In the past few years, a number of studies have been introduced that indicate more people — especially Millennials — believe what we refer to as “sustainable packaging” is becoming increasingly important. For instance, in one 2015 study, reported by IPS, an international news service, more than half of those surveyed said they would pay more for products packaged in eco-friendly packaging materials.
Another study, this one by Sealed Air, a packaging company and conducted at about this same time, found that 34 percent of those in their study said that the packaging materials a retailer uses tells them a lot about how environmentally focused the company is.
This is likely even higher among Millennials, or as those in packaging and distribution should start to refer to them as, the “next generation” of business owners and leaders. Other reports have found that as many as 60 percent of those in this age group — people born between 1985 and 2000 — consider sustainable packaging to be important, and four out of five consider how a product is packaged before making purchasing decisions.
Plain and simple, they value sustainable packaging and want to see more suppliers packaging materials in a more environmentally responsible way.
What it Is
Because the distribution industry will be the ones stocking, transporting, and delivering these packages, it probably would be a good idea for us to know a bit more about what sustainable packaging is all about. According to GreenBlue, a non-profit dedicated to the use of sustainable materials, sustainable packaging involves the following:
- Packaging materials that are safe to use and healthy for individuals and communities
- Is made of materials that are protective of the environment throughout the life cycle of the product (cradle-to-grave)
- Meets market requirements as to strength, durability, and costs
- Is sourced, manufactured, and transported using renewable energy
- The materials used can be recycled
- Follows established best practices as to manufacturing
Not to be forgotten, the packaging needs to do all of the things traditional packaging does including, protecting the contents inside, help “brand” the manufacturer or supplier, and provide transport, storage and package opening information as needed.
What Will It Cost?
Upon first hearing about sustainable packaging, many in distribution might believe that transferring to this type of packaging will prove costly. After all, traditional packaging construction and materials have been used for decades. Ways to make it less expensive and faster have already been developed.
However, proving more costly has not been the case. Ten years ago, when Walmart began packaging 300 products for children using sustainable packaging materials, it was determined they saved 3,425 tons of corrugated materials; 1,358 barrels of oil; 5,190 trees; 727 shipping containers; and here’s the bottom-line clincher, $3.5 million in transportation costs in just one year.
This was primarily a pilot program for Walmart. As you can imagine with these results, the company has expanded the program considerably. Further, these steps, according to the company, have helped Walmart pass on savings to the consumer, reducing retail prices of Walmart products by an estimated 7 percent.
Other companies, such as McDonald's and Coca-Cola have also reported environmental and financial benefits by transferring over to sustainable packaging. For instance, in 2016, Coca-Cola states it now saves about $180 million per year as a result of sustainable packaging.
Let’s Bring this Home
So what does sustainable packaging mean for distributors? For one thing, it could very well mean getting and retaining customers.
More large organizations are now ranking their vendors as to their green and sustainability initiatives. Walmart refers to this as their “supplier sustainability index,” which is determined by asking direct questions about a vendor or suppliers sustainability initiatives.
They are doing this for many reasons, but the two that surface to the top are the following:
- These organizations want all of their vendors on the same sustainability team, which helps promote sustainability
- When sustainability initiatives are put in place, higher efficiency is invariably right around the corner, typically resulting in reduced operating costs.
It is this last point that can prove to be the big payoff for those in distribution. To take advantage of this opportunity, distributors are advised to look into training programs, some of which have been developed by university professors and are offered online.
And while it has not been addressed so far, sustainable packaging invariably involves redesigning packaging, so that is lighter, maximizes the use of space, and is more accessible to stock and transport. This helps improve efficiencies, reducing costs, labor, and energy use, all of which can result in more money in the bank.
Michael Wilson is vice president of Marketing for AFFLINK, a global provider of supply chain optimization.