Background
Kimberly-Clark Corporation is a multinational company headquartered in Dallas, Texas that produces hygiene and personal care products, including paper towels, diapers, toilet paper, and similar items. The company was founded in 1872, and it has reached global popularity through its family of brands. In an effort to become more socially responsible, Kimberly-Clark Corporation has initiated a plan for reducing its environmental impact. Since the vast majority of the company’s products are disposable, waste management and minimization became the management’s principal focus. One of the core pillars in Kimberly-Clark’s sustainability plan is waste and recycling, and the goal is to divert 150,000 metric tons of product and packaging waste from landfills by 2022.
In order to achieve this goal, Kimberly-Clark Corporation focuses on post-consumer waste recovery, product redesign, and increased recyclability of products and packaging. The plastic film material used to package a lot of Kimberly-Clark’s products is the primary source of landfill waste originating in the company. However, it is unlikely to be substituted, and thus it is necessary to encourage customers to return packaging instead of throwing it away. So far, Kimberly-Clark corporation sought to raise consumer awareness by placing recycling labels where customers can see them. At the moment, the company is also considering the implementation of a rewards-based program to motivate customers to return or recycle the packaging. For the program to be effective in supporting Kimberly-Clark’s goals, it has to create value for customers. Store drop-off recycling and product rewards have been considered as one of the possibilities.
Problem Statement
The plastic film used by Kimberly-Clark Corporation is a significant source of landfill waste. In order to achieve its sustainability goals, the company has to reduce the volume of this film that ends up in landfills. The challenge in achieving this objective is in encouraging the customers to recycle the plastic packaging of Kimberly-Clark products. The management of the company wants to know whether a rewards-based recycling program would be feasible and effective in supporting Kimberly-Clark’s sustainability ambitions. At the same time, the company also focuses on how to create new value for retailers and recycling companies in the downstream. Obviously, retailers and recycling companies also are facing some challenges while they try to increase the recycling rate.
Analysis
Retailers and recycling companies have experienced challenges in different ways throughout the recycling process. For cost challenges, Recyclebank aims to improve the efficiency of plastic film recycling by rewarding citizens with live credits for recycling film and redeemable rewards such as magazine subscriptions and restaurant discounts. The company’s incentive program still carries a cost risk because it is impossible to accurately calculate how much the program will cost over time. On the other hand, when consumers put non-recyclable film or other materials together in the recycling bins of retailers, contamination can occur and cause other problems. Most importantly, contamination increases the cost of storage operations. Incentives for consumers to recycle plastic film are a challenge, although rewards can significantly increase incentives for consumers to recycle plastic. Where there are no incentives, consumers have little incentive to recycle plastic. For example, the recycling rate for beverage containers is about 60% in the incentive states and 24% in the non-incentive states. Some consumers in states with beverage container deposits were not affected by the redemption value. They may put the beverage containers in roadside trash cans or choose to throw them away. According to the How2Recycle’s Consumer Survey Report, half of the 1,833 people interviewed said their recycling habits were not changed based on the label and/or website. Not all recycled plastic film can be used, because their quality is not always very stable. Many plastic films easily adhere to other materials in single-stream bins during collection and become difficult to separate, resulting in contamination. As plastic films pass through a single-stream flow process, their quality and cleanliness can make it difficult to reuse and recycle them. In addition, when consumers put different plastic film and other materials into the recycling bins of retail stores, the film is also easy to be cross contaminated to destroy the quality of the film. The Closed Loop Fund estimates that about 3.2 billion of plastic film is discarded by American homes each year, but only about 10 million of the film is recycled and 300 million of the film goes into MRFs, with the rest disposed of in landfills. In addition, about 136 million pounds of flexible plastic film is recycled each year, and 126 million pounds is collected by drop-off stores and MRF for ten million, with a total recovery rate of less than 4%.To encourage consumers to return plastic film, many recycling companies set up consumer incentive programs to increase film recycling. This is a good illustration of the demand for plastic film from retailers and recycling companies, but the current supply of plastic film is far from meeting their needs
Kimberly Clark’s idea to develop a program to reward consumers for SLPF packaging brings some potential benefits. To begin with, about 3.2 billion pounds of plastic film is thrown out by American households each year, and only about 126 million pounds of plastic film is recycled, with a recycling rate of less than 4%.The large amount of plastic film discarded has brought serious impact on the environment and the waste of resources. Incentives could encourage consumers to return the film more actively and keep it away from the waste yard, giving it a second chance at life. Kimberly Clark used recycled soft plastic film to package products, including diapers, tissues, toilet paper and feminine hygiene products. These soft plastic film packing materials are one of the best choices for packing.
