CPIM-MPR approach - Certified in Production and Inventory Management - Master Planning of Resources Updated: 2023

A University of Queensland-led research team says the key to a more sustainable food future may be a better understanding of ancient Indigenous food production systems.

Their ARC Discovery project "Testing the Dark Emu hypothesis" combines bioarchaeology, archaeobotany, palynology, ethnobotany and plant genetics in partnership with Indigenous communities to challenge existing perspectives. The research is published in Archaeology of Food and Foodways.

UQ bioarchaeologist Associate Professor Michael Westaway said transdisciplinary research was needed to confirm whether Aboriginal communities were farmers rather than foragers, with evidence of early aquaculture and possibly cultivation.

"We're working closely with Indigenous communities, because Aboriginal people are increasingly hurry to gain insights into how their people cared for Country and developed these types of sustainable food production systems," Dr. Westaway said.

"We've found extensive evidence the largest forager quarries in the world were in western Queensland, where the Mithaka people extracted stone slabs to make grinding stones for processing seeds.

"We've also excavated the fireplaces of gunyahs, traditional Aboriginal huts, and found remnants of burned carbonized seeds, which archaeobotanists are now examining to identify the species."

Dr. Westaway said pollen cores taken from ancient lake beds also allowed the team to reconstruct how the surrounding vegetation had changed over time.

"The ethnohistory shows us that Aboriginal people would prepare for a big flood by burning the surrounding riverine plains, to increase the productivity of the landscape," he said. "By identifying carbon peaks in the cores from the lake beds, we can learn about the timing of the burnings.

"We believe we're seeing records that indicate domestication of landscapes, which is an exciting element."

The research team has also looked at plant genetics, including drought resistance.

UQ Professor of Innovation in Agriculture Robert Henry said a methodical, transdisciplinary approach was necessary to reveal the complete story of ancient Indigenous food production.

"I'm looking at the contemporary flora and how the plants there now might have been changed by humans over time," Professor Henry said. "These can include changes in seed size or whether the plant would have been edible and trying to link that with the archaeological findings.

"This is significant from an agricultural point of view, as there may have been practices in the past that are useful to know about for the future. Climate change means we will have to adapt agriculture to new climates, as they did in the past."

Dr. Westaway said the research had the potential to open new ways of thinking about using native flora in a more sustainable way, that would support new industry.

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Sustainability: The ability to be maintained at a given rate or level; avoidance of the depletion of natural resources to maintain an ecological balance.

By definition, sustainable plastics should be managed within a sustainable materials management system or circular economy that avoids creating waste, toxins and pollutants. Unlike a linear economy that takes resources, makes products, uses these products and disposes of them, creating waste, material in the circular economy is collected and reused after each use.

Plastic producers place heavy emphasis on a product’s ability to be reused at the end of its life as they transition toward a more sustainable, eco-friendly position within the broader circular economy. However, an often-overlooked opportunity for reuse comes within the production of the product itself via in-plant recycling or reclamation of production scrap. Creating and implementing a reclamation program can help a producer become more sustainable and often can be a cost-effective, profitable endeavor.

But an in-plant recycling or reclamation operation is a large undertaking that requires significant analysis to determine if it is a fit for the organization and production process. Producers must understand the type of scrap produced and the economics behind such a program. They also must identify and form an implementation plan for the reclamation of production scrap and its reintroduction into the production process.

Understanding, defining production scrap

Production scrap comes in all forms, shapes and sizes. Some can be reclaimed online, offline or not at all.

In the cases of blown or cast film and sheet, startup purge, trims, bad rolls and loose products should be reclaimed. Blow- and injection-molded scrap, such as flash, sprues, runners and whole or cut-down parts, should be reprocessed. Other processes, such as compounding and fiber extrusion, also produce considerable production scrap.

Photos courtesy of Vecoplan LLC

Producers often can reclaim production scrap directly online, known as direct scrap reclaim. For film and sheet, edge trim can be processed and fed directly back to the extrusion line. In blow and injection molding, scrap such as flash, trimmings and runners can be granulated beside the machine and fed directly back to the process. Producers must handle production scrap offline for all other processes, such as pipe and profile, compounding and fiber extrusion.

