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Myer Grace Bros
Cleaner Production - The Hanger Project


Introduction

"The Hanger Project is a clear demonstration of the commitment by Myer Stores Ltd. to sound environmental practice within a business framework." - Myer Grace Bros.

Five elements of concern

Myer Stores Ltd. is an Australian-based retailer trading as Myer Grace Bros Department Stores and Myer Direct in over 70 sites nationally, generating annual sales of $3.5 billion (1999/2000). In addition to an extensive customer base the company has trading relationships with in excess of 12,000 suppliers.

During 1990, concern was developing within the organisation with regard to the company's position on environmental practice. Five elements were fuelling this concern:

The Management Committee approved the appointment of an external consultant to provide guidance and advice during development of the Environment Strategy. An Environment Steering Committee was established with representatives from all relevant areas, in recognition of the long-term nature of the issues at stake. In all, eleven primary and secondary key impact areas were identified. These were:

Primary

Secondary

This case study outlines the approach taken by Myer Grace Bros to one of its primary key impact areas, namely the use of hangers.

Prior to commencement of work on the Hanger Project, the company lacked a policy on hangers and any controls on the range, shape or material composition of hangers used in merchandise presentation.

The major problems associated with the use of hangers in Myer Stores Ltd. in 1991 were:

The Hanger Cycle

The hangar cycle

Hanger project strategy

A senior manager was assigned to scope the project and produce a strategy paper. This document listed ten strategic objectives:

1. Develop a standard range of hangers
The company used in excess of 30 million hangers per annum, received with merchandise deliveries from 1,500 suppliers. Each supplier sourced their own hangers without reference to Myer Grace Bros, resulting in at least 90 different hanger styles. The aim was a range of 22 styles made of plastic.
 
2. Collect hangers for recycling and reuse
Use the Distribution Centre in each State as a collection point to draw back used hangers from stores and make them available to a hanger manufacturer.
 
3. Align with a hanger manufacturer
Develop an alliance with one company to supply hangers to Myer Grace Bros in conjunction with the apparel suppliers and to process the returned hangers either by recycling or reuse.
 
4. Give preference to an Australian-based hanger manufacturer
 
5. Involve all parties in the process
Bring on board a raw material (styrene) manufacturer/supplier to create a three- way alliance with the hanger manufacturer and Myer Grace Bros.
 
6. Use the by-product of recycling
Where possible purchase the products made from the recycled plastic through either the retail or internal supplies business group of the company.
 
7. Make supplier participation mandatory
Change the company's buying terms and conditions to make it compulsory for suppliers to use only hangers selected by the company's merchandise buyers.
 
8. Allow for use of regrind
Select a hanger colour that provides maximum scope for possible future production using the company's re-ground hangers as a proportion of the base material.
9. Assist the stores during implementation
Facilitate the change in work practices on the shop floor created by the delivery of merchandise with the appropriate hanger.
10. Keep it simple in the stores
Develop a used hanger collection in-store which embodied simplicity as its prime objective

Work commenced on the project in November 1992. The major actions which have contributed to the project success were:

Selection of a range of hangers:

Extensive discussion took place with the apparel buyers and stores to create a range of plastic hangers which was best suited to the transportation, processing and merchandising needs of the company. The range selected was comprised of different hanger shapes rather than specific hangers, to provide maximum flexibility in the selection of a hanger supplier. 

Selection of consistent hanger colour:

Initially, discussions were conducted with plastic recyclers and hanger manufacturers to determine which colours were best suited for regrind application whilst retaining our requirements for quality and finish. Armed with this detail a recommendation for colour per merchandise area was put to the Management Committee for ratification. This was accepted, resulting in black as the majority use colour with clear in Women's Intimate Apparel. 

Selection of a hanger manufacturer:

Extensive discussions took place with Australian and New Zealand-based companies. Overseas organisations were discounted early in the process due to the lack of understanding of our recycling/reuse initiative and the logistical problems associated with overseas supply. These discussions enabled a list of preferred suppliers to be compiled as company policy required a contract of this size to be offered via a closed tender.

The contract was awarded to Rainsfords Pty. Ltd. (now known as Cork International Pty Ltd), based in Sydney. This company presented an offer that was attractive from both the recycling/reuse process and pricing perspectives.;

Development of the recycling/reuse program:

Rainsfords proposed a process that entailed collection of hangers from each Myer Grace Bros distribution centre for return to Sydney and sorting at their factory. A cut-off price point for the hangers was set, below which the returned hanger was sent for granulation and above which the hanger was sorted by style/colour and repacked for reuse. Any broken hangers regardless of price were granulated. Dow Australia were excisting raw material suppliers to Rainsford and following previous discussions with Myer Grace Bros agreed with Rainsford to assist in the development of recyclers to take the regrind. The quality of the regrind was a known factor as Dow had supplied the input materials and Rainsford were to adhere to strict quality control during sorting.

