Is reusable packaging right for you?
Reusable packaging has a well-earned reputation for being good for the environment and the bottom line. But it's not for everyone.
Now that sustainability has entered the mainstream, more companies are looking at whether their operations might be a good fit for reusable packaging. Indeed, according to Jerry Welcome of the Reusable Packaging Association (RPA), the industry has seen annual growth of 10 percent over the past few years.
According to RPA, reusable packaging includes reusable pallets, racks, bulk containers, handheld con¬tainers, and dunnage made of durable materials such as metal, plastic, or wood. (A cardboard box, although it could be used more than once, would not be considered reusable packaging.)
The benefits of using reusables are manifold, experts say. They can reduce a shipment's impact on the environment. They are more cost-effective than buying one-way or nonreturnable packaging. They are typically stronger and easier to clean than their single-use counterparts. Finally, there's the aesthetic appeal. Reusable packaging usually looks better and often takes up less warehouse space because it is usually stackable and collapsible.
But for all the positives, reusable packaging does not make sense for everyone. Reusable packaging is not cheap, so to get a return on these assets (or to justify the fees if the units are rented from a pooler), a company has to make sure that it can get the packaging back. "You've invested the capital, the time, and the labor resource," points out Lisa Knight, director of marketing at Container and Pooling Solutions (CAPS). "If you are not able to get those [assets] back, you're going to be in some trouble."
For that reason, reusables tend to work best in a closed-loop system, where the units are exchanged among the same few parties, says Knight. She notes that there are circumstances under which reusables can work in nonclosed-loop environments—for example, if all of the end users' facilities are located close together, you could set up a regular milk run to retrieve the units. But even under such an arrangement, it would still be necessary to have a tightly controlled supply chain with a limited number of participants, she says.
But even if you have a tightly controlled supply chain, a reusable packaging program is not always a slam dunk. You have to put some thought into the program's setup. What follows are some steps you can take to make reusable packaging work for your company:
1. Calculate closely how many assets will be needed. To determine your asset requirements, it's important to know not only how many shippers are in the system but also the assets' cycle time. How long will it actually take to get reusable containers or pallets back from the end users? How many should be returned at one time? Is it worthwhile retrieving five or six containers or pallets, or should the return be postponed until a full truckload is built? Other questions center on the consistency of packaging volumes and whether there's a peak season for the packaging. Understanding all these factors will ensure the right amount of containers or packaging units are on hand and avoid the need to pay for expedited shipping from the end user, says Knight.
2. Conduct a lifecycle analysis. It is naïve to automatically assume that reusables will be cheaper or greener for the business, says Jack Ampuja, founder of the packaging advisory firm Supply Chain Optimizers. For that reason, he urges managers to perform a detailed eco-analysis tailored to their specific enterprise.
"Go back to what the original raw materials are and how they are converted into the packaging product, [and] look at how they come to your system, how they are transported, what you do with them," says Ampuja.
Ampuja adds that it's important that the analysis cover issues surrounding the packaging product's end of life. For example, many reusables are made out of plastic. "But plastic doesn't just disappear when its life is up," he says. "The [units] can be recycled, but in many ways, they can be much harder to recycle than paper."
3. Get supplier/customer buy-in. There are some cases where companies are only using reusables to ship between their own facilities. Most of the time, however, the items are being shipped back and forth between the company and one or more of its suppliers or customers.
In those cases, make sure suppliers or customers are on board with the reusables initiative. "Don't go down the path of doing the conversion [from nonreusables to reusables] without making sure your suppliers or customers understand what they are doing and the objectives behind it," says Norm Kukuk, vice president of marketing for Orbis Corp., a reusable packaging supplier.
One way to get partner buy-in, says Kukuk, is to show how reusable packaging will help them reduce overall costs. Another possibility, he says, is to point out how reusable packaging could support any objectives they may have, such as complying with new food safety requirements from the Food and Drug Administration.
Before you select a type of packaging, Kukuk recommends getting a customer's and/or supplier's input on how they would like to implement a reusable program. Ask them how they'd like to receive the packaging and return it and how they'd like their employees to pick out of the asset or place items into it.
4. Manage the assets. Reusable packaging is inherently valuable and can cost anywhere from $60 to several hundred dollars per piece. In order to get the most from these assets, companies must have processes in place to track, return, clean, repair, and eventually recycle or dispose of the material.
A pooler can help with the nuts and bolts of tracking and maintaining the assets. For example, many poolers will provide their customers (and their customers' partners) with scanners and systems to track assets. They will also ensure the assets are returned in a timely manner and that they are cleaned and repaired.
But contracting with a pooler doesn't mean you can simply step away from the operation; customers still have to be actively engaged in the process. "You need to understand [exactly] how you're going to be charged and who is responsible when one of these valuable pallets or totes goes outside the system or is broken," says Craig Densmore, a consultant with Supply Chain Optimizers and a professor of packaging at the Rochester Institute of Technology. "You don't want to receive a bill for a million dollars from the pooler because you can't account for reusables that they say are in your possession. It does take some administration from both sides."
It is also critical that your suppliers or customers play an active role in managing the fleet of assets. "Don't allow them to sit on inventory," says Kukuk. "Make sure you've detailed exactly how much they are allowed to keep on hand. Without that, you can get into a situation where your suppliers or customers are just building up buffers of packaging, and you find that your fleet is not turning over as fast as it could be."
