Clouth S.(a), Thomas B.(a) and Wright D.(b)
a) Resource Futures, Bristol, United Kingdom
b) Phineas Products Ltd, Bristol, United Kingdom

Keywords: Resource efficiency; circular economy; closed loop recycling; LCA; product re-use.

Abstract: In 2013/14 Resource Futures led a Technology Strategy Board (TSB) funded study to determine the feasibility of implementing a circular economic business model for Phineas Products Limited. The circular economy, as applied to Phineas Products, involves a system in which products are manufactured in the UK and recycled only when the product has reached the end of its usable lifetime.

The objectives of this feasibility study were:

  • To understand the baseline business model for Phineas Products’ main product line, the stackable shoe hanger, and to develop four system alternatives
  • To determine the technical feasibility of the alternative models on a range of material formulations for new products to assess the quality/durability
  • To undertake economic and environmental analyses, including sensitivity analysis and identification of critical variables
  • To quantify the potential economic and environmental benefits of full-scale implementation of each of the options.

The study found that re-use systems would be associated with significantly less CO2 per hanger than the baseline and recycling models examined. The largest potential savings in the re-use models came from the reduced manufacturing burden and material production emissions. Smaller gains were also realised in the distribution and the disposal emissions. The study also found that the re-use models offer the greatest financial costs savings over the baseline disposal hanger as might be expected by the reduced material requirement and distribution impact. Following the study, Phineas Products has re-shored approximately 50% of its manufacturing operation and established a closed loop recycling system for its products.

Introduction

Introduction

This paper presents the results of the Technology Strategy Board (TSB) funded ‘New designs for a circular economy’ study to determine the feasibility of implementing a circular economic business model for Phineas Products Limited. Undertaken as a collaboration between Phineas Products Limited, Resource Futures, and the University of Warwick, the aim of the project was to evaluate the economic and environmental impacts, as well as the technical feasibility of transitioning to a more circular business model for a specific product line of Phineas Products’ portfolio. The circular economy, as applied to Phineas Products, involves a system in which products are manufactured in the UK from UK- sourced recycled material, designed to be used and re-used in closed loop cycles, and recycled only when the product has reached the end of its usable lifetime.

Phineas Products Ltd

Phineas Products Ltd., based in Bristol, UK, designs, manufactures and distributes a range of bespoke plastic shoe hangers and boot clips for some of the largest multinational clothing and shoe retailers. The company has been in operation for 27 years, during which it has built on-going and successful relationships with retailers such as Clarks, Marks & Spencer, Mothercare and Next. Phineas manufactures over fifty million hangers per annum, most of which are used in the UK each year, representing the majority of the domestic shoe hanger market. The company has strong environmental, ethical and social policies, and is committed to advancing the sustainability of its operations by redesigning its product portfolio, trailing new materials, improving production efficiencies and developing new business models to further reduce the environmental impact of its products.

The present model

Phineas’ business model at the time of study was linear in nature and serves as the baseline model against which all costs whether financial or environmental are compared. The baseline model (Figure 1) was broadly as follows:

Schematic indicating the baseline manufacturing system

Although this model has been very successful historically, Phineas wanted to investigate transitioning to a more resource efficient, circular economic business model for a number of economic and environmental reasons. In terms of economics, the availability of quality in Asia can be variable and both raw materials and labour costs are forecast to rise in price, impacting upon profit margins and threatening the economic viability of the current model. On the environmental side, public and governmental pressure (in particular, the Sustainable Clothing Action Plan (SCAP) and the Packaging Essential Requirements Regulations) is encouraging retailers to examine the environmental and social credentials of their supply chains. Clients of Phineas were beginning to ask for re-usable products to reduce the materials dependency of their operations and meet the Corporate Social Responsibility objectives. Given these drivers, Phineas is considering new ways of supplying retailers with products and seeking competitive advantage in doing so.

The objectives of this feasibility study were:

  1. To understand the baseline business model for Phineas Products’ main product line, the stackable shoe hanger, and to develop four circular economy business model/system alternatives, each with a different manufacture/distribution/disposal/re-use configuration.
  2. To determine the technical feasibility of the proposed business models by conducting Dynamic Mechanical Thermal Analysis on a range of material formulations for new products to assess the quality/durability, and the effect of the addition of commercial additive packages.
  3. To undertake economic and environmental analyses on the baseline and each of the four system options, including Life Cycle Carbon Assessment (CO2eq), Life Cycle Costing and Sensitivity Analysis.
  4. To quantify the potential economic and environmental benefits of full-scale implementation of each of the options.
    Methodology

Mechanical Thermal

Analysis was undertaken to assess the quality/durability. The effect of the addition of commercial additive packages was also assessed. These analyses were undertaken by the University of Warwick.

