Industry wide Business Standards for the Cartridge Recycling Industry

By John Bannister - Fasint Ltd
Daniel J Roberts - Incartek
- both associates of Excelsis Enterprises.


Industry-wide business standards for the cartridge recycling industry?

Why does an industry such as the cartridge recycling industry need business standards? Should they be local, national, European or even global and what benefits would they bring to the industry? How can IT systems be implemented to assist with this?

First of all, let’s take you briefly away from this industry and take a quick look into one or two other industries and their routine operations. How has implementing global business standards and best-business practice affect other industry sectors and their ability to remain competitive in today’s market place?

Our first stop is to an office within the aerospace industry. The company in question carries out regular maintenance checks and repairs on passenger aircraft.

It’s crucial that this company turns around aircraft as quickly as possible, naturally ensuring that all safety regulations and quality checks are adhered to.

The office in question is responsible for ensuring that the thousands of spare and replacement parts that are needed during a complex aircraft maintenance operation are made available to the ground-crews and engineers at the right time during the time that an aircraft spends with the company. Many of the parts that are prepared before work starts are standard requirements based upon the industry-specific guidelines that show that this or that part must be replaced after a certain amount of flying hours.

However, up to 60% of the parts needed during a single maintenance stopover come from what the industry call “findings”. In other words, this is where an engineer may have found a fault or excessively worn component whilst carrying out a specific task. This company does of course not hold spares for every single aircraft component for each type of aircraft that the company maintains.

Previously, the office spent most of its time ringing up suppliers across the world to beg, borrow or steal specific components and to get them to the shop floor in time to ensure the successful turnaround of the aircraft.

Today, the operator logs on to the company computer system to double check their logistics system to see if the needed component is actually in stock but perhaps reserved for another maintenance job. If so, the system calculates the item’s delivery time and the operator will then have the facts at their fingertips to be able to make the decision to free up this item for this specific requirement and let the system automatically order new stock to be delivered in time for the reserved job.

Perhaps however, the company is not holding any stock of the required component. In today’s world, that is no problem either. The operator links his requirement onto a worldwide spares system, finds the required component, reserves it for his company and arranges delivery. Once this system has confirmed the delivery time, the maintenance engineer is informed and can carry on with other work until the new component arrives.

Our second stop is in the food industry where we meet a company’s Procurement Director who is very happy, as she has just been able to report a substantial saving over the previous year’s procurement costs. So how did this happen?

Previously, this company, along with many others in its industry, had battled with its suppliers to provide their required raw materials for as little cost as possible. However, as the quantity of the goods they needed was no longer increasing, this company had reached a stalemate, it was at the top level of its bargaining power and was no longer in a position to gain agreement for further cost reductions from its suppliers.

Now, this company has joined forces with other major companies within the industry who, it should be noted, are actually major competitors.

Through this new collaboration the companies pool their purchasing requirements through a communal E-Commerce web-site. Buying in bulk together like this returns the lost bargaining power and enables them to further reduce procurement costs.

The procurement process is now fully automated and the individual company’s IT business systems are able to track which purchase orders belong to their company and manage them accordingly.

How can the cartridge recycling industry benefit from lessons learnt here?

Returning from our brief journey across these two industries, perhaps the two biggest questions that arise are do these examples of complex business solutions have any bearing on small enterprises, and secondly, how can the cartridge recycling industry benefit from any lessons learnt here?

To address the first question, many organisations such as the aircraft maintenance and the food industry company have invested heavily in their IT systems. That is to be expected. They are, after all, what most people would label as “global players” or “corporate” companies.

However, more important than an individual company’s IT spend is the fact that the scenarios that you have just read about have only come about through these industries defining and taking on industry-wide best business practice and reflecting them within their IT systems, their infrastructure and implemented business methodologies.

Their industry leaders have not only debated and created global business methodologies used today across their respective industries but have also involved key players from outside their industry to assist them in creating systems that achieve their goals.

For example, many industries turned to the German IT company SAP and worked with them to build corporation-wide IT solutions to deliver and support industry-specific best business practice. These solutions are consistently reviewed by work-groups and user-groups to ensure that they reflect the latest evolvements to any industry-specific best business practice. In this way, a new client purchasing an SAP solution for their industry does so with the knowledge that their IT investment will have been designed to reflect upon and support the best business practice in their chosen industry, and help them maintain their competitive edge – vital in today’s marketplace.

That is all well and good, you may say, for the large multi-national, multi-billion dollar companies who are well-established and operating in traditional well-established industry sectors.

But what about new companies that are defined as being in the small-medium size market space? Would the same hold true? Would, for example, a company such as SAP be interested in this market space?

The answer to these questions is a resounding YES!

The market for business software developed for small and mid sized enterprises (SMEs) was already crowded. Players like Microsoft and Best Software had bought up popular software labels in an effort to corner this ever-expanding market. In addition, there have been many half-hearted and failed attempts by large software players that proved these companies either didn’t understand the SME market, or that they were never really committed to being successful in this area in the first place.

The SME market is very demanding and has changed dramatically in the last 10 years. Today there is a very faint line that separates the demands that SMEs face versus those of large corporations. Today, if you plan to be in business, it really doesn’t matter if you are small or large; the rules are the same and tools are as complex for one as the other. SMEs therefore are creating a demand for increasingly complex solutions.

Unfortunately, their budgets have not expanded with their needs. In fact, it is the opposite; the SME requires more functionality than ever before but has less money to spend, especially on IT solutions.

So why has SAP, the business software company jumped into the SME market and what makes them think they can succeed where others have failed?

