Cutting back on product packaging is one area where companies can go too far with sustainability initiatives, says Gene Bodenheimer, senior vice president for damage research at Genco ATC.
"If packaging is reduced too much, then the secondary packaging, which has the job of protecting consumer products from the rigors of normal supply chain handling, may not be able to do its job, and the products become damaged before they ever make it to shelf," he says. If heavily damaged, products have to be discarded and their value is lost. Even if the damage is minor or cosmetic, the result still may be lost sales because blemished products have a lower appeal to shoppers.
Companies often are persuaded by the promised savings of reduced packaging, which can be robust, says Bodenheimer. However, these savings often are more than offset by the detrimental impact of damages, with costs running 10 to 20 times the savings achieved, he says.
As an example, Bodenheimer cites a food manufacturer with which Genco worked. This company reduced the packaging used to ship glass jars containing food. Originally, these glass jars were shipped in corrugated cases that had corrugated dividers between the jars. This was changed to tray packs with shrink wrap in case configurations. "At first, the savings looked great, but damage claims went up four times and the end cost was about 20 times the original savings," he says.
One way to avoid such outcomes is to broaden the group of stakeholders involved in the decision-making process, Bodenheimer says. It is especially important to include the group that manages returns and unsellables, because this group typically tracks and measures how packaging performs in the real-world supply chain. "They are able to balance the lab test results for new package designs with real-world supply chain handling, which often is far less than the ideal conditions typically measured in a lab. "If this group is brought to the table early on, they can help avoid mistakes," says Bodenheimer.
Even with the best packaging and handling, damage will sometimes occur, which is why companies also need to have a cost-effective process in place to quickly re-market products with residual value, or to salvage and recycle materials, Bodenheimer says. Making an investment in such a system can quickly pay for itself, with every dollar spent resulting in $5 to $10 earned, he says. "That's an ROI that anyone would be proud to have."
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