Processors that still need to develop their internal recycling capabilities typically are left with three choices when dealing with their scrap: disposal, resale or toll processing. Disposal is the last resort before incineration, where the scrap can be used as fuel to recover its British thermal unit, or Btu, value. Disposal is the only option for scrap that cannot be reused or converted to energy. Often, size reduction and compaction are used to prepare the material for efficient transport and disposal, which can be critical for cost-effective operations.

Economics and decision-making for in-house scrap reprocessing

The first step is to evaluate the economics of the current production scrap handling process. You then can calculate the potential savings per year to substitute the current handling methods, including disposal, resale or toll processing. After calculating potential savings, you can compare them against the costs associated with an internal scrap reclamation operation, including any process modifications.

To understand the true economics and cost of disposal, you must calculate real and ecological factors. The cost calculation should consider factors such as the carbon footprint from transporting the waste as well as landfill tipping fees. If you plan to sell the scrap, you must calculate the net profit from the resale, considering costs such as marketing, administration, storage and logistics. These costs can offset a considerable amount of the price per pound received from selling the scrap. When determining an accurate cost analysis for toll processing, producers also must consider additional factors, such as the implications of quality control and material loss.

Once a complete cost profile is established for the current methods used to handle your production scrap, you can calculate potential cost savings per year to substitute your scrap’s disposal, resale or toll processing with in-house processing.

It’s important to evaluate the production process to determine the potential reuse of reclaimed materials. You can collect much of the necessary information by running trials on your processing line using reclaimed materials. Identify any detrimental effects that reclaimed materials have in the process, such as reduced output or automation and product quality issues, and study the impact of different reclamation forms, such as regrind, densified particles or repelletized material. Process modifications needed to optimize reclaim use need to be determined, as well as the costs associated with their implementation.

After identifying the ideal form or forms of the reclaimed material for reintroduction and any process changes needed to accommodate them, you can begin looking at different processes to recover the material.

Once you have decided on the correct processes to convert scrap into the desired form for reprocessing, you can determine the associated costs. Calculate the potential savings per pound of material recovered. Based on the process limitations of your production lines, the maximum percentage of reclaimed material introduction should be established, thereby indicating the potential material savings per year.

The final step is to calculate the cost for an internal scrap reclamation operation; this includes the capital equipment and operational cost per pound for the reprocessing line. With this information, you can compare the estimated cost savings per pound and factor in the amount of scrap that can be reprocessed for a projected payback.

Armed with this information, you can prepare the business plan for upper management to evaluate and make a tentative decision on whether to move forward with the project.

Detailed evaluation for introducing reclaimed material

With the initial cost analysis and justification completed and management’s OK to move forward, you are ready to dive into the implementation details. Transportation and storage of reprocessed material is the first consideration, knowing regrind materials and densified scrap handle differently than pellets.

All standard options—gaylord boxes, super sacks, hoppers/bins and silos—are available. Your material conveying systems, however, must be analyzed for these reprocessed material forms, including material line sizes, dust collection systems and material holding bins. If you repelletize material, storage and transportation equipment typically can be used as is.

Implementing system modifications to the production process is a complicated step in reprocessing material.

Blending and feeding systems need to be evaluated. While you can use existing systems to introduce reclaimed material in most circumstances, blending and feeding equipment might need to be added or modified to accept the new material stream.

The most complicated step is identifying and implementing any modifications needed to the production process for making your end products. The extruder and/or extruder screw might need modification to accept higher levels of reclaimed material. Nonpelletized reclaimed materials could require a larger feed section, deeper metering flights and improved venting. Melt pumps also can be incorporated into the process. Mixing sections or static mixers can be added to the extruder to Strengthen melt homogenization. Upgraded melt filtration could be required to handle increased material contamination arising from using reclaimed materials. Gauge measurement and control could need to be upgraded or added to better monitor the product’s overall dimensions.

