Packaging optimisation is no quick fix
With the continued upward revision of packaging recovery targets, the pressure is on all those in the supply chain to reduce the weight - and costs - of their products. But there is a lot more to packaging optimisation than just minimising materials, says Paul James, general manager of Exel's environmental compliance service.
For many FMCG products, packaging is at the very heart of their attractiveness to consumers. However, this well established tool of the marketing arsenal is coming increasingly under fire from environmental legislation that is placing a greater onus on manufacturers to reduce the amount of packaging they use.
While there are several high profile government-backed bodies encouraging companies to take their environmental responsibilities seriously – such as the Waste & Resources Action Programme’s (WRAP) retailer initiative – there is still a high proportion of consumer goods that use more packaging than their peers.
The sad fact remains that despite our best intentions, recent research indicates that nearly half of all household waste that ends up in landfill, originates from supermarkets and convenience stores, either as discarded packaging or wasted food.
The problem facing manufactuers in the FMCG market centres on achieving a balance between reducing packaging and maintaining important brand equity in their products.
While reducing the weight of packaging used, manufacturers are still faced with the practical realities of surviving in a fast moving and highly competitive market.
Take products sold in the supermarket environment, for example. Here the goods need to be self-promoting, carrying large amounts of information on the product – as well as creating a strong brand identity.
We no longer have the friendly shopkeeper there to advise customers on new products and pro-actively market on behalf of the manufacturer. Products have to sell themselves and packaging helps them to do it.
Similarly, luxury goods achieve far higher profit margins than commodity products and manufacturers invest considerably in the packaging to help them achieve this.
The often complex and eye-catching packaging is ostentatious for good reason – it wants to differentiate itself from commodity purchases and convey a feeling of exclusivity to the buyer.
Conversely, under-packaging can be worse for the environment than over-packaging. It can also dent a brand’s hard-earned reputation. If packaging fails somewhere along the supply chain, not only does it become waste, but so too do the contents.
Let’s take a mixed case of perishable items that has just been unloaded from a trailer. If a case of yoghurt splits and spills onto foodstuffs underneath, the cost includes the time to clear up the mess as well as the spoiled goods.
Exel works with the vast majority of FMCG retailers in the UK, helping them to calculate packaging volumes in order for them to fulfil their packaging waste obligations.
But we are the first to advise businesses that a far broader perspective on packaging needs to be taken than looking solely at packaging minimisation.
While we regularly undertake comparative packaging weight analysis for FMCG clients and retailers, often working closely with such bodies as WRAP, packaging savings themselves are not always the whole prize.
Decisions on packaging optimisation should not be based on packaging cost savings alone – there are often many other issues to take into account.
Savings can also be realised if consideration is given to the optimisation of secondary and transit packaging to achieve better pallet use, reducing both packaging use and transport costs.
If an additional row of product can be safety accommodated on a pallet due to smarter thinking, then significant cost benefits can be achieved.
Consideration also needs to be given to the costs of placing products on the shelf and how better pack formats take less time to shelf stack – again creating time and cost savings in the supply chain.
Many retailers have already made significant gains in this area with reusable trays and dollies, but there are still significant opportunities for further efficiencies.
Looking specifically at waste generation, industry can only take responsibility for the areas over which it has control – making sure the product is delivered in good condition using a rational amount of resources and that the used materials do not damage the environment.
Consumers also have to accept a share of responsibility – particularly for what they choose to consume and how they discard used packaging.
Packaging minimisation can have a positive impact on the bottom line by reducing raw material use and fuel costs. But businesses need to take a more holistic view of their packaging use.
Too often companies take a “silo” approach when it comes to assessing the pros and cons of packaging optimisation. Senior management need to have a total view of the supply chain to understand that marginal additional cost in one part of the supply chain could create significant savings overall for the business.
Packaging optimisation can yield significant benefits for many businesses involved with FMCG products. However, it should not be seen as a quick-fix solution that can save your business huge sums of money overnight.
It should be seen as part of a bigger strategy that deserves long-term commitment and measurement over time.