M3S10 Reverse Logistics Mini Case

Building a New Supply Chain – Reverse Logistics – Mini Case Study Report

PROBLEM:
The Company is having a difficult time receiving a healthy profit due to the high costs of garbage disposal and the lack of alternative sources of income. Failure to find alternate sources of income will make it difficult for the Company to remain in operation and be profitable.

CAUSE:
The high cost of disposition is cutting deeply into profit margins. Disposal fees are unavoidable if wanting to follow the legal methods of disposal; therefore must be factored into their cost structure. The Company is not utilizing reverse logistics or taking advantage of all opportunities to recover costs by creating a reverse logistics system.

ANALYSIS
Finding an opportunity to recover scrap material is key to the waste business.
Proper sorting and handling is key to maximizing revenue. Unfortunately after recovering and cashing in the scrap metal, the Companies revenue is not $550 as costs of transportation, cost of truck ownership and insurance, as well as labor rates are not considered. This would reduce profit by a set amount, but unfortunately cannot be calculated in this case. It would be safe to say that at

the end of the day, the Company is not making enough money on it’s own in the garbage collection business to sustain itself if they do not find alternate sources of revenue as a constant supplement to the income of the company.

SOLUTION:
It is recommended that the Company pursue its scrap metal waste collection as a no-charge option to their garbage disposal. It is also recommended that the company establish drop off bins for the general public to collect scrap metal.
This would be a no-charge option for the public to dispose of their waste metal.
The Company would wait until the bins are filled, then sort and cash in the scrap waste accordingly. It’s important that scrap is sorted by material type – clean metal vs. painted should be separated, as well as aluminum, copper, tin and the sort. It should be a minimal or no-charge option along with their regular garbage collection services for the construction sites.

It is recommended that the

company pursue this until very sustainable. At this point it is recommended the company expand its facility to a full-service scrap metal yard dealing in highvolumes of material of which there is a tremendous amount of money to be made. The key to the companie’s success is the mindset of constant growth. Do not settle for the status quo but continuously find new opportunities to increase the volume of scrap metal being recycled through their facility.