Despite best efforts, reprocessed material can negatively impact end products. Viscosity loss, gel formation and color degradation can result, as well as loss of mechanical properties. Process output and stability issues can lead to loss of production and gauge control. Contamination and visual imperfections also could be unavoidable. Though the market insists on products manufactured with reclaimed content, the producer also must maintain the highest possible level of aesthetics and performance, so, identifying potential adverse effects on the final product early on and implementing solutions to offset them are critical.

Processes for reclaiming production scrap

A critical first step in any reclamation process is size reduction. A preshredder might be required for proper sortation, inspection and separation of foreign materials. A second size-reduction step, or reshred, might be needed for further material processing for either densification or repelletizing. Further size reduction also could be required to granulate the product to a processable size or even to pulverize it to return materials to their original powdered or granulated form.

Complex material streams, even postconsumer streams, could require sorting for color and polymer type. Contamination removal is a critical last step and often includes ferrous and nonferrous metal removal and soft contamination removal by wash systems, including wet and dry-cleaning operations.

If the recovered material cannot be used in a simple regrind form, either densification or pelletizing must be incorporated. The extrusion process can include traditional single-screw extruders, twin-screw compounding extruders or specialized recycling extruders.

Pelletizing can be done either by “strand,” using a bath or water slide, or “die face,” either air- or water-cooled. Techniques are available to help preserve polymer properties during the recovery process, including viscosity recovery, to boost color, remove odor and Strengthen mechanical properties.

Future considerations

There’s a lot to think about when you want to go green and move toward a more sustainable, circular production process, considering ecological and economic factors must be addressed. Consider hiring a sustainability manager responsible for looking into all aspects of production to minimize waste. As your internal recycling capabilities grow, you also can consider bringing in other producers’ production scrap as well as postconsumer scrap to supplement your own.

Grow your sustainability program into a profitable business unit your competitors will admire and lead the way toward the ultimate goal of zero waste.

The author is the business development and complex applications manager at Archdale, North Carolina-based Vecoplan LLC and can be reached at dana.darley@vecoplan.com.

The role of education as a pathway to opportunity in our country has never been more critical, or more scrutinized. The evidence is clear: Poverty, and the chaos it often brings to a family’s daily life, severely constricts a child’s ability to engage and succeed in school. How can we make sure our schools are up to the challenge of providing a 21st-century education for all our children — not just some? And what will it take to get there?

Everyone is looking for policy solutions that work.

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Originally, the term "Sherpa" denoted a hill-tribe of Tibetan descent, but it has since become synonymous with guides on Mount Everest, the world's highest and most rugged mountain. Much like these Sherpas, research into the demanding task of developing catalysts for hydrogen production is making substantial progress and has earned recognition as the featured cover article in an international journal.

In this article I cover a strategy that identifies stocks with strong return on equity (ROE) and give you a list of stocks that currently pass the AAII Return on Equity screen. Return on equity may help to reveal profitable firms, but does Wall Street reward the stock prices of these firms? The AAII Return on Equity screen has gained 10.7% annually since inception in 1998, while the S&P 500 index has returned 5.6% annually over the same period.

Measuring Profitability By What Shareholders Earned

Return on equity is a popular measure of profitability and corporate management excellence. The measure is determined by dividing the firm’s annual earnings by shareholder’s equity. This relates earnings generated by a company to the investment that shareholders have made and retained within the firm. Shareholder’s equity is equal to total assets of the firm less all its debt and liabilities. Also known as stockholder’s equity, owner’s equity or simply equity, it represents investors’ ownership interest in the company. It is also known as the book value of the company.

Warren Buffett considers it a positive sign when a company is able to earn above-average returns on equity. Buffett believes that a successful stock investment is first and foremost the result of the underlying business; its value to the owner comes primarily from its ability to generate earnings at an increasing rate each year. Buffett examines management’s use of owner’s equity, looking for management that has proven its ability to employ equity in new moneymaking ventures, or for stock buybacks when they offer a greater return. If the earnings are properly reinvested in the company, earnings should rise over time and stock price valuation will also rise to reflect the increasing value of the business.

