This blog is the first in a series on the First Mile Problem and how to solve it with a reverse supply chain. Read about challenges to implementation and an assessment of how the program could be applied in Portland in the series’ second and third articles.
In countless homes and apartments around the world, there are unused goods that could be of use to someone else: a spare set of dishes could find a new home in a college apartment, a gently used pair of shoes to help a homeless person or an old children’s item that could be a perfect fit for a quickly growing toddler.
Each of these goods has some usefulness to someone else and an owner who would readily part with it. Based on the U.S. Census Bureau’s 2017 estimates, there are roughly 40 million Americans living in poverty who might benefit. But getting the right goods into the hands of those who need them poses a supply chain challenge to coordinate the demand and supply.
Today, one of the most popular ways to get a large volume of reusable goods back into this channel is to drop them off at Goodwill. But with millions of pounds of donations coming in each year, many branches of the organization find that they are unable to process them all. Some stores report being overrun, and other solutions today are relatively small scale, like Craigslist’s 1-to-1 approach for buyer-seller.
While there may be an overall trend of increasing consumer demand for sustainable consumption, we are also seeing the Marie Kondo effect. There has been a marked uptick in the volume of goods dropped off at thrift stores due to the popularity of Kondo’s home decluttering strategies. One Maryland Goodwill region reported a 42 percent rise in donations since Kondo’s Netflix show launched in January 2019.
When people drop off bags of clothes, shoes, or housewares at Goodwill or similar thrift stores and donation centers, they likely don’t realize that much of it is ending up in the landfill. Extra donations are sometimes sold at a discount, but much of today’s donated items, which are still usable, end up in the landfill.
Efforts to handle this waste are becoming difficult to sustain. In March 2018, China complicated U.S. efforts to use traditional waste management channels with its ban on importing recycling and other post-consumer materials. Some municipalities are now cancelling recycling programs or burning materials as a result.
The rise of Amazon and direct-to-consumer delivery has given rise to the supply chain concept of the Last Mile Problem, an operational attempt to constantly drive efficiencies up and costs down from the closest stocking location to a customer’s front door. “It is called the last mile, and it’s crucial to the future of all commerce,” said John Markman, a senior Forbes contributor, in his essay.
The First Mile Problem
The U.S. needs a new solution, and an additional channel, to collect reusable goods from homes and back into a usable market. Otherwise we can’t get out of our current channel situation, where materials that are in good condition, and of value to other people in our society, will continue going to the landfill. This is the First Mile Problem: How can we maximize the collection of reusable goods and get them into a reverse supply chain channel — a first mile of collection — and do so in a cost-effective manner?
What’s needed is a civic-level collection system, a coordinated reverse supply chain for reusable goods that connects people with the items they need. It’s similar to the Last Mile Problem but driven by sustainability and in-need populations, organizations, or other enterprises. This model provides an additional approach to the clogged, traditional pathways of the used consumer products market, and could provide an omnichannel for reusable goods or enable organizations to collect only the used goods that they need. Here’s how it works:
- Creating demand for reusable goods: The demand for goods, and getting organizations and municipalities on board, is the driver. It determines the amount that could be collected and reused within a population or geography. A municipality, nonprofit organization, or a for-profit entity identifies the types of reusable goods it needs, and informs a targeted geography’s population via newsletter, Facebook group or similar approach.
- Dropping off reusable goods: Networks for collecting goods from homes, apartments, and businesses exist today; my city has a blue bin for recycling, green bin for compost, grey for landfill, and there is an apparel donation bin on my block. This same bin approach can be used for reusable goods, a purple bin for residents in a neighborhood to drop off their reusable goods. As someone with something reusable, the easiest location for me would be at the end of my driveway, or at the end of my block, so long as it is close by.
- Collecting reusable goods: In our research, collection isn’t much more complicated than a truck with a 1-2 person crew collecting the goods on a predetermined schedule, directly or on behalf of an organization. As the number of bins rises in an area, the opportunity to collect more volume rises too, but so would costs.
This model, and resolving the First Mile Problem, is initially driven by demand, by a need that keeps those goods out of the landfill. It could be a municipality requesting donations of socks and shoes for the homeless, a refugee assistance organization in search of home goods to resettle its beneficiaries, or a sustainably driven for-profit looking for raw materials or resell items.
Our research and modeling proved out the operational feasibility of civic-level collection systems, and that the existing systems of collection can be readily established to create a new channel for reusable goods. There’s neither unreasonable barriers to get it set up, nor much complexity in running it, and scaling it was relatively easy.
Most surprisingly, the costs weren’t prohibitive, nor did they rise as we scaled either. And this proved that it’s possible to resolve the First Mile Problem. It’s operationally feasible without the cost or complexity to not try. Isn’t it time we divert efforts from the Last Mile Problem and begin to look at the great opportunity of the First Mile Problem, to make the same efficiencies within a reverse supply chain for reusable goods a reality?
Adam Gittler is a Principal Consultant, with 25 years of experience in global Supply Chain operations and Continuous Improvement roles, and an adjunct professor in the Portland State U. Graduate Supply Chain Management program. His previous work includes director-level roles in lean six sigma, quality, international operations, and regulatory affairs, with expatriate assignments in Shanghai, Tokyo, Hong Kong and Malaysia.
He holds masters and bachelors degrees in engineering and operations, and a UC-Berkeley MBA, with experience in multiple industries including apparel, medical device CFR 820, food and hazard analysis critical control points, energy, public transit and automotive.
Categories: Faculty Research