Development of a hanger collection system:

To ensure success of the program, the collection system had to be simple. The accepted process required point-of-sale locations to put used hangers in cartons placed at strategic points within on-floor reserve locations. These cartons were to be emptied into larger cartons placed on the receiving dock. All cartons used in the process were remainders from merchandise deliveries to the store. The stores were not required to sort hangers by style or colour; this was to be done by Rainsfords.

The large cartons were forwarded to the State Distribution Centre via the merchandise delivery trucks which returned from each store partially laden. Once centralised in each State the cartons were stored until a container load had been accumulated. A carrier then transhipped the hangers to Sydney.

Communication of the process to the apparel suppliers

The communication of the change to apparel suppliers was to be conducted by each relevant apparel buyer. This course was adopted as many products under purchasing agreements did not include a hanger in the prime cost and a price re-negotiation was required. To assist the buyer, the terms of trade were altered to reflect the company's new position and a hanger manual was provided to buyers for distribution to suppliers. The manual comprised a photograph of each hanger with price, size, pack quantity and style number detail, a comprehensive listing matching hanger style with the recommended garments suited to the hanger and a foreword from the Myer Grace Bros Managing Director emphasising the environmental strategy.

Implementation continued through December 1992 to July 1993.

A wide range of benefits

Discounting the implementation phase the project has been running for 12 months and the results have been very satisfactory. Most of the original strategy objectives have been achieved and a number of unplanned benefits have developed from the process.

Reduction in the Myer Grace Bros waste stream: Wire hangers are no longer acceptable for merchandise delivery and all plastic hangers are returned to Rainsfords for processing. The 30 million hangers used per annum no longer go to landfill and waste removal costs have been reduced.

Hanger reuse/recycling: Sorting of the returned hangers has been refined greatly since project commencement. The large number of "old" (i.e. non-Rainsfords) hangers returned from stores took longer than expected to clear out of the system. However, hanger volumes from reuse now account for 24% (and rising) of total sales to apparel suppliers. Regrind is being processed by several recyclers, although Myer Grace Bros has not yet progressed to the stage of buying back the recycled plastic products. This action is not as straightforward as was thought initially due to the diversity of recyclers and products.

Savings in-store: Merchandise is now delivered on the correct hanger. This has removed the need for store staff to either hang or re-hang merchandise upon receipt, making available in excess of $6 million of salary expenditure for redeployment to customer service.

Furthermore, additional in-store reserve space has become available as stores no longer have to house large volumes of hangers to cater for merchandise deliveries without a hanger or with the incorrect hanger.

Improved merchandise presentation: The adoption of a standard for hangers and hanger colour has lifted the on-floor presentation of merchandise, putting focus on the garment rather than the hanger. In addition the use of a more appropriate hanger and deletion of rehanging in-store have improved garment condition during the delivery to shop floor.

Improved productivity in Distribution Centres:  A by-product of the process has been a gradual change from flat packed to hanging delivery to the State Distribution Centres. This has improved the processing rate per piece and enabled other initiatives to be implemented which reduce the time for processing through to delivery to the shop floor.

Improved working conditions: The deletion of the hanging and rehanging process in store reserves and on the shop floor has created a reduction in back injuries caused by constant bending. A reduction in injuries from shattered plastic hangers has occurred as well due to the improved hanger quality and a decrease in use of clear hangers.

Control of the hanger range  The use of one supplier allowed control of the number of hangers in the range and the individual hanger shapes.

In July 1994 a revised range was released which reduced the number of styles by four. At the same time the range was more attuned to current fashion styles.

Returned hangers that were granulated were not  added to the styrene mix used to manufacture new hangers. However this remained an option as the range could be tailored to suit such a process.

Myer Grace Bros started with an apparently straightforward problem - stopping hangers entering the store waste stream. What resulted from the hanger project  not only achieved that aim, but also created cost savings and improvements in merchandise presentation which were significant enough to warrant inclusion in the 1993 Annual Report for Coles Myer Ltd.

Further Developments

Myer Grace Bros has continued to benefit from this project.

There have since been refinements to the logistics through the use of dedicated collection bins made from recycled cardboard. All in-store delivery cartons are compacted and forwarded to a recycler for either export or use in the manufacture of cartons and other board products.

The use of regrind in the production of new hangers commenced operation in 1997. Between 10-15% of new hanger content is regrind, reducing significantly the volume of plastic forwarded to recyclers.

Dow Australia is no longer the raw material supplier. Cork International manages hanger content, sourcing raw materials from a number of suppliers that conform to Cork's technical specifications.

Information source

Meeting the Environmental Challenge: corporate contributions to environmental management.
Melbourne: Business Council of Australia.