August 2015
Approximately three million containers are collected daily by Dansk Retursystem' 65 lorries. The system is a joint system for the entire industry, with a return rate of containers currently at 89 per cent. The advantage of a shared industry system is that it is easier to avoid inefficient island solutions, thus preventing a lot of waste.
Three million a day translates to about one billion a year. That’s a lot, but everything points to even more in the future. In fact, the growth over the past two years has been 25 per cent, and there’s nothing to suggest that this growth will slow down anytime soon; on the contrary. The reason for this growth is, among other things, that several larger breweries are switching from refillable plastic bottles to single-use plastic bottles.
‘This has significantly challenged our production system and created bottlenecks. We are essentially set up like the process industry, where problems in one part of the flow cause delays in all other parts of the flow,’ says CEO Lars Krejberg.
He adds that there is a possibility that the Danish government will enter into an agreement with the German state of Schleswig-Holstein to place a deposit on German aluminium cans. If this happens, it will mean a rise of up to 50-100 per cent in the number of cans that Dansk Retursystem will have to collect, receive, and process.
Dansk Retursystem A/S has, therefore, with the help of Langebæk A/S, first carried out a thorough analysis of the company’s flow and then modelled several scenarios for both the short and long term. The purpose is to ensure Dansk Retursystem has an optimal production strategy in terms of location, capacity, and production design.
‘It’s about being proactive. We are facing the upcoming need to change and expand, so we can continue to fulfil our task in the future. The analyses we have now completed together with Langebæk A/S give us peace of mind when we need to present our investment needs to the board. We know that our plans and investment needs are based on the best possible foundation,’ says Lars Krejberg.
The most important questions for Dansk Retursystem’s future-proofed plan were to look at:
How many factories should there be?
What are the optimal locations for the factories?
How should the factories be designed to ensure the necessary capacity?
‘We can see that we will lack capacity in the future; In fact, there is already very little room in our production today. But we can also see that the packaging composition is changing. For example, we are currently moving from refillable plastic bottles to single-use plastic bottles, and there have been other such shifts during the 13 years we have existed,’ says Lars Krejberg, adding, ‘We expect more changes in the future, and this means that our production needs to be scalable and flexible. We must be able to quickly switch from handling certain types of packaging to handling new types. It could be changes in form or material.’
Based on the analyses from and discussions with Langebæk A/S, Dansk Retursystem has now established a production strategy. The strategy maintains two factory locations, which will be situated near the current locations in Hedehusene on Zealand and Løsning in Jutland. However, there will be no further expansion of the existing factories.
Three locations would be optimal in the short term, but in the long term, two locations will be more business efficient. Two large factories will make it easier to invest in advanced technology that can streamline production and also provide more scalability.
‘Our existing premises are simply too cramped. We are therefore currently negotiating with municipalities in the two areas about suitable locations,’ says Lars Krejberg. The analysis work took two to three months to complete, with Dansk Retursystem providing data and Langebæk carrying out the network optimisation using the ILOG LogicNet Plus XE tool, combined with Langebæk's expertise in the general supply structure in Denmark. ‘It has been a fairly painless process. The flow analysis provided us with a good foundation for the network optimisation, and the collaboration between us and Langebæk has worked well,’ he continues.
The network structure still plays a central role in creating value in the supply chain, and that role will only grow in the future. Just-in-time supply chains can only be implemented to a certain extent because there will always be differences in the pace of the market and the supply system.
‘Warehouse, production, and distribution locations are a source of significant competitive advantages, but they also represent a substantial cost for all supply chains, regardless of how much lean management has been implemented. Therefore, there are strong business incentives to analyse whether your network structure has the right physical focal points in relation to balancing costs with service levels,’ says partner John Carstens from Langebæk A/S, adding:
‘Supply chain functions have focused heavily in recent years on working with transporters and suppliers to deliver lower prices, higher quality, and faster deliveries. This work must, of course, continue, but if you want to gain significant additional benefits, the natural next step is to do what Dansk Retursystem and many other companies have done: Closely examine your own network structure in terms of the number and location of warehouse, production, and distribution sites in relation to customers and suppliers.’
Dansk Retursystem A/S is a privately owned, non-profit company that has been granted the exclusive right by the Danish Environmental Protection Agency to operate the Danish deposit and return system through a politically adopted decree, until the end of 2019. The company recycles single-use packaging made of plastic, glass, and metal. After sorting and counting, the containers are sent for processing and recycling. The materials are used primarily in the production of new cans and bottles. In 2013, for example, the company collected enough aluminium to produce approximately 439 million new cans. In 2013, Dansk RetursystemA/S had a turnover of DKK 1.561 million.