Wednesday 26th Oct 2016 - Logistics Manager

WEEE will rock you

The government now expects the WEEE Directive, the new European legislation that governs this waste, to be transposed into UK law in December so time is running out to influence how it will be implemented.

The introduction of this legislation has been delayed as the government has struggled to come up with a workable implementation scheme.

At the moment, the Department of Trade and Industry is running a public consultation on the implementation which will close on 17 October.

Introducing the consultation paper, energy minister Malcolm Wicks said: “The Waste Electrical and Electronic Equipment Directive (WEEE), aims to encourage reuse, recycling and recovery of waste to minimise the impact of electrical and electronic goods on the environment. How such waste will be collected, treated, recycled and recovered in the UK is dealt with by the regulations. The directive will encourage the return of used equipment since private householders are able to return equipment for reuse or recycling without charge.

At the heart of the plan is the creation of a national Distributor Takeback Scheme which will establish a network of Designated Collection Facilities (DCFs) for the waste. The waste will be taken to Authorised Treatment Facilities (ATFs), which will process it and provide evidence to producers on the amount of WEEE received for treatment. There will also be accredited reprocessing facilities which will provide evidence of reprocessing to producers.

Enforcement is a key element of the plan. There will be obligatory registration for producers through approved compliance schemes and a code of practice covering the collection of WEEE from DCFs. In addition, there will be an end-of-year settlement to ensure producers are able to meet their obligations via an “Exchange” system.

Earlier consultations, which have included contributions from Wincanton and DHL Exel, have highlighted some of the concerns of industry at the way the government intends to implement the legislation.

For example, there were fears that an earlier version of the plan would allow monopolies to develop in the handling of waste. Some producer schemes might seek to handle much more WEEE than would be indicated by their members’ obligations. “This,” said the DTI, “could have adverse consequences for producers, which are not members of those schemes.

“To avoid this possibility, we propose to limit the Exchange’s payments to any one scheme in respect of surplus WEEE to the value of five per cent of total WEEE arising. Any additional surplus would need to be presented to the Exchange without further payment. This removes any incentive to handle excessive amounts of WEEE. Producer compliance schemes would have to aim to handle WEEE broadly in accordance with their member’s obligations. Persistent departure for that aim could lead to withdrawal of the scheme’s approval.”

There has also been concern at the set-up costs for collecting the waste were not adequately covered in the proposals as well as a lack of clarity on what constitutes a Designated Collection Facility.

There has also been a major discussion on whether the cost of disposing of historical waste should be displayed. Producers of white goods have favoured a mandatory system for displaying this information to the customer as part of the new product price while producers of other goods have generally been opposed. The government has decided that it should be a matter of “supply chain negotiation”. In fact, it does not like the idea at all as it implicitly transfers the cost of processing historical waste to the customer.

The WEEE directive will clearly have a major impact on supply chain operations – particularly in the area of reverse logistics – when it comes into force.

Full details of the Department of Trade and Industry consultation can be found at its web site: recent years, there has been a trend for organisations in both the private and public sectors to contract out great swathes of their non-core activities as management questions the waste of time and effort required to achieve something that is already being done more efficiently by specialists elsewhere.

Because warehousing, distribution and the total logistics function are activities that many companies see as peripheral to their main operation, many companies have chosen to outsource these disciplines to experts and, as a result, the third party logistics market has become well established.

Cutting costs is often seen as a major benefit of third party contracting, but this can lead to disappointment. Contracting out does not necessarily save money. A much better reason for doing so is the specialised knowledge, flexibility and added value that a contractor can provide. So, what advantages could a company expect and look for when considering entering into a third party logistics agreement?

First and foremost, improvements in the company’s balance sheet by removing the requirement for capital investment in warehouses, materials handling equipment and transport fleets, and the up-keep and maintenance of these assets.

Operational flexibility by the third party with resilient resources to meet changing needs and the ability to respond quickly to changes in the market place.

Cost savings from economies of scale, more direct routeing, additional expertise, stricter inventory control and, with improved technology, a reduction in emergency shipments at premium prices.

