the green supply

8/8/2019 The Green Supply

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Green Supply Chain:

PepsiCo, Waste Management Tackle

the Reverse Supply Chain for

Disposable Bottles«..

Executive Summary

To stay competitive, companies must continually find new

ways to improve efficiency and cut costs. PepsoCo have demonstrated that preventing solidwaste (source reduction) offers significant cost savings. But where do you find the biggestsavings for your company? First, identify each of your key business operations. Then, for eachkey operation, identify the products and materials used or generated in the largest quantities.These are the materials that should be evaluated first for waste prevention opportunities.

y Work with purchasing agents and records to identify major purchases that could bereduced, e.g., by working with suppliers to reduce packaging or through reuse of supplies.

y Employees can be your best resource for identifying efficiencies and cost savingopportunities. Solicit their ideas on ways to reduce office waste.

y Copier paper is a significant expense. Is there a way to encourage more double-sidedcopying? Perhaps with educational posters near copy machines?y Does this long report really need to be printed? Perhaps employees could view it online

and only print essential pages? Perhaps we could shorten the report?y Is there a way to reduce these corrugated boxes before they are recycled? Perhaps we

could switch to reusable containers or reduce the box size?y Could these pallets be repaired or the wood reused for another purpose?y Could our product packaging use less or lighter-weight material?y Could the product be redesigned to use less material?y A lot of excess material is generated by the production process² is the equipment as

efficient as possible? Could the excess material be reduced through changes in operator

practices or materials?

The Green Supply

Chain Says:

Will the Dream

Machine effort produce

enough results that it

will at least

temporarily quiet

critics calling for

deposit legislation?



Transport Packaging Reduction Leads to Big Cost Savings

y Pepsi-Cola saved $44million by switching from corrugated to reusable plastic shippingcontainers for one liter and 20-ounce bottles, conserving 196 million pounds of corrugated material.

Amajor change began, when PepsiCo announced theacquisition of its two largest independent bottlers, Pepsi Bottling Group Inc., andPepsiAmericas Inc. for $7.8 billion. At the time of the announcement, PepsiCo Chairwomanand CEO Indra Nooyl made a very powerful argument that the business model had changed.Whereas carbonated beverages previously drove the bulk of North American sales, alternative beverages such as flavored waters, juices and other drinks are now demonstrating higher salesgrowth. These newer products have different production, distribution and operating margin needs

A new initiative by Pepisco and Waste Management offers an interesting example of how goingGreen can nicely intersect with consumer perception and market development.Earlier this year, the

two companies announced an ambitious plan to improve the reverse supply chain for individual beverage bottles not most commonly thrown in trash cans and not recycled.Together Pepsico andWaste Management have plans to deploy thousands of ³Dream Machines´ in both permanent andtemporary locations that will take in recycled bottles and provide both monetary and psychic rewardsto consumers who participate.Plastics, glass and aluminum bottles and cans in individual servingsizes (e.g., the 20 ounce plastic bottle or 12 ounce can of soda, not to mention bottled water, teas,etc.) are famously hard to get into the recycle supply chain. Why? Because in many cases it issimply not convenient to hold on to a container until a recycling option is available. Few conveniencestores, recreation facilities or other venues have recyclingreceptacles.

Industry statistics say that just 34% of non-alcoholic

US beverage containers are currently recycled and just 25% of the most common plastic beveragecontainers.Enter the Dream Machine, which is sort of like a reverse vending machine and kiosk. Themachine will accept plastic and aluminum containers from anyone (no glass yet), but those who signup for the program they can earn points for themselves of others for every container they recycle.PepisCo say they have plans to deploy as many as 3000 Dream Machines this year, some in

permanent locations such as convenience stores and city sidewalks, others more temporary such aslarge concerts or other events.

How It Works The machines have an electronic display that offers instructions and also the ability to scan a key

fob ID to link the person to the containers that will be deposited. Consumers can sign up on aweb site or the Dream Machine itself, which will trigger a key fob to be sent. Consumers areasked to scan the UPC bar code on the container itself, helping the companies better understandwhat products and container types are being deposited. This would also enable PepsiCo, if it sochose, to offer higher reward points for recycling Pepsi products.



³There¶s got to be something in it for people, both through material rewards and emotionalrewards,´ Jeremy Cage, Pepsico¶s Dream Machine project manager, was quoted as saying acouple of months ago. Interestingly, the Dream Machine does not crush the containers, as thecompanies believe that some consumers will avoid the effort because they do not like that sound.That decision means that each bin can hold fewer containers than if they were crushed, requiring

more frequent emptying.E

ach Dream Machine should be able to hold about 300 emptycontainers, the companies say.

The machines are wirelessly connected to the program¶scomputers. This allows not only the point totals and other information to be easily collected, but for the DreamMachines to play updated commercials and offer other services. When a container is near full, it will trigger anemail to whomever is responsible for emptying themachine that it is time to remove the recycled bottles. O

ften that will be a store manager, when a DreamMachine is set up at say a convenience store. Local eventworkers will probably do the work at concerts and similar venues. Who that will be on city sidewalks or other morechallenging locations is not immediately clear. Waste Management will pick up the consumer recycled

containers and take them to a downstream recyclingcenter. The machine themselves were developed byGreenO ps, LLC, a subsidiary of Waste Management,which claims to be the first provider of interactiverecycling technology.

