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Corporate Responsibility and Sustainability in Retail

One man's trash...


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Abstract

How much are beat-up cardboard and old plastic film worth? Millions of dollars per year for one large U.S. retailer, thanks to a planned new recycling program that turns discarded packaging materials into bottom-line value.

The Challenge

To offer consumers name-brand goods at outlet prices, this company needs to keep its own costs under tight control and extract every cent of value from its operational investments. So when executives realized that recycling the corrugated boxes and plastic film used to ship merchandise to stores could help the company earn revenue and cut waste-hauling costs, they naturally decided to pursue the opportunity.

The challenge lay in working out the details. Because its stores differed widely in their physical layout, waste management cost structure and distribution arrangements, the company couldn’t apply a single standard recycling approach to its entire store network.

How We Helped

Executives decided to tackle the problem one U.S. region at a time. With Deloitte’s assistance, the company segmented the stores in a pilot region into mutually exclusive categories based on a number of operating characteristics relevant to recycling, including back-room size, waste management cost structure and type of distribution network. For each configuration of store operating characteristics, the company then developed a baseline recycling approach describing the investments and processes needed to enable recycling at each type of store. Using cost and price information obtained through requests for information to potential vendors and recyclables purchasers, as well as factors such as labor costs, the volume of recyclables generated per store and other relevant information, the company calculated the anticipated net profit that recycling should yield at each individual store as well as for each store segment.

Solution

The detailed analysis showed that a properly structured recycling effort could cut the company’s waste management costs by 43 percent and generate more than $3 million in revenue annually in the region covered by the analysis, which represents 15 percent of the company’s national store footprint. The recycling program also would help the company reduce carbon dioxide equivalent emissions by about 37,000 metric tons in the pilot region alone (by, among other things, reducing the amount of waste routed to greenhouse-gas-emitting landfills and incinerators).

As used in this document, ‘Deloitte’ means Deloitte LLP (and its subsidiaries). Please see  www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. 

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