For the downsides of this consumer rewards program, we could see some risks that are mentioned in the case. The biggest one is, how to make people not only aware of the role and significance of recycling the SLPFs, but also accept the potential steps to accomplish the recycling. All those steps are just simple actions such as separating plastic bags from films, identifying which film could be recycled, remembering to take them next shopping time, and leaving them in the correct drop-off bin; however, when you put those steps together, they become a “task” to people, and apparently nobody likes tasks. Although this could be relieved by raising consumers’ own perception of the environment, it changes slowly. The result of this brings another problem that how much will, and should it cost, for the rewarding to customers, that would make people feel good, in order to commensurate those “tedious” processes? A very cruel but meanwhile very realistic question described in the 11th page is, if the reward is not attractive enough, why should I bother to do this at all? Just simply throwing them away anywhere takes me 2 seconds, but following the process would take me days – I do not go to the store every day, and what do I get after 3 days? Maybe only 5 cents. Also, other issues are lining up to be solved: what if someday Kimberly-Clark found this program not financially healthy for the company, and cancelled, what would be the impact to the film’s recycling supply-chain? Positive or negative?
One of Kimberly-Clark’s 2022 sustainability goals is waste and recycling, to be more detailed, diverting 150,000 metric tons of waste from landfills. As a result, consumer rewarding programs is one of the three approaches that KC takes to achieve its goal. The company has already using How2Recycle labels to educate people, following the three steps to change a behavior:
- What is all about this behavior?
- Make it easy and clean barriers.
- Trigger the behavior.
In the case, Mrs. Cramer thinks the labels fit all the three steps, however from our standpoint, it only fits two of them. The label does exactly tell consumers how to deal with films, make it easy to remember and implement, and yes it does remind people to recycle at any time, but it does not actually trigger the behavior, or at least not enough. It is missing one important piece: we know how to do with films, we know where to throw films, and we know it’s time to recycle the films, but we don’t know why we should do this, what responsibility we have. This Consumer Rewards Program is exactly the trigger of the behavior, it gives people an irresistible reason to do all these things. We still do not know what film has anything to do with us, but we do know if we recycle films, we can get money, even the reward is just peanuts.
So, the program is a necessary step for Kimberly-Clark to achieve its goal, it is the fundamental action that ensures How2Recycle labels to be effective, leading to huge contribution to people’s awareness, also the success of waste diverting.
Recommendation
Short-term
In the short term, the company should keep developing a rewards program to attract more people to return packaging. The key problem is that the system can’t retain the material value because of cross-contamination or because the material’s prepared in a way that’s not cost-effective for the retailer. To deal with that problem, the company should collect the contamination data by building a team taking charge on the contamination research. In the case, Opsteen mentioned that they want to replace the bins with a kiosk which is a great idea. However, since scanning packages is not a convenient action for the customer, a rewards program is necessary. There should be good and reasonable incentives for the customer to do what they don’t do before.
Developing a reward program can also encourage more entities in the plastic-film lifecycle to help fund the program. If more and more customers return plastic-films, it means sources of the whole plastic-film lifecycle are expanding, increasing the value of the recycling chain. Assuming that in the future, with the development of new technology, retailers and recycling companies can gain more profit from recycling. Therefore, they may like to participate in the reward program as well.
