16 Benefits of Integrating Cullet Processing Increase cullet availability through acquisition 100% of Recycled Glass SGS 55% Recycled Glass Other Cullet Processors 45% Recycled Glass 80% SGS* 44% of Total Recycled Glass *Using CulChrome Technology Landfill rates range from $ per ton nationally Massachusetts rates averaged $94 per ton in 2008 Current Proposal #1 #2 #3 #4 #5

17 Integrate Cullet Processing Capabilities Alignment of Production and Supply Target the Northeast Region High recycling rate High landfill gate rate Bottle bills can increase cullet High potential financial benefits Current Proposal #1 #2 #3 #4 #5

18 Financial Analysis A i Assumptions Currently SGS acquires 25% of recycled glass per region per year State recycling rates remain at current levels After backward integration, SGS uses 100% of the recycled glass from its own cullet processing facilities Other Data Annual glass bottle usage rate per capita: ton Raw materials savings per ton of cullet used: Unit price Quantity saved Cost saving sand $28/ton 0.65 ton $18.20 soda ash $115/ton ton $23.58 limestone: $10/ton 0.19 ton $ % of energy saved for every 1% of cullet used Landfill gate rates for MSW: Northeast $66.30, West $26.70, National average $41.29 Current Proposal #1 #2 #3 #4 #5

19 Financial Benefits Savings from Operations Current 25% cullet $20 M Scenario 1 Scenario 2 Scenario 3 35% cullet 45% cullet 55% cullet $60 M $76 M $92 M West South Southeast Midwest Northeast Total Increased Percentage Current Benefits Scenario 1 Scenario 2 Scenario 3 $7,501,640 $1,264,079 $1,861,856 $4,046,095 $5,395,469 $20,069,138 $23,930,779 $3,543,567 $5,219,304 $11,366,563 $15,490,095 $59,550, % $30,017,777 $4,558,395 $6,714,040 $14,626,733 $19,849,538 $75,766, % $36,131,172 $5,574,291 $8,210,348 $17,893,944 $24,222,105 $92,031, % *For detailed analysis, please refer to the appendix Current Proposal #1 #2 #3 #4 #5

20 Environmental Benefits Potential ls Savings from Rd Reduced dc Carbon Footprint Current Scenario 1 Scenario 2 Scenario 3 25% cullet 35% cullet 45% cullet 55% cullet $2.7 M $7.6 M $9.8 M $12 M Total CO2 Reduction (KG) in Different Scenarios West South Southeast Midwest Northeast Total Economic Value (million) Current 34,160,862 5,713,001 8,414,655 18,274,196 23,969,304 90,532,017 $2.72 Scenario 1 95,650,412 15,996,406 23,561,033 51,167,750 67,114, ,489,651 $7.60 Scenario 2 122,979,103 20,566,807 30,292,756 65,787,104 86,289, ,915,263 $9.78 Scenario 3 150,307,791 25,137,208 37,024,479 80,406, ,464, ,340,876 $ KG ofco2aresavedforevery for every tonofglassmelted/cullet of Assume that price for greenhouse gas (GHG)/carbon emissions is $30/ton *For detailed analysis, please refer to the appendix Current Proposal #1 #2 #3 #4 #5

21 Cost Considerations Savings Will Fund Costs Financial/tangible Cost of glass processor acquisition Costofobtaining of obtaining CulChrometechnology Cost of SG&A Opportunity cost Managerial/intangible Internal coordination to seamlessly link cullet processing and glass manufacturing Most costs are one-time investments Additional revenue and cost savings are sustainable Current Proposal #1 #2 #3 #4 #5

22 Summary of Recommendations 4 Challenges: Leverage Sustainability Index Promote sustainability Create growth opportunity Enhance operations efficiency Benefit Supply Chain Integrate Cullet Processing Provide Packaging Solutions Establish Partnership in Bottle Reuse Participate in Sustainability Advocacy

23 Provide Packaging Solutions Enhance operations efficiency i Leverage SGS s Core Competency : Expertise in glass design New Bottle Lightweight Design Compact Shape with same volume Reasons Reduce shipping weight Uses fewer raw materials Fit more bottles in one shipment Benefits Save raw material costs Save shipping costs for SGS Save shipping costs for bottlers and retailers Current Proposal #1 #2 #3 #4 #5

24 Summary of Recommendations 4 Challenges: Leverage Sustainability Index Promote sustainability Create growth opportunity Enhance operations efficiency Benefit Supply Chain Integrate Cullet Processing Provide Packaging Solutions Establish Partnership in Bottle Reuse Participate in Sustainability Advocacy

25 Diversify into Bottle Refilling Create Growth tho Opportunities Leverage SGS s Core Competency : Expertise in glass handling Recommendation Partner short term with Wine Bottle Recycling, LLC Long term, establish business unit in bottle refilling Reasons High recycling rates incalifornia provides supply Good customer base of wineries Reduce carbon footprint Environmental awareness Government efforts Benefits Shorter learning curve Reduced risk Reinforce green company image Reduced carbon taxes SGS prepared for future trend in refillable bottles Current Proposal #1 #2 #3 #4 #5

26 Summary of Recommendations 4 Challenges: Leverage Sustainability Index Promote sustainability Create growth opportunity Enhance operations efficiency Benefit Supply Chain Integrate Cullet Processing Provide Packaging Solutions Establish Partnership in Bottle Reuse Participate in Sustainability Advocacy

27 Sustainability Advocacy Why Better Push sustainability for Bottle index Bill Legislation? 1,400,000 1,200,000 1,000, , , ,000 Current Tons of Glass Recycled Proposed Tons of Glass Recycled 11 states tt + 9 states tt Cullet supply could jump 35% or 1.1 million tons! (from 3.1 to 4.2 million tons) 200,000 0 MW Total NE Total S Total SE Total W Total Current Proposal #1 #2 #3 #4 #5

28 Sustainability Advocacy Benefit supply chain chain, Promote sustainability Suppliers Bottlers Customers Use Buyer Power: Request more flint glass Offer an additional 1% Discount in Bottle Bill States Offer Manufacturer Coupons to Consumers for Bottle Return Encourage DualStream Recycling Incentive for Bottlers in Other States to Support Bottle Bills Extend Sustainability Index upstream to suppliers Current Proposal Bars/Restaurants: Provide Racks to Make Recycling y g Easy Improve Bottlers Sustainabilityy Index by Improving SGS #1 #2 #3 Imprint sustainability symbols on bottles #4 #5

29 Sustainability Advocacy Benefit supply chain, hi Promote sustainability Trade Organizations Support Group- Sponsored Lobbying for Bottle Bills Educate consumers about benefits of glass Collaborate to Influence Bottle Bill Legislation and Increase Demand for Glass Green Non-Profits Co-Sponsor Recycling Events Provide Speakers and Panelists for Conferences Publish Data on Energy and Carbon Savings Influence Legislation Current Proposal #1 #2 #3 #4 #5