Return on equity indicates how much the shareholders earned for their investment in the company. Annual net income of $100 million created on a base of $300 million in shareholder’s equity is very good ($100 ÷ $300 = 0.33, or 33%). However, $100 million in annual net income relative to $3 billion in shareholder’s equity would be considered relatively poor ($100 ÷ $3,000 = 0.03, or 3%). Generally, the higher the return on equity, the better. A return on equity above 15% is good, and figures above 20% are considered exceptional. However, it is important to compare return on equity with industrywide averages to get a true feel for the significance of a company’s ratio.

Return On Equity Defined

Return on equity can be simply stated as net income divided by common shareholder’s equity. However, return on equity can be broken down into three components: net profit margin, asset turnover and financial leverage. Multiplying these three components together results in return on equity.

The net profit margin—net income divided by sales—reflects how efficient a firm is in operations, administration, financing and tax management per sales dollar. A rising or improving profit margin over time translates into an increase in earnings for a given level of sales.

Asset turnover—sales divided by total assets—shows how well a company utilizes its asset base to produce sales. Poorly deployed or redundant assets result in low asset turnover that adversely reflects return on equity and profitability.

Multiplying profit margin and asset turnover together results in return on assets (ROA). A firm can increase its return on assets, and thereby its return on equity, by increasing its profit margin or its operating efficiency as measured by its asset turnover. Margins are improved by lowering expenses relative to sales. Asset turnover can be improved by selling more goods with a given level of assets. This is the reason why companies try to divest assets (operations) that do not generate a high degree of sales relative to their value, or assets with decreased sales generation. When examining profit margins or asset turnover, it is important to consider industry trends and compare them to how a company is doing within its industry.

Financial leverage completes the return on equity equation. Financial leverage—total assets divided by common shareholder’s equity—indicates the degree to which the firm has been financed through debt as opposed to equity sources. The greater the value of this leverage ratio, the greater the financial risk of the firm—but also the greater the return on equity. When equity is small relative to debt, generated earnings will result in a high return on equity, if the firm is profitable. The risk with high levels of debt is that a company will not generate enough cash flow to cover the interest payments during challenging times.

Debt magnifies the impact of earnings on returns during both good and bad years. When large differences between return on assets and return on equity exist, an investor should closely examine the liquidity and financial risk ratios.

The ideal firm would maintain a high net profit margin, utilize assets efficiently and do it all with low risk, as reflected by a low financial leverage. The key in working with return on equity is examining and understanding the interplay between the determinants of the ratio.

Implementing The AAII Return On Equity Screen

The primary goal of the AAII Return on Equity screen is to identify companies with consistently high return on equity. Secondarily, the approach includes characteristics to filter out firms with high levels of debt, low margins and low asset turnover relative to industry medians.

The AAII Return on Equity approach starts by seeking out companies operating with a return on equity 1.5 times their respective industry median over the last 12 months and each of the last five fiscal years. This screen helps to reveal companies whose management has consistently generated the highest profits from its equity capital. The AAII Return on Equity strategy does not simply screen for companies with return on equity levels of 20% or higher but instead looks for ratios that are high relative to industry norms to highlight firms outperforming their peers.

Stocks Passing the Return on Equity Screen (Ranked by Return on Equity)

As discussed above, return on equity is influenced by profitability, efficiency and leverage. Therefore, the next set of screens seek companies outperforming their peers in these areas. First, the AAII Return on Equity approach requires that a firm’s net margin (net income divided by sales) exceed the industry median over the last four quarters (trailing 12 months). Net profit margin looks at bottom-line profitability. Firms exceeding their peers are translating a higher percentage of sales into profits.

Next, the AAII Return on Equity screen makes sure that the asset turnover (sales divided by total assets) for a firm exceeds the industry median over the last four quarters. Asset turnover helps to measure the efficiency of a firm’s use of its asset base. Firms exceeding their peers are generating higher levels of sales dollars for a given level of assets.

