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Insights and News /

01 April 2019

Deposit Return Scheme – are you ready for it?

Sofia Gkiafi

Sofia Gkiafi
Senior Manager | Supply chain and procurement | London

I have mixed feelings about recycling. There. I said it. My food recycling bin usually ends up serving dinner for the neighbourhood’s foxes, and my mixed bin has been rejected more times than I care to count due to ‘contamination’.

So when one of my colleagues asked me what my view was on DRS, I thought she was after the latest trends in resource scheduling or something to that effect. After establishing that she was actually talking about the proposed Deposit Return Scheme, one of the hottest topics for soft drinks bottling companies, I decided to research the topic. Good old Google coupled with conversations with my client brought me up to speed with the scheme and the intended benefits of it. The idea is that you pay a small deposit for every plastic bottle you buy which you get back when you return the bottle - this way ensuring it’s recycled. This may not sound new. It’s not. Many countries in Europe have adopted the scheme, with Norway achieving a 97% recycling rate for plastic bottles, and Germany a 98% total return rate for plastic, glass and aluminium cans.

What I find exciting are the supply chain implications of the DRS. And there are plenty!

When it comes to demand planning, which just so happens to be my favourite topic, the commercial implications could be significant as the combination of increased price and required action to get your money back could put consumers off or lead to a shift to glass bottles, if these are not impacted by the DRS. I expect long term forecasting will be particularly challenging due to the sheer amount of assumptions that will have to be made to account for this unknown behaviour.

A potential shift from plastic to other materials will in turn impact manufacturing as production lines and materials, raw and packaging, will have to keep up with the change. And this of course will impact costs, and thus commercials, and so the circle continues.

Added to this uncertainty is the possibility of Scotland introducing a DRS scheme ahead of the rest of the UK. In this case soft drinks bottlers will need to consider coming up with different packaging for bottles intended to be sold in Scotland as a way to distinguish those that are eligible for refund. I can only sympathise with those that have portfolio complexity in their scorecards.

Let’s spare a thought for the actual logistics of the scheme. Collection and transportation will become a new mini-industry in its own right. Add governance of the scheme on top and you’re dealing with a huge new undertaking. And it goes without saying that consumer goods companies will not be the only ones impacted, the oil & gas sector for one is closely linked with plastic usage.

All that said, there is much the UK can learn from the 10 European countries who have already implemented DRS. They have introduced some great initiatives - my favourite being return locations that are used for charity.

So despite my own questionable success with recycling I am excited about the DRS and really keen to see it succeed. However, as a supply chain professional in consumer goods, there are plenty of questions on my mind that I am looking forward to exploring further.