Recycling industry needs a complete supply chain approach

  • 25 Oct 2016

The recycling industry and infrastructure must move to a complete supply chain approach if it is to succeed, according to Axion Consulting senior engineer Richard McKinlay. 

In a recent statement by the company, Richard claimed that recent failures of several well-known plastic recyclers has caused concern, leading some to question the future viability of the sector. Richard went on to cite Axion Polymers as an example of a company that has weathered changes in the economic landscape – such as lower oil prices, changing demand and volatile markets – and is continuing to flourish.

Richard claimed a reliable, long-term supply of input waste raw material, in addition to being in full control of the whole value-adding process, through to the output of finish products, as two key elements of a sustainable and stable business model.

He said: “If there is a common thread of stakeholder involvement and shareholder equity that follows the materials recycling stages, then the management team can concentrate upon optimising the process efficiency and avoid having to battle with the trading mentality that dominates any ‘breaks’ in continuity along the chain.”

A long-term approach that avoids external price influences and reactive volatility created from supply-demand imbalance delivers the gross-margin stability required to keep the business profitable, whilst always covering monthly operating and overhead costs. 

As a result, the business has regular and predictable cashflow necessary to pay back the investors in capital intensive processing plant. 

The ‘right’ technology

Choosing the right recycling technology is another key success factor, according to Richard as well as selecting the best management team to design, install and operate the process equipment, and securing your finished product market.

He continued: “Many recycling firms have fallen into the trap of selling their output polymer as a commodity with a price that is indexed to the virgin polymer price. This delivers a nice price-down saving for your customer’s buyer, but leaves the business massively exposed to volatility in the market.

As we transition further towards the circular economy, the complete supply chain approach will play a key role in the survival of sustainable businesses. We need to build strong links between recyclers, those controlling the generation and collection of the waste and, ideally, the end user to keep the recycled material supplies flowing.”

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