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Chapter 11
Investment Recovery
11 - 3
McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Scrap Recyclers Handle 120 Million tons/year
• 60 million tons of scrap iron and steel• 47 million tons of scrap paper and paperboard• 5.1 million tons of scrap aluminum• 1.7 million tons of scrap copper• 1.1 million tons of scrap stainless steel• 1.4 million tons of scrap lead• 248,000 tons of scrap zinc• 2.3 million tons of scrap glass• 745 million tons of scrap PET plastic bottles• 734 million tons of scrap HDPE plastic bottles
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McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Four Pieces of Federal Legislation Impact the Scrap Disposal Market and Sourcing
Procedures• Resource Conservation and Recovery Act (RCRA)
- Ensure that suppliers are competent and reputable and have an EPA permit
- Require the supplier to warrant that employees are trained in handling the specific waste
- Insist on the right to inspect the facility and the EPA permit
• Toxic Substances Control Act (TSCA)- Requires suppliers to warrant that any chemical or chemical
mixture they provide is listed by the EPA
11 - 5
McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Four Pieces of Federal Legislation Impact the Scrap Disposal Market and Sourcing
Procedures• Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA)- Purchasers must track the amount and type of chemicals that
enter and leave the plant and consult the Material Safety Data Sheets (MSDS)
• Clean Air Act Amendments- Purchasers can choose environmentally friendly products,
establish criteria for supplier selection that limits purchases from suppliers that sell damaging products, and be alerted to alternatives, substitutes or new technology that may help their companies meet the goals of the act.
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McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
The EPA’s Voluntary Compliance Programs
• Climate Wise• Commonsense Initiative• Design for the Environment• Electronic Commerce/Electronic Data Interchange• Environmental Accounting Project• Environmental Leadership Program• National Environmental Performance Track Team• Sector Facility Indexing Project• Sustainable Industry Project• WasteWise
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McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Environmentally Responsible Purchasing Practices Can Reduce Costs
• Reducing the obsolescence and waste of MRO supplies through better inventory management
• Reducing costs from scrap and materials losses• Lowering costs of handling hazardous materials• Increasing revenues by converting wastes to by-products• Reducing the use of hazardous materials through more
timely and accurate materials tracking and reporting systems
• Decreasing the use and waste of chemicals and solvents• Recovering valuable materials and assets with efficient
materials recovery programs
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McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Environmental Management
•Reduce
•Reuse
•Recycle
less riskless complexityeasier to implementsmaller environmental benefits
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McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Materials Recaptured from a Computer
PersonalComputer
Plastic
Pothole Filler
Aluminum
Cans, Foil
Steel
CarsConstruction Beams
Nonleaded Glass
Usable Glass
Copper
Wiring, Pipes,Computer Circuitry
Lead
Car Batteries,Film
Leaded Glass
Asphalt,Industrial Abrasives
Precious Metals
Jewelers, Dentists,Chip Makers
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McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
ISO 14000 Framework
Environmental Management
EnvironmentalPerformance
Systems
EnvironmentalAuditing
EnvironmentalLabeling
Life CycleAssessment
EnvironmentalManagement
Systems
EnvironmentalAspects in
Product Standards
Organizational Evaluation Product and Process Evaluation
Source: Melnyk et al., ISO 14000: Assessing Its Impact on Corporate Effectiveness and Efficiency, Tempe, AZ: CenterFor Advanced Purchasing Studies, 1999.
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McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Benefits of Effective Disposal Programs
• Cost recovery• Cost reduction and avoidance• Customer service• Quality control• Protect intellectual property and brand identity• Comply with government regulations• Reclaim valuable materials from customers• Control product liability• Improve public image
11 - 12
McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Categories of Material for Disposal
• Excess or surplus materials
• Obsolete material or equipment
• Rejected end products
• Scrap material
• Waste
• Hazardous waste
11 - 13
McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Reasons for Assigning Disposal of Materials to the Purchasing Function
• Knowledge of the materials, equipment or substances being disposed
• Knowledge of price trends and the market• Contact with salespeople and information as to possible users
of the material• Familiarity with the company’s own needs for the material• The company may not have a surplus material disposal group
11 - 14
McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Disposal Channels
• Use elsewhere in the firm “as is”• Reclaim for use within the plant• Sell to another firm for use on an “as is” basis• Return to the supplier• Sale through a broker• Sale to a local scrap or surplus dealer• Donate, discard or destroy the material or item
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McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
raw material processing
The Reverse Flow of Materials in the Supply Chain
manufacturing distribution consumption
recovery
recycle remanufacture reuse
wasteprocessing
disposal
resell
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McGraw-Hill/IrwinPurchasing and Supply Management, 13/e
© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
Selecting Disposal Partners
• Selling, not buying materials places the purchaser in a new role• Understand regulatory issues
- fines, penalties• Disposal practices have implications for operations
- impact on processes, labor costs• Use appropriate segregation and transportation methods based
on volume of material• Internet and technology applications
- Internet marketplaces provide access to a large number of potential bidders
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