This article was first posted on Nov. 6, 2009
The 2009 Choose Reusables Conference offered a unique opportunity for users of reusable packaging to interface with service and product providers. I’ve been to a lot of conferences over the years, and invariably the best ones are those which bring the stakeholders together to address opportunities and challenges – or as Peter Senge might say, to put the entire supply chain into a single room. Held this October, the meeting was co-located with the PACK EXPO show in Las Vegas, which clearly provided some nice synergies.
There was a lot of energy around the future growth potential for reusable packaging. Bob Klimko of Orbis, the current RPA Chairman, was particularly enthusiastic about the future of reusable packaging. In some industries, the use of reusables is still just in the early stages, while in other applications such as automotive it is dominant. He stated that the goal of RPA is to promote the value and expand the use of reusable packaging systems – to move the demand curve for reusable packaging. He believes that with increased environmental pressure and other emerging trends the uptake of reusable packaging is on the verge of revolutionary growth.
The RPA takes great pains to emphasize that it is material “agnostic.” The group promotes reusable packaging of all material types, including plastic, steel, wood, and mixed materials. There was even representation from www.usedcardboardboxes.com, a company that brokers the resale and provides 3rd party retrieval services for corrugated paper boxes.
With the variety of packaging material qualifying as reusable, Bob emphasized that the RPA wants to be accurate and balanced with any information it presents to the public. “There is a lot of green washing going on and we want to make sure our comments are relevant and accurate,” he commented. Looking ahead to the next year, one of the areas of emphasis will be in developing educational resources for users of reusable packaging.
Barriers to Implementation
I’ll come back to other aspects of the meeting in the weeks ahead, but for me one of the key takeaways is that while many companies are looking at reusable packaging for cost reduction and environmental benefits, some face significant barriers to successful implementation in the process of butting heads with both internal operations and trading partners.
“The reason we started looking at it was that if you don’t throw it away there is a benefit to it,” stated Gail Tavill, Vice President of Sustainable Development for ConAgra Foods. She cautioned that cost justification for specific reusable packaging applications can be difficult to achieve if overly cautious managers pad their numbers to be on the safe side. ConAgra is taking baby steps with respect to reusables, starting on its inbound operations. Seasonal spikes in reusable packaging demand are problematic, requiring inventory availability for maximum volumes. Reusable container pooling opportunities would be useful in resolving this, Gail indicated, emphasizing that they already work with CHEP for pallet pooling. She said they would welcome the assistance of a 3rd party to provide the experience needed.
Jennifer Schleicher, until just recently a project manager with Whirlpool responsible for launching their corporate reusable packaging strategy, said that while the company has embraced a greater transition to reusable packaging, implementation remains a significant challenge in the culture of that mature company. She previously worked for 8 years for Toyota, where the use of reusables is taken for granted in that culture.
Over the years when I have written about reusable pallet and container program implementations, (see for example my story about executive sponsorship http://www.materialshandling.net/articledatabase/view.asp?articleID=2090) I have often emphasized key roles such as having a supporting executive, local champions, and effective change agents. The executive sponsor can act as a ‘silo straddler’ – pushing through the initiative in silos where there is resistance. And I’m not for a second suggesting that some silos aren’t team players. The fact of the matter is that the benefits of the conversion may be unequal between silos, and the fear factor of the unknown can skew cost estimates. The silo straddling executive ideally is able to convince the other groups to fully cooperate, in concert with the efforts of those other operatives – the local champions and packaging program change agents.
But lets cut those resistant silo dwellers a little slack. Business unit managers are not disinterested in cost reduction or environmental goals. They are typically very bright and responsible people who are under enormous pressures to achieve performance targets, and if they perceive that reusable packaging stands in the way of that, then there is barrier.
Coles: An Example of How to Get It Done?
But what happens if we can restructure the metrics so that there is no disincentive to resist change, or better yet, incentives to change? This was exactly Ian Neeland’s approach when he led the reusable packaging initiative for produce at Cole’s, an Australian supermarket chain with sales of greater than $20 billion, and over $2 billion in fresh produce sales. Cole’s plan was to purchase the reusable containers itself, and rent them to the growers. When the Cole’s team visited each grower location, they were assured each grower that their cost to switch to the Cole’s rental reusable packaging system would not be greater than its current cost with expendable packaging. The response was favorable, and as a result, Cole’s now enjoys the highest ratio of reusable packaging usage of any supermarket chain in the world, according to Ian, while enjoying a net benefit in the order of $70 million in terms of savings and crate hire revenue. We’ll come back to the Cole’s story in more detail in the near future, but the point that Ian made with me is that if the economic incentives are right, people will fully participate.
In operations where reusable packaging passes from one silo that enjoys the bottom line savings to another which perceives it will be burdened by its introduction, the challenge is clearly greater. How do we effectively design economic incentives that make sense for everyone, without having to employ the big stick of that
menacing I mean supporting executive? Any thoughts appreciated.
By the way, RPA has generously posted all of the presentations mentioned above and others, at its website.