Walmart’s Real Reason for Considering Corrugate Instead of RPCs?

Talking about reusable plastic containers (RPCS), we recently reported on Walmart’s decision to test corrugate packaging for apples, citrus and stone fruit, with an eye to seeing how carton graphics would impact sales.

That may not be Walmart’s only agenda, according to an opinion column in the Perishable Pundit. Columnist Jim Prevor provides a brief history of Walmart’s RPC experience, and how it led the retailing giant into the RFID discussion. Moreover, he suggests that Walmart’s rationale for considering corrugate is to improve its ability to procure fresh fruit on the spot market, where the most common transport packaging remains corrugated cartons. And to be clear, the spot market is about price, but it can also be about quality. If one particular field or segment of the growing area ripens a little sooner or more spectacularly, then local field buyers can advise corporate procurement where and when to buy for optimal product.

Indeed, one of the challenges of deploying specialized supply chain technologies is that they can to some degree fragment the market. In order to maintain a transactional procurement strategy, a retailer has basically two choices. The obvious one is to embrace the commonly accepted approach – in this case it is the fibreboard carton. The other approach is to try to establish the new technology as the standard. And in the early days of RPCs, Walmart certainly put some effort into doing just that in the produce industry. Bruce Peterson or someone from Walmart perishable would always find time to give me an interview for the little known Pallet Enteprise Magazine, which speaks to me about their commitment towards getting the word out in the name of industry adoption.

Several years later, adoption continues to move in the right direction. As Andy Hamilton of IFCO suggests, RPCs are maintaining double digit annual growth, while retailers such as Kroger, Safeway and Loblaw continue to expand RPC usage

But without RPCs being the standard, then a transactional approach becomes more difficult. The question becomes one of how to reap the same benefits of a transactional approach while all suppliers are not offering to ship in RPCs. Perhaps a better approach to relationship management is required, maybe one with more creative pricing models that are sensitive to market conditions, or alternative secondary relationships that can better adjust to supply or quality issues? I’m not a procurement person, I’m just someone who sees RPCs as too important of a technology to be thrown under the bus if in fact we are not designing those relationships to make them perform as efficiently as the broader transactional marketplace. Then again, maybe I am making a mountain out of a molehill, and Walmart is actually just concerned about point of sale graphics, as it has stated.

Read the original story about Walwart RPCs at Perishable Pundit, and the mail response.

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