We know that SAP is seeking growth in these markets. It’s strategy has two unique aspects. Firstly, they are staying with what they know best - and that is business applications. This alone is a huge advantage over Microsoft for example, which is trying to make the transition from Windows to SME applications, or Oracle which is going from database to business applications.

Secondly, SAP has a tremendous ecosystem of customers and users around the globe. There are hundreds of large companies that have many small divisions who are often unable to justify the cost of implementing high-end SAP products. These opportunities are often lost to various low end packages, creating a dilemma for companies which use several different packages to try to integrate all locations into their corporate IT structure. SAP recognises this unique opportunity to approach this ecosystem with a low cost alternative, but with all of the necessary tools and interfaces into the existing SAP corporate platform.
It is important to understand that SAP’s offering to the SME market is not a “light” version of SAP’s larger applications. They have released an entirely new platform and a whole new division called SAP Business One.

SAP knew not to try to “downsize” existing offerings, but to start with a fresh product, developed specifically for the SME space. The other unique aspect of the strategy is that for this new division, they recruited their staff almost exclusively from the SME software market rather than moving people around from within. The result is a team of professionals who know the SME market and are armed with a fresh new product.

It is our belief that SAP will not only succeed in this market but will become a dominant player in it over the next three years. We see here a company that has delivered a product to SMEs that was developed through the eyes of the SME and all of the challenges they face to be competitive against much larger companies.


So, for those organisations wishing to be successful in today’s business world, great attention is given to business standards and global best business practice.

The cartridge recycling industry is in many respects also controlled by business standards. However, these business standards seem to be more centred around what legislation (both country-specific and of the “made in Brussels” variety) demands of the industry as a whole and therefore the companies operating within it. This is as opposed to business standards which are needed to ensure that those companies operating within this market need to become and, more importantly, remain successful.

So, have any moves been made towards any business process standardisation within the Cartridge Recycling Industry?

The answer is ‘yes’. It is known that there have been, for example, e-procurement ventures within the office products arena within the industry but it does appear that none of these have achieved universal recognition. In this area alone there is therefore still a lack of standardisation in business systems and methodologies within the industry.

There are, of course, several reasons for this –

1. Ours is a young industry where co-operation within joint business ventures is in its infancy.
2. IT business systems are often perceived as a key competitive factor by owner-managers who are often unwilling to let their competitors have access to their systems – although competitive access to another company’s systems is actually not the reality.
3. Other areas, such as production and quality are perceived as more critical to the business and so most of the emphasis in terms of work and financial backing is placed in these areas.
4. Ventures such as industry-wide e-procurement are virtually impossible when there is a lack of standardisation, especially within company infrastructures, for example, in the area of product nomenclature.

So, how could implementing best business practice and definable standards into this industry be of benefit?

One example would be to address the issue of the global cartridge shortage. If the industry adopted an approach where most organisations were using a “standard” business system, it would make it easier to create web-based search facilities to locate the cartridges needed at any one time.

It would be easier for companies to enter into joint, mutually profitable partnerships by being able to sell excess stock to other companies experiencing difficulties to source and fulfil a specific customer order. Sub-contracting excess manufacturing capacity to other organisations would also be a possibility.

Yes, all this is possible in today’s current environment. However, if all companies were using the same software and business processes, the whole operation would be easier to manage and more cost-effective.

And what about best business practice within the cartridge remanufacturing industry?
Before looking into and defining best business practice it is necessary to identify what the critical success factors are for companies wishing to not only survive but to succeed in this industry.

First of all a company needs a good position in the marketplace. This means being a reliable source of quality products, able to deliver them to clients at a competitive price. This also necessitates sound sales and account management skills. It is well known that customers’ demands vary, as do product lifecycles – even more so as OEMs replace their ranges regularly.

Secondly, product availability is crucial. The adage “He who has the empties is king” is well known throughout the industry. This does not just mean having plenty of empties, it means the right empties in the right place, in the right condition, at the right time and purchased at the right cost. There is the need to balance favourable cost opportunities through advance purchasing (provided the spot empties price does not fall in the meantime) with the cost of maintaining and financing inventories.

Thirdly, the low cost of manufacture commensurate with customers’ quality expectations needs to be reflected on. And last but not least, a company needs to have sound financial management.

All of the abovementioned factors hinge on the ability of the enterprise to have the right information available at the right time and the ability to be able use it effectively.

A survey to investigate the needs of the remanufacturing industry

To investigate the possibilities of current and future best business practice for the cartridge recycling industry and how best business practice reflects the critical success factors described above, we have created a survey which is available online at www.therecycler.com/survey.

This survey looks at which business management standards are currently being used throughout the cartridge recycling industry, which should be adopted in future and what business systems should provide to enable companies to become more successful and profitable.

The survey is being conducted on behalf of Recycler Trade Magazine by Excelsis Enterprises Ltd., who will consolidate the results and present them at Remax. The results will also be published in a future edition of the Recycler Trade Magazine.

We would like to thank you in advance for your cooperation in agreeing to complete this survey and can assure you that your responses will be treated with the utmost confidentiality. So, please give us your assistance by completing the survey.

Callouts –

Fully Automated logistics solutions integrated into both worldwide networks and the company business systems, ensure visibility, control and service to its clients. Furthermore, they resolve any stock shortcomings through the ability to look outside the company’s own stockroom.


Utilising fully integrated company business and procurement solutions linking into E-Commerce solutions ensure stronger purchasing power and the overall reduction of procurement costs.

Caption – The aerospace industry uses special systems to ensure efficient circulation of spare parts.

Caption - Could a system be developed to solve the industry’s perennial empties problems?

Caption – Most SMEs concentrate on production and quality in terms of work and financial backing

For more information Contact daniel@incartek.com

Links:
Incartek

Excelsis Enterprises

Fasint Ltd

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