For the retailers and recycling companies, the company can build a deeper relationship with them. For now, the key action is using How2Recycle to raise the awareness of customers. On the other hand, the company doesn’t have a deep enough relationship with its partners, which is also a critical factor affecting the recycling chain. Firstly, the company can also develop a reward program for retailers to gather more data. Data can help the company understand what drives the customer to return the film. Secondly, sharing data with retailers can make a win-win situation. Retailers also would like to know about how the customer behaves. For example, they want to know if the customer is willing to buy the product with the How2recycle label more than the product without the label. The company can do more to deepen the relationship.
Another short-term recommendation is that including children in recycling efforts. The company can develop an education program in school to set the mindset that people should return the waste. Often kids will bring home the recycling message and behavior they learn in school.
The last short-term recommendation is that adding community drop-off locations, offering more choices to people to drop the film. But this action needs support from the local government since it is impossible for a single company to manage such a huge program.
Looking to the Future (Innovation Strategy)
Recycling needs a major paradigm shift that can change the concept toward more efficiency and productivity practices. Successful, proven programs have already helped to divert more than a hundred and fifty thousand metric tons of post-consumer product and packaging waste from landfills. But it’s not enough, isn’t it? Including a view adjustment from time to time but, the way that most industries do recyclability is no different from fifty years ago.
To achieve sustainability goals in the long-term Kimberly-Clark needs to look into recyclability from a different point of view. Not just try to improve current programs, but to invest in Invention to change recyclability that we knew and we understand that is not working the way that it should be at this technology era. Therefore we recommend that the company should look into a new and innovative way to take the recyclability Industry to the next level.
Innovation Strategy
Policies
To build an Innovation Strategy the company would need to put together strong policies that can enhance innovation and help achieve the level of commitment toward this goal. Innovation Strategy would play a great role in improving alignment on all company levels, define purposes, and focus the efforts. policies that can enhance innovation in the organization.
Planning Team
First we need to answer an important question about whose job is it to set this strategy?
The answer is clear: the top-level and leaders of the company have to be involved in this process, so we can ensure a high level of participation throughout the process. What kind of mindset does it take to achieve or reach a paradigm shift? What framework Kimberly–Clark needs in order to reach such a level of Invention? Answering these questions is key to better understand the necessary talents required to execute this strategy. This team can create culture change toward Innovation and often followed by a higher financial return on investment.
Action Plan
The ultimate goal of the strategy development process is to convert the strategy to actions. Even the best strategies, and policies are useless unless they inspire and lead actions. Action plans should include details on the timing and expectations of the long-term strategy as well as the resources and talent needed to achieve sustainability goals in the long-term.
Conclusion
Kimberly-Clark Corporation is a large and influential company, and they need to be very responsible for all of its operations. They can positively affect the environment condition, involving consumers in the recycling process. According to our study, they already put many efforts into this process, but have not yet made it perfect. In particular, their policies do not give consumers a sufficient understanding of why packages should be recycled. Several ways can now help the company in this complicated matter. First of all, it is necessary to maintain the existing system of remuneration for consumers while making the process of returning packages more convenient. Adding some new places where consumers can leave the packages would also be a solution. In addition, Kimberly-Clark Corporation should build a productive long-term relationship with retailers and recycling companies. It would also be an excellent solution to involve children in the recycling process. For them, it will be an exciting game, and for their parents, it is a crucial step to solve environmental problems.
Besides, the company should not forget about the need to develop its recycling system in the future. To do this, Kimberly-Clark Corporation will need to arrange a group of leaders who will develop an innovative strategy for further work. It is crucial to complete the process by developing a qualified plan and following it. Thus, Kimberly-Clark Corporation meets the challenge: they need to do everything to become an environmentally friendly company. Fortunately, they have all the opportunities and resources for this. Moreover, the organization’s policy has long been aimed at this. Thanks to this approach, they can add new tools to existing developments and achieve their goal.