The Retailer Spring_09.05_FA
Sustainable Supply Chain and Packaging
Clyde Buntrock Chief Executive Officer Allport Cargo Services
UNLOCK THE VALUE HIDDEN BEHIND THE BOX Sustainability has climbed the agenda for many retailers, who increasingly realise the environmental impact of their supply chain. As a consequence, packaging has become an area of focus: its impact, risks and opportunities should not be overlooked. Optimised packaging standards, combined with increased governance, on-going compliance and traceability, can transform the environmental impact of products and reduce supply chain costs. Experience tells us that suppliers are often provided with little or no packaging guidelines and retailers make do with whatever comes their way. Common issues include over or under engi- neered and often underfilled transit boxes combined with oversized polybags, excess tissue paper, redundant cardboard and clips. In practical terms, this causes unnecessary waste, product damage and increased logistics expenditure – all of which leads to a greater than expected impact on the environ- ment. IMPACT Primary packaging (the layer of packaging that is in direct contact with the product) plays a significant role in the amount of waste generated and in labour utilised to make product retail ready. Excess primary packaging may reflect a supplier’s struggle to find the right balance between product integrity and essential packaging, as well as a limited understanding of a retailer’s store set up. Transit packaging (the outer carton around the product, used for shipping) plays an even more significant and, frequently, less obvious role in supply chain sustainability. Over engineered boxes mean more cardboard enters and travels through the supply chain. On the other hand, under engineered boxes may cause product damage. Underfilled and wrong sized boxes increase the environmental impact and costs throughout the product life cycle – from origin factory to ultimate destination distribution centre, store or consumer giving increasing demands for omni-channel solutions. The absence of packaging guidelines and governance or, equally, the presence of inadequate procedures does not necessarily reflect the maturity of a retailer’s supply chain. Transit packaging has not been a priority to many as opportunities are not always obvious.
RISKS The current retail market requires competitiveness and sustainability as consumer’s demand for both affordable and environmentally friendly products has increased. Packaging has a direct impact on supply chain costs. Upstream, it influences material costs and logistics expenditure by dictating dimensions and therefore container fill, trailer utilisation and chargeable weight. Downstream, it impacts warehouse operations, including handling time, labour costs, pallet utilisation, storage, as well as distribution costs and store labour. Inefficiencies in any of these areas may put a retailer’s competitiveness at risk and exponentially increase the environmental impact of a product in terms of miles travelled, carbon footprint and waste. OPPORTUNITIES Optimised packaging standards take into consideration the sourcing market and the product flow from origin to ultimate destination. Packaging dimensions must take into account modes of transport and warehouse set up, maximising for example container utilisation, minimising volumetric weight, whilst allowing optimum pallet and rack fill, without compromising pick locations and store flow. Naturally, any primary packaging must consider store set up and the labour required to make a given product retail ready. Improved density is the ultimate goal and therefore packaging specifications ought to be coupled with clear instructions on how the product must be packed into the carton, including folding guides for garments. The optimum box – engineered to the right specifications, right sized and filled – reduces paper usage and waste, reduces carbon footprint, keeps miles travelled and freight costs at bay, it improves warehouse operations and ensures products reach consumers in a more sustainable manner. On-going governance and compliance are key enablers to realising and maintaining the benefits of a packaging optimisation initiative. Our experience tells us that close collaboration with suppliers dictates overall success. Merely recording and reporting non-conformity at destination is not enough. Suppliers must be trained and supported by hands-on technical support – a much appreciated approach. Compliance must be actively managed at origin through quality assurance checks and/or a system solution before the product is shipped. Depending on the complexity and scale of a retailer’s supply chain, a software platform will assist management and ensure the correct packaging is used.
40 | spring 2019 | the retailer
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