Will the Dream Machine effort produce enough results that it will at least temporarily

quiet critics calling for deposit legislation? That certainly remains to be seen. Pepsico says

its goal is to increase the number of beverage containers recycled in the US from the

current 34% to 50% by 2018.

PepsiCo Reports Improved Recycling, Careful Water Use

To minimize its environmental impact, Pepsi has improved water, fuels, and electricity

efficiency ± saving about five billion liters of water and nearly 500 million kilowatt hours of energy from 2006 to 2007. By the end of 2008, the company started using a recently installed

natural gas heat and power system to bottle beverages at its plant in Queens, NY ± saving a

potential $408,000 a year.



Pepsi renewed its commitments to recycling and launched a sustainable packaging policy. In the

spring, Pepsi launched its ³Have We Met Before?´ campaign to communicate the benefits of

aluminum can recycling and encourage Pepsi consumers to make recycling a part of their daily

routines.Still, last month the company trailed behind Coca-Cola and Anheuser Busch to come in

third on As You Sow¶s Beverage Container Recycling Scorecard.Around the same time it used

the Aquafina water bottle label to tell customers of its CSR goal of making PepsiCo India a³positive water balance´ operation. The report noted that Pepsi has put more than $16 million

toward bringing safe water to developing countries.

PepsiCo Launches Program to Reduce the CarbonFootprint of Tropicana Orange Juice

March 18, 2010

PepsiCo wants to reduce the carbon footprint of Tropicana Pure Premium orange juice.

A year ago, the company partnered with the Carbon Trust to conduct a lifecycle analysis of its

orange juice and discovered that the largest single source of carbon emissions ±approximately35 percent ² was fertilizer use and application for the growing process.

Two lower-carbon fertilizers will be tested.

One, produced by Yara International , the world¶s largest fertilizer producer, is manufacturedwith proprietary technology that reduces nitrous oxide emissions by up to 90 percent. Accordingto the Intergovernmental Panel on Climate Change, nitrous oxide has approximately 300 timesathe greenhouse effect of carbon dioxide.



The other, produced by ERTH Solutions, a wholly owned subsidiary of Toronto-based Outlook Resources, achieves a lower-carbon footprint by using locally-sourced, carbon-neutral rawmaterials such as food waste and agriculture waste rather than natural gas, avoiding unnecessarycarbon emissions from both natural gas and fertilizer transportation.

³This pilot program is an example of how PepsiCo is working hand-in-hand with our suppliersto find innovative ways to make our agricultural practices more environmentally sustainable,´says Indra Nooyi, chairman and CEO of PepsiCo.

PepsiCo to Recycle Potato Water

The company uses roughly 350,000 tons of potatoes every year and 80 percent of each potato is

water that is extracted in order to produce chips. The company has managed to reduce its use of

water by 45 percent from 2000 to 2008, and reduced its use an additional 14.6 percent last year.

The company has pledged to disconnect four of the plants from the central water supply entirely

within 10 years, although PepsiCo¶s vice president for sustainability for Europe said in the report

that he hopes that goal can be achieved in five years.

The factories will rely solely on water extracted from their potatoes for their supply. The

company is also testing a new irrigation system that will compare moisture conditions in crop

soil with local weather forecasts to more efficiently irrigate crops. The company is also trialing

new crop varieties in order to move toward potato varieties that are less water-intensive to grow.

PepsiCo recently announced it is more than three-quarters toward its goal of reducing water

consumption by 20 percent by 2015.

PepsiCo to introduce compostable crisp bag for SunChips

In response to growing environmental concerns, consumers are showing increasing interest in

packaging that is not destined for the landfill. And in step with this growing movement towards

green plastics with sustainability credentials, food firms are gradually adopting new, sustainable

materials for their packaging applications, such as PLA made from corn-based ethanol.

And by Earth day (A pril 22) 2010, PepsiCo's Frito-Lay North America division plans to roll-out

a package for its SunChips snacks where all three layers are made from PLA material so the

package is 100 per cent compostable.

"When the packaging is 100 per cent compostable, it will fully decompose in about 14 weeks

when placed in a hot, active compost pile or bin ," said PepsiCo, that claims over the past five

years it has reduced the amount of plastic in packaging by 10 per cent, thereby eliminating 12

million pounds of materials annually used to make the snack bags.



PepsiCo, the world's fourth largest food company, sourced its PLA from US firm NatureWorks,

itself a joint venture between agro-giant Cargill and japanese firm Teijin. NatureWorks claims its

proprietary polylactide biopolymer, marketed under the brand name of Ingeo, currently uses 65

per cent less fossil fuel resources to produce, and reduces greenhouse gas emissions by 80 to 90

per cent compared to traditional petroleum-based polymers.

What is Green plastics...??????????

Green plastics, also known as bioplastics, are usually fabricated from 100 per cent renewable

sources, such as plant-based ethanol and vegetable oil. Setting out to have the same

specifications of petrochemical plastics, plastics made from renewable sources purportedly have

a net positive carbon footprint. By contrast, the production of plastics derived from petroleum

emits the greenhouse gas carbon dioxide (CO2) into the atmosphere. It is suggested that

recyclable green plastics generally perform better than biodegradable alternatives in

sustainability analyses. Biodegradable green plastics are less durable, cannot be easily disposed

of because of the need to separate them from conventional recyclable material, and emit the powerful greenhouse gas methane when decomposing in landfills.

Another option could be anaerobic digestion, whereby the packaging could be fed into

digesters together with waste food. But there is still limited capacity for this form of

disposal, and many bioplastics manufacturers are still conducting tests.

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