Why Quality Matters in the Recovered Fiber Market and 5 Ways to Improve It

If you collect, trade or recycle paper and cardboard, you will know that the quality of material has become increasingly important.

China introduced its Green Fence inspection regime in 2013, and this progressed to the tougher National Sword before it banned mixed paper in 2018 and all imports of recovered fiber at the end of 2020.

This was fundamental in changing the demand for quality, with other destinations including Malaysia and Indonesia also introducing import inspections and contamination levels.

But US domestic mills are also wanting good quality fiber too, as they want to ensure they are receiving the same material as the export market.

Five reasons why quality matters

1. Quality standards

Within the United States, the Institute of Scrap Recycling Industries (ISRI) sets specifications for grades of recovered fiber.

For OCC, no more than 5% outthrow (contaminated material) is permitted, with a maximum of 1% prohibitive materials within this overall 5%. These prohibitive materials are defined as any material that makes the bale unacceptable and unusable and any which causes damage to equipment.

Those exporting to Indonesia face a 2% maximum contamination limit, while Malaysia introduced inspection processes for paper and cardboard in January 2022.

2. Premium prices

Because of the extra sorting required, those exporting to Malaysia and Indonesia tend to receive a better price for high quality material that meets the specification of those countries. 

But within the US, and to other export destinations, providing high quality material also reduces the claims process saving on administrations costs.

3. End-of-waste criteria

Some countries including France, Spain and Italy have introduced end-of-waste criteria for certain recovered fiber grades.

This means that this material has to meet the European EN643 standard that limits contamination to 1.5%.

While there is no sign of the United States introducing end-of-waste for fiber grades, it is a growing trend globally with other countries including the UK considering this legislation.

Indeed, Malaysia requires material to meet EN643 before being imported.

4. Education and recycling rates

Organizations including the American Forest & Paper Association have developed education programs to help people understand the best ways to recycle and paper packaging products.

By improving the quality of material collected, less material is sent to landfill, helping the US reach a recycling rate of 68% for all paper. 

5. Less contamination of other materials

Paper is a contaminant itself. Wet paper in particular sticks to plastics, metals and glass making them harder to recycle. By keeping paper and cardboard separate, it makes recycling overall easier.

5 Ways to Improve Quality with the AMCS Platform 

1. Automation, Automation, Automation

Automating all inventory management processes reduces manual error, increases visibility and control.

The challenges of paper and cardboard inventory management demand a fully automated and robust solution that has been designed for the specifics of the sector.

As a base, automation functionality should include:

• Inventory tracking across yard locations as well as robust processes and controls for intracompany and intercompany transfers 
• Inventory identification tools including barcoding, RFID tags etc.  
• Digital grading and inspection apps that allow yard staff to inspect, grade, count classify and re-grade material 
• Integration with inbound and outbound truck and floor scales to minimize data entry and errors 
• Robust controlled processes (subject to multiple authorization controls) to record inventory adjustments in value, count and classifications 
• Accurate valuation of inventory based on a perpetual weighted average costing which can incorporate both landed and other costs including production, freight and tolling etc.
• Demand planning tools to facilitate accurate planning of production based on sales orders 
• Real time reporting of inventory positions 
• Automatic updating of the finance system at month end closing.

2. Track inventory through your recycling value chain

Accurate real-time inventory management is now possible using digital technology to track the progress of your inventory from receipt at the scale, initial grading, and inspection, through to processing and into finished goods. This tracking is made possible through use of barcodes and digital mobile applications. 

These solutions make it possible to track and audit all transfers, re-grades and transfers to domestic and export mills to become finished goods. The result of this is being able to locate your stored recovered fiber easily when a buyer wants it, or you want to process it. This means you can adjust and track your inventory whether for contracts with mills or spot market trades.

Download the Mobile Workforce brochure below to learn more.

3. Use Analytics to get valuable insights into your inventory and its valuation

Since China began to introduce tougher restrictions and an eventual ban on imports of recovered fiber, the markets have become more volatile.

Trading now requires being much more alert to market movements and optimizing your trading opportunities.

Business Intelligence tools and standard inventory reports can provide you with detailed insights into accurate inventory position and valuations, re-grades and transfers.

These insights are invaluable for all your purchase, sales, and operations teams.

It gives you knowledge of what affects your cost build up and margin including assessment of margin rates when prices are rising or falling. This means you can recognize times when margin might suffer and make adjustments that benefits your revenue.

Reporting tools also help you understand your inventory levels, enabling you to analyze seasonal trends and impacts on levels. This helps you make decisions on when you might need to buy or sell to optimize your inventory.

You can also get data on your suppliers and customers, including those who are most profitable to buy from and sell to. This gives you hard data to analyze and adjust sales and purchasing strategies.

Download the Analytics brochure below to learn more.

4. Embed inventory management best practices across your recycling chain

Inventory management is critical to all paper and cardboard recycling functions but particularly purchase, production, and sales functions. 

Accurate inventory records will allow you to understand in detail what has been purchased, from whom, for how much and at which yard locations. 

A comprehensive automated inventory system will also allow you to record the cost of purchase and the sales price achieved if you are trading, allowing to ensure profit margin is met. For mills, understanding your inventory helps you analyze your input costs, as well as greater awareness of how it impacts on the sale prices of finished product.

Finally, a complete understanding of available finished goods for sale will allow you to accelerate turnover of inventory and streamline your sales and any outbound shipment processes. 

5. Carry out regular cycle counts

Regular and scheduled cycle counts will ensure that your inventory counts are accurate and up to date. It will also pinpoint any areas for improvement in your inventory management processes.

Cycle counting can be readily facilitated using digital mobile applications designed for this purpose. 

AMCS helps paper recyclers across North America to automate their operations and improve the quality of their feedstock. Learn more about our Grading and Quality Evaluation application here or download the brochure below.  

The Paper and Plastics Recycling Conference is taking place on October 19th and 20th in Chicago. Come and visit AMCS at Booth 2. Contact us to book a pre-book a meeting.