UPS Longitudes | Return to Sender: Navigating Reverse Logistics
In a traditional linear economy, we make goods, use them and dispose them. In a circular economy, by contrast, the end of a product’s life can be an opportunity for new value creation. But for the circular economy to work, materials must be in the right place at the right time.
As companies continue setting ambitious goals to advance circular strategies, they look to partners like UPS to help make reverse logistics seamless — whether reclaiming products for their “next life,” helping consumers recycle goods or packaging and collecting items for refurbishment for future use.
At GreenBiz Circularity 20, I joined Katie Fehrenbacher, GreenBiz Senior Writer and Transportation Analyst, and Ezgi Barcenas, Global Vice President of Sustainability at Anheuser-Busch InBev, to discuss how smart reverse logistics strategies deliver environmental benefits and business value.
Check out our conversation, or read an edited version of our chat below.
Fehrenbacher: What are some strategies around making reverse logistics more sustainable and more efficient?
Barcenas: Brewing great beer depends on healthy environments and thriving communities. A huge component for AB InBev is our circular packaging vision: By 2025, 100 percent of our product will be in packaging that is returnable or made from majority recycled content. To achieve this, we must invest in recycling supply chains and reverse logistics strategies.
This includes promoting our returnable bottles, which can be used up to 30 to 40 times and generate six times less emissions than a single-use bottle. In 2019, more than 40 percent of ABI's global volume was sold in returnable SKUs.
We’re also reducing packaging materials and weight wherever possible in collaboration with our partners. Finally, we’re rethinking how to innovate and raise public awareness to ensure we get more of these bottles back.
“As companies continue setting ambitious goals to advance circular strategies, they look to partners like UPS to help make reverse logistics seamless.”
Lassiter: UPS is an important part of the global supply chain — to the tune of 3 percent of daily global GDP. Our customers expect us to help advance their sustainability efforts and their circular strategies.
In collaboration with Nespresso, we’re addressing coffee pod recycling — made complicated because leftover coffee grounds contaminate used aluminum pods. Our solutions simplify returns: You can mail or drop off prepaid recycling bags at any The UPS Store, Nespresso boutique or participating retailer.
Eventually, capsules go to recycling partners who recycle the aluminum and compost the coffee grounds.
Fehrenbacher: What have been some of the biggest lessons from trying to make this process more efficient and sustainable?
Lassiter: One of the biggest challenges is consumer awareness. Consumers have to do their part. For example, with the Nespresso recycling program, consumers have to be aware and then willing to return or drop off the coffee pods. As consumers continue to do more, we will keep trying to simplify the process.
Scalability is another challenge. UPS works with unique industries like consumer commodities and refurbished electronic equipment. Each value chain is different and warrants its own creative solutions, which can limit scalability in the short term.
Barcenas: Consumer awareness is also a challenge for us, along with a lack of recycling infrastructure and incentives and material traceability. Luckily, partnerships come naturally to us.
Our partners can be our consumers, customers, retailers, suppliers or startups. We partner with organizations like Brazil’s Green Mining, which is a member of our 100+ Accelerator program, to map high concentration areas of disposable glass bottles and set up collection systems for our glass recycling plant in Rio de Janeiro. Another example is Nomo Waste — also a member of the 100+ Accelerator program — which supports the reverse logistics for returnable glass bottles in Colombia.
An added benefit is that waste collectors in many regions are predominantly female, so these reverse logistics programs can empower women.
“To establish those cultural norms around reverse logistics and enable a strong circular economy, we need to figure out how to incentivize different parties, like the consumer, along the value chain.”
Fehrenbacher: Is there a way for these reverse logistics systems to be profitable or have commercial benefit?
Lassiter: E-commerce has skyrocketed in recent years and most recently during the COVID-19 pandemic as people rely on delivery of everyday goods. As e-commerce grows, so do returns.
We’ve partnered with Optoro — a technology platform — to provide solutions that streamline returns. By combining our operations and logistics expertise with Optoro’s technology platform, we’re helping retailers figure out the next best stop for returned goods, eliminating unnecessary shipping and reducing waste destined for landfills.
Barcenas: We’re one of the largest champions of the circular economy in the world because of our returnable bottle system.
So, for us, it’s very clear: If we’re getting more aluminum scrap or cullet back into the system from our returnable bottles, the upstream costs go down significantly. There are huge benefits. It’s just about creating the ecosystem.
“No one company can do it by themselves. These types of partnerships are critical to solving our shared, not individual, challenges.”
Fehrenbacher: How can we make reverse logistics more efficient and sustainable? What are UPS and AB InBev looking for in terms of new technologies, policies and partnerships, among other needs?
Barcenas: We need enabling policies, innovation, recycling infrastructure and transparency across the value chain, along with established consumer behavior and cultural norms.
Unfortunately, many believe that there is no demand for recycled content. But in reality, many food and beverage companies are looking for more recycled content. The true challenge is the supply.
Ultimately, when you’re solving for the supply problem, you’re solving for many different aspects of the value chain. To establish those cultural norms around reverse logistics and enable a strong circular economy, we need to figure out how to incentivize different parties, like the consumer, along the value chain.
Lassiter: In addition to smart policies that incentivize companies to consider the impacts along a product’s full lifecycle, collaborations are also especially important.
No one company can do it by themselves. These types of partnerships are critical to solving our shared, not individual, challenges.
For more information about UPS’s commitment to advancing a more circular economy, click here.