A spreadsheet based model was developed by Resource Futures for the modelling performed in the project. System data was provided by Phineas Product Ltd for the baseline model. A number of business model options were also framed and investigated for the project. In total, the following options were examined:

  1. Baseline – the majority of the Phineas Products hangers are produced in China from virgin polystyrene and polypropylene, and then distributed to approximately thirty customers across India, China and Vietnam. Most hangers are then packaged with the shoes and distributed to the UK by sea freight. Upon arrival in the UK, the hangers are transported by road to a number of retail distribution centres where they are held before being moved into the retail environment
  2. Recycling – The model uses as a default 30% recycled material from secondary sources. Higher proportions are analysed in the study sensitivity analysis as it is possible to create polystyrene products with 100% recycled content
  3. Re-use Model 1 – Re-used in baseline supply chain (captured and returned to Asia manufacturing base)
  4. Re-use Model 2 – Re-used in UK in supply chain (captured and returned to UK manufacturing base)
  5. Re-use Model 3 – Re-used in-store (captured in-store – re-used 5 times in shop).

Data were collected or estimated for each alternative to the baseline. The model was used to undertake both life cycle carbon and life cycle costs assessments for the baseline system and five alternative options across the life full cycle. Sensitivity analysis was performed on key variables in the model including numbers of time each product was re-used and handling time.

Results

Environmental performance

The study found that re-use systems were associated with significantly less CO2eq per hanger than the Baseline and Recycling options. The greatest savings in the re-use systems comes from the reduced manufacturing burden and material production emissions (See Figure 2). Smaller gains are also realised in the distribution and the disposal emissions.

CO2 equivalent emissions per hanger for each of the models and life cycle stages

Financial performance

The study found that the re-use models offer the greatest savings over the baseline per hanger as might be expected by the reduced material requirement and distribution (Figure 3). Of all the re-use models, the configuration where hangers are manufactured in the UK and sent back to Phineas for quality checking and redistribution provided the best financial performance as a result of the lower distribution costs. The re-use model where hangers are re- used in store is modelled to be the most expensive of the re-use models due to the higher cost in the use phase on account of estimated additional retailer handling time. The recycling model shows marginally decreased raw material costs but higher manufacturing costs making it more costly than the baseline and the re-use models. However, as a result of expected oil price rises in the coming decades, the recycling model becomes less expensive than the baseline after approximately five years.

Life cycle costing results of each model

Technical performance

Polystyrene was found to be the best candidate for re-use as a result of its durability and rigidity, followed by polypropylene and talc filled polypropylene. The suitability for assessing potential re-use can be judged by much clearer pass/fail criteria with polystyrene (Figure 4), whereas quality issues such as part distortion were found to affect polypropylene samples to a greater degree. However in all cases an inspection stage is recommended to look for visual signs of stress damage at stressing points mainly located on the joints of the components.

Mechanical testing for five re-use cycles

A series of sensitivity analyses were carried in the feasibility study to determine the effect of a range of critical variables on the environmental and economic costs of the various models (Figure 5). The following variables were deemed to be critically important in determining the viability of the re-use/recycling models: proportion of recyclate, number of re-use cycles, in-store handling time and oil price inflation.

Cost per hanger with additional handling time in-store

Conclusions

The study intended to answer the question of whether it is feasible from a technical, environmental and financial perspective, to commence large-scale manufacturing of the Phineas Products shoe hanger in the UK and promote the use of the hangers in repeated cycles. The modelling suggested that systems where the products are manufactured in the UK and subjected to multiple re-use cycles do indeed perform better from a financial and environmental perspective. The research also found that the hangers, subject to reasonable use as well as the material used, are potentially durable to endure up to 5 cycles of re-use.

Following the study, Phineas Products has re- shored approximately 50% of its global manufacturing operations to the UK. A closed loop recycling system has also been established for products that are taken back by the retailer. The company has purchased recycling granulation and injection moulding equipment, which they also collaboratively share with an adjacent plastics products manufacturer. Phineas and Resource Futures are seeking further research funding to formally trial a re-use system for their products with a high street retailer.

Acknowledgments

Our thanks to the Technology Strategy Board (Innovate UK) for their funding support for the project. We also wish to thanks the University of Warwick for their assistance for the study.

References

CIBSE. (2012). Guide F Retail Benchmarks. Distribution Warehouse (electric powered, typical usage).

Defra/DECC. (2011). GHG reporting August 2011.

Defra. (2013). Conversion factors for greenhouse gas reporting.

OECD. (2007). Maritime Transport Costs Database (HS64 Footwear 2007).

 


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