That's a situation you definitely want to avoid, says Dave Mabon, head of contract packaging for third-party logistics service provider Genco. For cost reasons, you need to get as many turns as possible from each asset, he says.
5. Train, train, and train some more! To get the most out of the investment, employees must be properly trained on how to use and care for the asset, says Densmore. That might mean, for example, making sure associates know how to collapse and/or stack the items for maximum cube utilization when they are in return mode, he says.
6. Periodically reanalyze your packaging needs. Companies should recognize that as business conditions change, they may also have to adjust their packaging. For example, a business that has recently automated its operations might find it has to switch to a different type of reusable packaging. Or as the type of product being shipped changes, a company may need to switch to bigger or stronger containers.
The important thing, according to Kukuk, is to have procedures in place to ensure your program is re-evaluated on an ongoing basis. Companies with successful reusable packaging programs, he says, are continually "rightsizing" their packaging to make sure they are using the right packaging for the right application.
For all reusable packaging's benefits, it's hard to beat the allure of cardboard. The cardboard box is cheap, easy to obtain, and easy to recycle. It's also versatile: According to Jack Ampuja, president and CEO of the packaging advisory firm Supply Chain Optimizers, a typical corrugated cardboard box will work extremely well for two-thirds of all packaging applications.
But if you do use cardboard boxes, you have to have a plan in place for handling the excess (also known as old corrugated containers, or OCC). If you don't, it can create serious bottlenecks in an operation, says Mike Connell, sales manager at Balemaster, a manufacturer of balers. "A distribution center usually requires several people to handle its excess corrugated," he explains. "Boxes are cut down or flattened and bundled on pallets. It can be a very labor-intensive task."
In most cases, Balemaster says, you will need a baler at your site so that you can create bales that will be sold to a paper broker for recycling. "With an automatic baler, the boxes are simply fed into the baling chamber where they are compacted quickly into a tight bale that can be recycled," Connell says. "The benefits of using a baler in a DC include generating revenue by selling bales to a recycling company, eliminating the cost of hauling the excess corrugated to a waste yard or landfill, and being environmentally friendly."
But you have to choose your baler carefully. There are several different kinds of machines on the market, so selection is not always a simple matter, explains Tade Mahoney of American Baler Co. The wrong choice could prove costly, he adds. "You have to be really careful because balers are expensive to put in, and they're expensive to take out. So operators of distribution centers have a responsibility to provide [their baler vendor] with accurate information."
That information includes what type of boxes the baler will be handling (for example, whether they're single-wall or double-wall corrugated), the size of the boxes, the carton-per-minute flow rate (both during average and peak times), and the percentage of broken-down boxes versus setup boxes that will be tossed into the baler. "From that, we determine how big a baler you need, how big a charge box (the chamber below the hopper and in front of the ram that holds material before it's compressed) you need, and how fast the ram (the plate that compresses the corrugated) has to cycle," Mahoney says.
Many DCs can get by with a 60-inch charge box, an eight-inch cylinder, and 50 to 75 horsepower, according to Mahoney. "But that's not good for everyone," he emphasizes.
Companies may want to consider other features for their balers depending on their operation. For instance, a high-volume operation might want a baler that can tie bales automatically (which can save two to 10 minutes of time over manually tying a bale), while a site looking to cut its energy costs might want a baler that turns off when idle. Alternatively, a baler with dual pumps and motors might be a good fit for a DC that can't afford a total work stoppage—that's because if one of the pumps or motors breaks down, the machine can continue to operate at a slower speed. Finally, a really large DC may find that a baler cannot keep up with the amount of excess corrugated it churns out. In that case, it may want to install a shredder over the baler.
When dairy product company Fairlife switched from using fiberboard containers to plastic reusuable totes for shipping milk to grocery chain Kroger, the benefits were immediately noticeable.
"It was cheaper, cleaner, and easier for the end customer to deal with," says Hans Maron, Fairlife's vice president of operations.
The fiberboard containers, which cost around $100 apiece, had to be recycled after one use. In contrast, the reusable totes, which Fairlife rents from pooler CAPS, can be used 50 to 60 times before they need replacement. "Totes, as long as they don't get damaged, have a life of three to four years," says Maron.
The main reason for Fairlife's switch to reusables, however, was ease of use. The totes are easier to fill and empty than the fiberboard version. They're also stronger. With fiberboard, according to Maron, there's more of a risk of a forklift tine's puncturing the packaging. Additionally, if the fiberboard is stacked, it can get pinched and start to leak. The totes, on the other hand, can be stacked 10 to 15 feet high.
Furthermore, CAPS has made leasing convenient for Fairlife. As part of its service, CAPS picks up the totes from the Kroger facility, cleans them, wraps them in plastic, and returns them to Fairlife.
There were a couple of factors that made Fairlife a good candidate for reusable packaging. First, the company had a closed-loop supply chain. It ships out filled totes from a single Fairlife location to a single Kroger location, where the milk is processed to make the grocery chain's own branded Greek yogurt. Second, the company had the shipment volume and consistency (300 to 400 totes per month) to make returns economical. "If you have lower volumes and they don't turn often, you're going to end up paying more to make sure they don't accumulate as much at the end user," Maron explains. "With higher volumes—because you can fit about 108 totes in a trailer—you're able to take full truckloads, which cuts back on shipping costs."
About the Author
Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
More articles by Susan K. Lacefield
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