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Who hasn't cursed the explosion of Styrofoam peanuts, cardboard and other types of padding that accompany most small shipments to consumers and businesses? Even with a wealth of recycling opportunities, the disposal of packing materials can be a time-consuming task - not to mention an environmental nightmare.
Office Depot has devised a simple yet effective way to cut down on unnecessary shipping materials, including corrugate. The solution is expected to reduce the cardboard used in deliveries by more than 3.5 million pounds.
With revenues of nearly $12bn, Office Depot operates some 1,600 stores around the world. Its website ranks sixth in global sales and second in business-to-business purchases, according to Yalmaz F. Siddiqui, senior director of environmental strategy.
The company ships around a million packages per week to business customers, promising next-day delivery to more than 90 percent of the U.S. population. Its on-time performance stands at 99.3 percent, says Brent Beabout, senior vice president of supply chain.
Efficient though it might be, the high-volume operation was creating "a huge problem of waste with fill material," says Beabout. For most customer repack deliveries - averaging more than 26,000 a day - Office Depot was protecting the contents with air pillows and tape. In response to a need to cut down on its use of materials, the company developed the GreenerOffice Delivery Service for all business customers in North America.
The strategy involves the placement of orders in sealed, recyclable paper bags, which are delivered in reusable plastic totes. The totes go back with the delivery truck, virtually eliminating the common problem of lost or misplaced units. (In an initial test of the program, Office Depot left the totes at customer sites for later pickup, but not all of them were returned.) There are no peanuts, air pillows or dunnage of any kind.
A Multi-Disciplinary Approach
The program was developed with the participation of multiple functions within Office Depot, including sales and marketing, legal, information technology, procurement, transportation, finance and environmental strategy. A pilot effort ran from August to December 2011, utilizing 100,000 totes purchased earlier that year. Customers were given the option of sticking with the traditional cardboard cartons, but more than 95 percent chose not to. Instead they received product in bags that contained 40 percent post-consumer recycled content, carried in totes made up of 60-percent recycled plastic.
The pilot consisted of tests out of distribution centers in two distinctly different regions - Seattle, Wash., and Weston, Fla. Customer service was on hand to ensure that the program ran smoothly and was well-received by accounts. Customers were polled on their experience and invited to solicit input. They were also provided with information and assistance via a dedicated website, which included frequently asked questions and downloadable documents outlining the details of the program.
There were multiple concerns to be addressed at the outset. Office Depot had to ensure that both automated and non-automated material-handling systems could deal with the plastic totes. Maximizing space within the distribution facility was also a major goal. A large number of cartons would no longer need to pass through the stages of dunnage insertion and carton sealing, as they queued up for loading.
Totes containing the paper bags would be directed to a centralized processing area, similar to an express checkout lane at a home-improvement store, Office Depot says. They featured labels that could be easily removed. The company further cut down on complexity by designing just one size of bag.
All of these changes required tweaking of Office Depot's order-fulfillment and warehouse-management systems, to make sure the company was accurately tracking and processing corrugate materials. An electronic "flag" was added to indicate those internet customers who had opted out of the delivery method, so that the information could be conveyed to the distribution center. In addition, key metrics were followed by use of a scorecard, which informed the company as to whether it was meeting its goals for sustainability.
Program's Early Benefits
In the initial four-month rollout, the program resulted in 2 million tote shipments, eliminating that many cartons and avoiding the use of 1.7 million pounds of cardboard and 4 million air pillows, Beabout says. The bags aren't suitable for all products, especially oversized or heavy items, but Office Depot has been able to convert about 45 percent of its shipments to the new delivery method.
The longer-term goal is even more ambitious. Office Depot says it's on track to replace some 5 million boxes with paper in the first 12 months of national rollout, eliminating 3.5 million pounds of cardboard over a 12-month period. That equates to more than 3,000 tons of wood, or the harvesting of 20,000 trees, the company said. Annualized savings in cardboard costs - even allowing for depreciation of the plastic totes and the cost of paper bags - is expected to top $1.5m. Additional revenue opportunities exist in the placement of advertisements on the bags.
Office Depot claims to be the first large company that has successfully initiated a tote-recycling program of such size. Still, there are limitations to its use. Beabout notes that the company only deploys one bag size, even though a slightly bigger bag could still fit within the tote. "There's no solution yet for really large products," he says. Items such as printers still ship in their own boxes. As for the totes themselves, a typical conveyor system is limited in the sizes it can handle.
Neither product damage nor security appears to be a problem at this point. The bags are sealed with a self-adhesive glue strip. Director of sustainment Jeff Mayhew says the risk of pilferage is no greater than that of corrugate packing materials. "Over time," he says, "we didn't see that happen."
Even a limited reliance on plastic totes and paper bags has given Office Depot a means of substantially cutting down on waste and lowering costs without compromising customer service. "By bringing innovation to the delivery process," the company boasts, "Office Depot's supply-chain team turned everyday distribution into a competitive differentiator."
Keywords: supply chain, supply chain management, inventory management, inventory control, global logistics, logistics management, warehouse management, retail supply chain, green supply chain
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