Waste reduction is a meaningful KPI that all corporations and organizations should look into. Likewise, reducing waste is also a critical competent to the Six Sigma methodology. Going hand in hand with decreasing production defects, reducing your overall waste results from due diligence and innovative thinking. However, as more organizations adopt Six Sigma practices, there is a growing need for more analytical data concerning production and efficiencies. To answer this, we look to a new key performance indicator, Product Recycling Rate. While reducing overall waste is the first step towards efficiency, it’s equally important to understand how your products and services impact the surrounding environment. In today’s article, we will discuss product recycling rate, how to calculate it, and why you should use it.
What is ‘Product Recycling Rate’?
This relatively new KPI calculates the extent to which organizations are minimizing their impact on the environment. Whether its producing a product, manufacturing goods, or offering services, this KPI measures how your operations positively or negatively impact the environment. As part of the corporate social responsibility, calculating your product recycling rate is an easy way to see how efficient and resourceful your organization is.
To calculate your product recycling rate, you need a few variables. First, you will need to calculate the number of products you currently reuse or recycle during your operations. Next, you must sum the total number of products you have sold. It’s important that you measure both of these variables within the same period. This could be during each quarter, during a project timeline, or other time intervals. Once you have your data, you will divide the number of products you recycle by the total number of products you sell. You then multiply this number by 100 to give you a percentage. This percentage is your organization’s product recycling rate.
Now that you have your recycling rate, it’s time to analyze it. First, you must compare your rate to others within your industry. Typically, industries will set standards or benchmarks for organizations to meet. Of course, the ideal product recycling rate would be 100%. This means you reuse or recycle all of your products. However, this is almost impossible to achieve without error. Instead, discover what an appropriate rate of recycling for your organization should be and set goals to achieve it. For example, an automotive manufacturer achieving a 70% product recycling rate within 10 years.
Six Sigma and Recycling
There are two areas where Six Sigma practice comes into play with this KPI. First, with collecting data. Second, with implementing the changes you make. When collecting data for your recycling rate, you may face high costs and a long time to complete. In order to combat this, insure you have qualified Six Sigma professionals, such as Green Belts, collecting, storing, and analyzing the data properly. Additionally, if you wish to increase your recycling rate, you must have an effective project manager to do so. Typically, Six Sigma Black Belts and higher will lead these projects and insure that the organization meets the goals. You can expect your project manager to implement Six Sigma methods, such as DMAIC and Kaizen to increase your organization’s product recycling and reuse rate.