Packaging as Part of Retailers’ Supply Chain Planning
Consumer goods packaging is a rather complex business in and of itself – just ask any supplier that makes laundry detergent pods.
These days, though, as more retailers play in the traditional CPG space, whether through private label, ecommerce, or other, more consumer-direct initiatives, they would be smart to think more about packaging, too, according to several packaging experts. By doing so, and specifically by paying special attention to how packaging fits into their overall supply chain, retailers could improve their efficiencies, contribute to a more sustainable planet, and even find some hidden cost savings.
The typical retail executive, as well as the local store manager, spends little time pondering over packaging, notes Gary Kestenbaum, an independent packaging consultant based in New York. “Even among retailers with large private label businesses, if you ask the corporate office if they understand everything about their product packaging, nobody really knows,” he observes.
Yet the importance of packaging throughout the supply chain can’t be underestimated, according to Kestenbaum. At the store level, “it’s the packaging that drives consumer interest,” he notes. And way before the product reaches the store, there are plenty of opportunities for logistical wins – or nightmares. In his many years of working in the consumer goods industry, he’s seen a supplier lose an entire trailer of nuts because of the way the product was loaded, and because it didn’t fit the pallet dimensions properly. He’s also seen cases of cereal being crushed because of how a machine loaded product onto the trailer.
“Packaging is an end-to-end process,” he says.
A recent report published by Reston, Va.-based PMMI, the Association for Packaging and Processing Technologies, underscores just how complex packaging’s role in the supply chain has become in recent years. “Part of the challenge of increased supply chain complexity for CPGs involves increased pressures on warehousing, transportation and overall distribution,” the “Vision 2025” report notes. “These constraints are affecting everything from case packs, case sizes, pallet sizes, package orientation, and secondary and tertiary packaging reconfigurations that must ‘fit’ into warehouses trucks and onto store shelves.”
Indeed, the complexity of packaging might be overwhelming to the average grocery retailer, but there are two areas worthy of special consideration in today’s retailing climate: sustainability and ecommerce.
- Key Takeaways
- The importance of packaging throughout the supply chain can’t be underestimated, both because, at the store level, it drives consumer interest, and it’s key to ensuring that products arrive intact at their destination.
- There are two packaging areas worthy of special consideration in today’s retailing climate: sustainability and ecommerce.
- A few leading retailers are already prioritizing packaging sustainability as part of making their overall businesses more environmentally friendly and cost-effective.
- Having knowledge throughout the supply chain of a product and how its packaging is related is beneficial to suppliers and retailers alike.
Greener Packaging
A few leading retailers are already prioritizing packaging sustainability as they work to make their overall businesses more environmentally friendly, and likely save money in the process. In fall 2016, Bentonville, Ark.-based Walmart Inc. unveiled a Sustainable Packaging Playbook to provide its suppliers and vendors guidance on how to make progress in specific areas to help improve their sustainability index score and reduce their cost of goods. Walmart’s three primary goals were to optimize design, source sustainably and support recycling.
The retailer has also said it plans to have 100 percent recyclable packaging for all of its private-brand products by 2025.
In a similar vein, Rochester, N.Y.-based Wegmans Food Markets has zeroed in on packaging innovation in recent years as part of its commitment to sustainability.
Jason Wadsworth, manager of sustainability for Wegmans, spoke directly about packaging last year, just in time for Earth Day. “It’s always important to remember that a food container’s No. 1 job is to protect the food inside,” he noted. “It takes resources to grow that food, and fuel to bring it from the farm to the store, so we want to preserve nature’s investment in this food with containers that protect it all the way to your table. Our job is to make sure packaging is functional, performs as expected, and uses materials efficiently and responsibly. That leaves plenty of opportunity for exploring ways to make packaging more sustainable.”
Wegmans has said that it’s committed to avoiding excess packaging, and is specifically focused on reducing the amount of virgin materials in its packaging – new plastic or paper made from nonrenewable fossil fuels – and replacing them with mineral fillers, and renewable and recycled materials.
On a broader scale, the grocery industry overall is becoming more aware of packaging’s impact on the environment, says Jenna Jambeck, an associate professor at the University of Georgia’s College of Engineering, in Athens. Jambeck also works with the university’s New Materials Institute, which was founded three years ago to create new materials and technologies that are commercially successful and sustainably made. Her research on plastic waste in the ocean suggests that 8 million metric tons of plastic enter the world’s oceans every year.
“I think policies around the world -- say, for example, plastic bag bans or taxes -- have made industry adjust per these policies,” she observes. “So having industry thinking internally about these issues and how to reduce leakage along with, or outside, these policies can be advantageous. The public is also asking for action by the industry, and many companies are finding that being progressive on this issue can be good for their bottom line.”
Going ‘Frustration-free’
Dustin Smith, CEO of Waukesha, Wis.-based BoldtSmith Packaging Consultants, says that most companies who seek his services are primarily looking to reduce costs, although sustainability is sometimes a tertiary goal.
One of the hottest trends he’s seeing in his work now is the move to make consumer-direct packaging as efficient as possible – and that often means using less packaging, and definitely less “air,” or unfilled space. As more grocers get into the ecommerce business in which they’re delivering product straight to people’s homes, Smith expects them to pay more attention.
As an example of this idea, he points to Amazon’s “frustration-free packaging,” which the company launched back in 2008. Seattle-based Amazon gives its vendors the option to apply for Certified Frustration-Free Packaging status, which means using simpler packaging for shipping and a reduction in the overall amount of packing materials used. Amazon bills this packaging option as “easy to open, 100 percent recyclable and with less packaging waste and protective packaging.”
A recent check on Amazon’s website found that several grocery-related brands are already participating, including Nestlé Coffee-Mate coffee creamer, Pampers Sensitive Water Baby Wipes and Gillette Fusion Manual Men’s razor blade refills.
In some cases, suppliers are finding that it makes sense to create a separate SKU for ecommerce, continues Smith. The ecommerce product might not have the same amount of graphics or sell points, since it isn’t meant for retail display.
“What we’ve kind of seen is that food industry companies are a little behind the eight ball in this,” says Smith. “Something like this is a large project. If you want to have a different ecommerce SKU, and you’re looking to do it with a high-volume product that’s constantly running, this is a big deal.”
At the end of the day, having knowledge through the entire supply chain of a product and how its packaging is related is advantageous to suppliers, as well as retailers, he asserts. “You want to think about how the product is stored, how it’s being stacked on pallets in the warehouse, what happens when it leaves the warehouse, and even how it’s handled once the consumer brings it home,” he notes.
Smith has been surprised by the number of his clients that don’t have a supply chain map in place. “One of the first questions we ask companies when we have a new project is, ‘Tell me about your supply chain map,’” he says. “The majority of the time, they’re not really sure.”
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