Publication Date
Authored by
Kenneth Critchlow, Pedro Benitez
Topic(s) Covered:
  • Network Design
  • Omnichannel
  • Sustainability

Plastic waste has been a growing source of environmental concern, and the CPG industry is the largest consumer of plastic while also having the highest plastic consumption to waste ratio. Consequently, under greater levels of public scrutiny, many CPG firms have publicly committed to source fractions of their plastic consumption from recycled plastic sources. Despite these intentions, current quantities of recycled plastic are substantially less than what is required to meet these goals, in part due to low recycling participation rates and inefficiencies of traditional recycling methods. To address this challenge, we evaluated three different types of circular supply chain networks, reliant on collaboration between material recovery facilities (MRFs) and Amazon last-mile delivery facilities (LMDs). These networks utilize empty backhauls of Amazon delivery vans to collect plastic waste from households, which is then consolidated at Amazon LMDs and shipped to MRFs. Furthermore, we introduce a new, theoretical facility referred to as a Smart Material Recovery Facility (SMRF), which is constructed adjacent to Amazon LMDs, and designed to process specific types of plastic material. The goal of this research is to determine the optimal network design that maximizes total system profit and quantifies the distribution of costs and profits of participating actors. To this end, we conducted a case study based in the State of New Jersey, and through mixed integer linear programming, we compared networks using no SMRFs, only SMRFs, and an unconstrained number of SMRFs with respect to optimal profitability followed by sensitivity analysis and Monte-Carlo simulation to understand network behavior and robustness to variability. In doing so, we determined that the network with unconstrained selection of SMRFs was the most profitable, presenting positive annual net profits, and a robust network of one SMRF and six MRFs that were able to capture the supply of plastic entering the network. The results of this case study present the groundwork for further network evaluations and present an opportunity for collaboration between the CPG industry, Amazon, MRFs and SMRFs in the development of these circular supply chain networks.

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