The AAII Return on Equity approach also specifies that when looking at the financial leverage of firms, the ratio of total liabilities to total assets at the end of the most exact quarter is below the industry median. A high return on equity can be attained by having a very high amount of debt and, therefore, a very low shareholder’s equity. In such a case, return on equity would be high, but risky. Financial leverage increases return but also increases risk. Highly leveraged firms have more volatile earnings. Acceptable levels of debt vary from industry to industry. More stable industries such as utilities can comfortably carry more debt on their balance sheets than volatile industries such as oil and gas. By comparing levels of liabilities to industry medians, the AAII Return on Equity screen takes industry differences into account.

To help ensure some basic level of growth, the AAII Return on Equity strategy requires positive earnings and sales growth over the past 12 months. The approach also requires that the firm’s five-year historical growth rates in earnings and sales exceed their respective industry medians. The approach does not specifically look for high absolute levels of growth, just signs that the firms are expanding faster than their peers.

The AAII Return on Equity screen also requires that a stock be listed on an exchange to help ensure trading liquidity. Therefore, stocks that trade over the counter (OTC) are excluded. Due to their special nature, the AAII Return on Equity screen also excludes real estate investment trusts (REITs), closed-end funds (CEFs) and American depositary receipts (ADRs).

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The stocks meeting the criteria of the approach do not represent a “recommended” or “buy” list. It is important to perform due diligence.

If you want an edge throughout this market volatility, become an AAII member.

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Recent research into the demanding task of developing catalysts for hydrogen production has made substantial progress.

Professor Yong-Tae Kim from the Department of Materials Science and Engineering and the Graduate Institute of Ferrous & Eco Materials Technology, and Kyu-Su Kim, a doctoral student from the Department of Materials Science and Engineering at Pohang University of Science and Technology (POSTECH), collaborated on a research project that offers a promising direction for the future development of catalysts for water electrolysis.

Their study was showcased as the cover article in ACS Catalysis.

Water electrolysis, a method for producing hydrogen from the abundant resource of water, emerges as an environmentally friendly technology that produces no carbon dioxide emissions. However, this process faces limitations due to its reliance on precious metal catalysts such as iridium (Ir), rendering it economically unfeasible. Researchers are actively exploring the development of catalysts in the form of metal alloys to address this challenge.

In the field of water electrolysis catalysis research, the primary catalysts under scrutiny are iridium, ruthenium (Ru), and osmium (Os). Iridium, despite its high stability, exhibits low activity and comes at a steep price. Conversely, ruthenium displays commendable activity and is a more cost-effective option compared to iridium, although it lacks the same level of stability.

Osmium, on the other hand, readily dissolves under various electrochemical conditions, leading to the formation of nanostructures with an expanded electrochemical active surface area, thereby enhancing geometrical activity.

Initially, the research team developed catalysts using both iridium and ruthenium. By combining these metals, they successfully preserved the excellent attributes of each, resulting in catalysts that demonstrated improvements in both activity and stability. Catalysts incorporating osmium exhibited high activity due to the expanded electrochemical active surface area achieved through nanostructure formation. These catalysts retained the advantageous properties of iridium and ruthenium.

Subsequently, the team expanded their experimentation to include all three metals. The results showed a moderate increase in activity, but the dissolution of osmium had a detrimental effect, significantly compromising the structural integrity of iridium and ruthenium. In this series, the agglomeration and corrosion of nanostructures were accelerated, leading to a decline in the balance of catalytic performance.

Based on these findings, the research team has proposed several avenues for further catalyst research. First and foremost, they stress the need for a metric that can simultaneously evaluate both activity and stability. This metric, known as the activity-stability factor, was initially introduced by Kim's research group in 2017.

Additionally, the team advocates for the retention of superior catalyst properties even after the formation of nanostructures, in order to enhance the electrochemical active surface area of the electrocatalyst. They also highlight the importance of carefully selecting candidate materials that can effectively synergize when alloyed with other metals. The essence of this study lies not in presenting specific outcomes like the development of new catalysts, but rather in offering essential considerations for catalyst design.

Professor Yong-Tae Kim, who spearheaded the research, said, "This research marks the beginning of our journey, not the conclusion." He shared his vision by stating, "We are dedicated to the continuous development of efficient water electrolysis catalysts based on the insights gained from this research."