A simpler, more reliable supply chain, increased customer confidence and possible reductions in inventories.

Working closely and in a partnership based on trust and a fair return, a third party logistics provider will help to develop a company’s long-term strategy to improve customer services, reduce costs and improve efficiency.

Finally, while the company is concentrating on it core activities and improving its competitive edge and marketing skills, the third party provider will be focusing on his core business and keeping himself – and, in turn, his client – at the cutting edge.

Such expectations by companies seeking third party services are not easily achieved. Prospective users of third party contractors should ask the following questions:

Do they have the necessary structure and know-how within their organisations to get the job done?

Do they have a commitment to continuous improvement and can their vision of business be adapted and be made fully compatible with your own organisation’s vision?

Are they prepared and willing to report external costs to their clients and will such costs be in line with your own needs and objectives?

As a third party provider, is the company capable of the meticulous fine tuning required to integrate and take over a client’s logistics function and make it their own?

Do they have the personnel and financial resources necessary to integrate with a client’s organisation and establish compatible working arrangements based on continuous improvement in all areas?

There are many challenges to making a third party contract work. It is essential to have a well thought out contract and scope of work. These documents should clearly define the tasks involved for both organisations, including a concise statement of the nature of the operation, which tasks are to be performed and the level of service to be achieved. All the people who will be doing the job on both sides need to be involved at an early stage. Roger Williams, chief executive of the United Kingdom Warehousing Association has some advice to potential users before entering third party logistics contracts.

Letters From: Paul Redington, property claims manager, Norwich Union.

Dear Sir,

Speaking on behalf of the UK’s largest general insurer, I was disappointed to read Charlie Jacoby’s comments on insurance companies in relation to the Buncefield explosion (Logistics Manager, July/August 2006).

The piece highlighted that several businesses found their insurance inadequate, which resulted in a delay in their return back to their premises, and indicated that insurance companies thrive on such circumstances.

Norwich Union received more than 50 commercial claims from the Buncefield incident. While under-insurance has been identified on some of them, the vast majority of losses have been dealt with in full.

Most commercial policies incorporate an ‘average’ condition, which means that a claims payment may be reduced if the premium paid does not reflect the full value of the risk.

We actively communicate with our policyholders to encourage them to regularly review their sums insured and to consult their insurance intermediary for advice.

In relation to the Buncefield explosion, our experience is of satisfied customers who feel aggrieved about the fact the incident happened in the first place.

Norwich Union is working hard to ensure that those responsible for this explosion are held accountable, and that appropriate financial recompense is received.

Yours faithfully,

Paul Redington

Property Claims Manager

Norwich Union

Key questions

These are the questions that the government hopes the consultation will answer:

1. Do the government’s proposals correctly implement directives 2002/96/EC and 2003/108/EC?

2. If you are a small business, what burdens are associated with the introduction of the regulations and how could these be mitigated?

3. In the Regulatory Impact Assessment, do you agree with the costs and benefits of handling WEEE in accordance with the directive?

4. What do you think of the approval criteria for producer compliance schemes? Are there any criteria that appear superfluous or are there any important criteria that have not been taken into account?

5. What would be a reasonable permissible limit for over- or under-collection by a compliance scheme? How could this limit be defined?

6. What is a practical limit for payments by the Exchange to schemes which have over-collected? Please explain what the effects of changing this limit would be.

7. What improvements could be made to the arrangements for evidence and trading, which are consistent with the reporting requirements of the directive and which show that the producers’ obligations have been fulfilled?

8. Do you agree that the mandatory presentation of the costs of handling historic WEEE would exceed the requirements and increase the costs of implementing the directive? How could such a fee be set at an appropriate level (adjusted over time), without arbitrarily distinguishing the costs of handling historic WEEE from other costs faced by producers?

9. What do you think of the arrangements for business to business producers? Are there any difficulties/particularities about business to business WEEE that have not been taken into account?

10. The annual subsistence charge payable to the agencies includes the cost of monitoring activities against free-riders. Do you agree that part of that fee should cover monitoring activities? Are there other ways in which the cost of monitoring activities might be recovered from members of a compliance scheme?