As far back as 1994, discussions were taking place in the retail community and the beverage community with regard to third party pick-up. At that time, the vast majority of stores were not using reverse vending machines (RVMs) but were hand sorting empty beverage containers, according to distributor, and each distributor would pick up their respective bags of empty containers at the various times they visited the retailer to deliver full product.
The new process envisioned by retailers would involve a third party picking up containers (comingled and uncrushed), taking the containers back to a facility, and then counting them and assigning them to the appropriate distributor for calculating the redemption back to the retailer. The distributor would be charged a fee by the third party for this transportation and processing function. There was a “CRINK” system operating in Iowa that utilized this method of bottle returns/redemption, but the major soft drink companies were not participating.
The retail community was obviously very interested in such a program and could see the benefits to them of such a system. The soft drink industry was understandably not too much interested, because of the new costs this would bring to their operations, but the industry also was sensitive to the retailer’s desire for a one stop, clean out of their back room.
As RVM’s became more prevalent in Michigan, the pressures from the retail community escalated, especially because the reverse vend manufacturer, Tomra, was circulating among the retailers a proposal to pick up containers, bill distributors for the cost of the pick up, and reconcile the dimes for retailers based upon the electronic counts from the reverse vending machine computers. At that time, the soft drink industry still had real concerns regarding the integrity of the container counts from the reverse vending machines, and also recognized the danger of being put in a position where they could be held hostage by the third party pick-up company (i.e., once the program started, and distributors changed their operations and logistics systems to accommodate it, the third party could come back and raise their rates, and the distributors would not have much of an alternative but to pay, because they would have no other readily available way to pick up their containers).
Because the pressures from the retail community were essentially reaching the point where they were suggesting that if the distributors did not do something to help their back room clutter and cleanliness, the retailers would unilaterally implement the Tomra proposal, the MSDA sought to gather some better in-depth feasibility analysis. Researchers from the respected Michigan State University business school department of logistics were retained to look at the situation from an objective perspective. They concluded that reverse vending machines were here to stay, and would be utilized by all the large retailers – to the extent of at least ½ of the returns statewide. They also concluded that there would be real cost savings to the retailer under a third party pick-up program, and to a lesser extent to the distributor who was using a bay truck to service a retail location (as opposed to bulk delivery).
Even though the savings to the soft drink companies would be speculative (because they were using bulk delivery for most RVM locations), so not equal to the fees they would be charged by the third party pick-up agent, the soft drink industry nonetheless determined to go forward to develop a third party pick-up program. The soft drink industry knew that if it didn’t take control of the situation, it would be done to us – and we would have no protections from escalating costs if some other independent third party pick-up agent was brought in by the retailers.
In the months that followed, as the third party pick-up program was developed with and rolled out to eligible retailers (mostly the large chain stores), representatives from Meijer, Kroger, Farmer Jack, Spartan and some of the other independent chains, met frequently with the soft drink industry. They were appreciative that the soft drink industry would embark upon such an initiative, particularly as they realized it would cost the soft drink industry millions of dollars in pick-up fees – a cash outlay that the soft drink industry heretofore did not have to endure.
As a result, the retail community was fully in support of making certain their back room and accounting operations would accommodate the new pick-up system. The retail community realized that the third party pick-up system had to be run as efficiently as possible in order to hold down the fees to be charged for the pick-up service. Accordingly, they recognized the need to cooperate with the scheduling of pick-ups (pertaining to frequency, time of day, and off-peak periods), to maintain sufficient back room space to assure inside storage of all empty beverage containers, as well as the need for appropriate stacking of the gaylord bins and easy access to both the stacked gaylord bins and to the loading dock. It was in the retail community’s best interest to accommodate these needs of the third party pick-up agent, because the benefits and cost saving of the third party pick-up system for the retailer far outweighed the cost of reasonable accommodation.
Later, as the beer industry later joined in the third party program, it became fully developed and the retail community began reaping the full benefits of the system. In just a few short years, Michigan’s third party pick-up program had become a potential model for the nation. For more information or to enroll in the program, go to UBCRLLC.com.