Circularity is trending. But how to activate your supply chain?

“There is a lot of publicity around the industry of our customers, because of developments such as the plastic soup and the ban on single-use plastics. We see this polluting image as an opportunity for sustainable development”, says Rinus de Kok, commercial director of Pallet Return Systems (PRS). The company developed a European pallet pooling system for producers of polymers. These producers deliver plastics granulate to their customers in entire Europe, who use this to produce all kinds of plastic products. The beads are delivered in predominantly 25 kilo plastic bags on pallets; over 5 million pallets are transported each year.

Together with the polymer industry, PRS designed a standard pallet 25 years ago, that all major players in the industry use. Very suitable for a circular system. PRS set up a pan-European network of about thirty third party PRS pallet suppliers for new pallets and forty depots to collect and repair the pallets in order to supply them to the next customer. The company operates a dedicated pooling IT platform and a central Collection Service Centre to keep track of the pallets and to contact the 15.000 locations where they end up.

The result: by reusing the pallets as long as possible, PRS saves resources for the production of new pallets. After reusing them multiple times, the pallets are used as biomass for diverse applications. Additionally, by delivering them to the next customer from a local depot, PRS manages to reduce the number of transportation kilometres and empty load running by trucks. “The density of the network is very important here”, De Kok says.

From cost reduction to CO2 reduction

PRS’ circular business model may not be new, but the story around the model is. “We invented the pooling model to reduce costs. However, this goes hand in hand with reducing the ecological footprint of our customers”, De Kok explains.

Telling this story is important to make the system work, he states, because it requires an extra effort from all parties in the supply chain. “Customers used to buy single use pallets. Once they load the pallets with their products and ship them, it’s not their business anymore. But in our system, we remain the owners. We ask our customers to inform us where they sent the pallets, so we can go there to recollect them after use.”

What makes the system even more challenging, is the fact that PRS’s customers send the pallets to their customers, plastics convertors. They too have an important role in the system. It is the responsibility of PRS’s customers to make sure that these manufacturers cooperate as well. “For example by not selling the pallets to a third party or burning them, but to keep them apart until we can collect them”, De Kok explains. “That is why it is important to demonstrate the benefits of this model to our customers. And we help them to deliver that message to their customers.”

Green Label

To emphasize this circular model, PRS has introduced the Green Label. “Our customers, but also their customers, can use this label when they cooperate sufficiently in reusing the pallets”, De Kok explains. “We notice that the Green Label helps to increase that cooperation.”

“When the sales representatives of my customers are talking to the plastics convertors, of course they are more likely to talk about their products than about the pallets on which the products are delivered. But now our pallet is part of their sustainability strategy. That makes it far more interesting for our customers to address returning the pallets with their partners.”

Circularity is trending

Why introducing a Green Label now, when the circular pallet pooling model already exists for over twenty years? “The past few years circularity has become an increasingly important topic in the polymer industry”, says De Kok. “However, not everybody realises that our service fits into the circular economy very well. The Green Label allows us to show that we are not just another pallet supplier. Using our pallets and our service, our customers can contribute to the circular economy.”

The Green Label also allows PRS to interact with customers on a different level. “In procurement processes, circularity is usually not a knock out requirement yet. Price is often the decisive factor in tenders.. Now with the Green Label message, I can connect with our customers to different levels and departments. Instead of simply selling our product, we can then talk about sustainable partnership.”

Financial incentive versus the sustainability message

Apart from the Green Label, PRS uses a financial incentive to motivate customers to return as many pallets as possible. For each customer, PRS measures how many pallets are being recollected. The company provides customers with information about which of the plastic convertors they should address to improve that recovery ratio. The rewards are a better price and a lower environmental impact.

Is it really necessary to underscore the circular aspects of the pallet pooling model? Yes, stresses De Kok. “The real incentive is the fact that our partners become aware of the circular idea. I can engage far more easily with customers when emphasizing the sustainability message.”

Catalyst

That message seems to work as a catalyst, De Kok notices. Before, he only talked to customers about the price of his service. But the circular model leads to in-depth conversations about sustainability and to new ways of collaboration. “The other day a client said: You visit nearly all plastic convertors in Europe. How about collecting the polyethylene bags we deliver our granulate in, along with the pallets? There are a lot of materials that we can collect and separate in this way. PRS can do that, because we have the network and the facilities.”

Meanwhile, De Kok participates in discussions on how to boost circularity in the plastics industry at European level. There is enough reason to be optimistic, but he also takes a critical stance. “There are plenty of good intentions, but not enough deeds. Purchasers should pay more attention to circular products and services, it should be one of the decisive factors. We want to be a catalyst in that process.”