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Online Сase Solution by Benchmark company at Changellenge Cup Moscow 2012
Tula 0: Getting rid of landfills,cutting costs and getting greenMade by Benchmark Company exclusively for CL Cup Moscow’12 >>24 November 2012
Zeroing allwaste sent tolandfillsStrategy steps Description and key initiativesCutting costsand reducingenvironmen-tal impact-$6.8M costs in 2013-2015+$84M in cost savings 2016-2020Quick switch from landfills usage to greeneroptions without significant cost increase Incinerate floating foam, recycle remainder Invest in waste sorting, employee motivationTransition to more cost-efficient ways thatallow to reduce environmental impact Build a small facility for paper andcardboard recycling Imply initiatives that expand reuseoptions and lower packaging amountTo achieve sustainable goals Tula factory should firstly switch fromlandfills usage to greener options and then concentrate on cost reduction2Source: Benchmark Company analysis, case data.Goals Approach Cutting costsZeroing Landfills Results
3We will consider 3R + Incineration for Landfills Switching and take intoaccount different facilities to recycle and reduce waste for cost cuttingSource: Benchmark Company analysis, case dataLandfillsSwitchingReduce*Reuse/Eliminate*IncinerateRecycleCostcuttingReduce costsReduce volume ofwasteChosen option Can’t useNot an optionGoals Approach Cutting costsZeroing Landfills ResultsBuild a smallfacilityBuild mid-sizedJV facilityCut currentcontractors costsChange facilitiesBuild large jointventure facilityIncrease recyclingefficiencyFull recyclingSplit betweenavailable optionsFull incineration* Unfortunately, there is no opportunity to reuse or reduce waste that is sent to landfills due to its natureSwitch from foamincineration
4The best possible way to get rid of landfills is to use both incineration andrecycling facilities in Moscow district for different types of wasteSource: Benchmark Company analysis, case data, Cleandex, see “Landfill effect” in Excel attachmentFull incinerationSend all types of waste to1 of 4 Moscow incineratorsFull recyclingSend all types of waste toMoscow recycling facilitiesIncinerate foam,recycle remainder*Since there is no recyclingfacilities to recycle foam0,13,11,74,83,49,90,512,03,41,74,93,40,36,81,8Goals Approach Cutting costsZeroing Landfills ResultsFeesTranspor-tationCostsavingsTotalcostsInvest-ments***ContractorsavailabilityEnvironmentimpact*** Based on our market analysis there is no facilities that currently recycle flotation foam in Russia, but all other types of waste thatare currently sent to landfills can be recycled (garbage, ice-cream waste, some metal)** In this case the environment effect for each option is compared to other options since we can’t adequately evaluate that impact*** Investment costs = Containers costs + Employee Motivation Program costs (see more detailed analysis in excel file)In mln of rub, compound effect for 2013-2015, discounted to 2012Switching option
5The factory will benefit from building its own small facility since itprovides the best operation cost savings and low investment costsSource: Benchmark Company analysis, case data , see “Recycle effect” in Excel attachmentGoals Approach Cutting costsZeroing Landfills ResultsTransport.savingsRecycleEarningsInvest-mentsTotalsavingsOverallRisksOwn landusageRecyclablematerialsSwitching optionOwn small factoryBuild own small-sized facility thatrecycles our paper and cardboardand some 3rd parties’ waste touse the spare land*Own middle factoryBuild a mid-sized facility withdiversified product line using ourown land**Large JV factoryCooperate with the governmentcompany (e.g. Rostechnologies) tobuild a huge factory for multipletypes of waste***4,65,041,441,035,720,05,3 21,015,80,04,019,8PaperCardboard+ Plastic+ Glass+ Metal+ Others* Since the highest transportation cost are caused by paper and cardboard wastes, it is more efficient to capture these types ofwastes by our own recycling** The capacities allow a few companies to recycle their waste on this factory, so the investment costs will be divided between them*** All investment costs will be carried by the government due to the significant initial investments required to build such capacitiesIn mln of rub, compound effect for 2013-2015, discounted to 2012
* In mln of rub, compound effect for 2013-2015** 10% of polyethylene waste, cardboard and stained wrapping are supposed to be reduced*** By using less packaging materials costs for recycled plastic and paper decreases by 10%**** Price for sorted black metal increases by 20%, for aluminum scrap – by 25% due to pre-recycling sorting process6Finding ways to reuse waste to maximum extent, metal sorting andpackaging reduction will allow to save up to 43M in costsSource: Benchmark Company analysis, case data, see “Reuse calculation”, “Recycling” in Excel attachmentGoals Approach Cutting costsZeroing Landfills ResultsReuse materials ina good condition**Give a second life to some well-preserved plastic/paper wastesthat are currently fully recycledIncrease recyclingefficiency***Decrease the production ofpackaging wastes, on-the-factorysorting of metal scrap into itsparts to increase the price Order merchandise in bulk Use returnable containers Switch on durable boxes Sort metal scrap before recycling**** Reuse polyethylene waste Use gently used cardboard for storage Clean and reuse stained wrappingStrategies Key initiatives Cost savings*813161,01,01,52,5Total: 43M
7The proposed strategy will provide 77M in cost savings with immediateswitching from landfills and long-term reducing and recycling measuresSource: Benchmark Company analysis1. Landfills switching 2. Cost-cutting2013 2016 20203 yearsGoals Approach Cutting costsZeroing Landfills Results5 years Incinerate flotation foamand recycle remainder Invest in waste sorting,employee motivation Build a small facility for paper andcardboard recycling Imply initiatives that expand reuseoptions and lower packaging amountEnvironmental impact: Landfill will be reduced to 0% during first year Switch to more environmental friendly typesof dealing with waste New job places creation through new facilityCost effect Quick switching from landfills: 7M in costs Own facility: 41M in cost savings Cost efficiency measures: 43M in cost savingsNo landfills77M cost savings
Benchmark Companyhigh-experienced team of fellows with strongspirit that study and work together for 4 yearsMarkKhlynovMariaKochmolaSergeySlutskiyElizavetaIvakhnenkoGreat case cracking track Semifinal of McKinsey BD’12 3rd place at Microsoft CaseCompetition’11 Semifinal of CL Cup Russia’11Excellent academic study High achievers of FinanceUniversity, 5% of course rating Grants from Russian EconomyFund, Potanin Foundation, Lukoil,Gazprombank, VozrozhdenieUnique working experience Worked in PwC, JTI, MCG Organized of Fincontest’12,Russian Innovation Convention’11 Participated in student consultingproject with BCG ad-hoc support8