How Distribution is Getting Greener
Segments of the supply chain distribution industry are getting on the green and environmental sustainability bandwagon more than many people may realize. As we are using the term here, supply chain distribution typically refers to the manufacturers and distributors that market all kinds of goods to the owners and managers of commercial facilities all over the world, from small kindergartens to multi-floor office towers used by hundreds of people every day.
Historically, these products are packed, wrapped, and delivered in ways that have shown only minimal concern for their environmental impact. And sometimes, if a product was delivered that had a reduced environmental impact—such as purchasing cleaning supplies in five-gallon drums instead of one-gallon containers—the choice was made not to benefit the environment, but because the purchaser negotiated a better price for the cleaning chemicals.
However, this traditional operating procedure is changing and changing fairly rapidly. What can be termed “eco-packaging” is taking over large segments of the distribution industry. The reasons why distribution is getting greener and adopting more practices that promote sustainability are many, but typically they boil down to the following:
Reduced costs: Using our earlier example, selecting cleaning solutions in five-gallon drums instead of five of the traditional one-gallon containers invariably means less packaging materials are needed and fewer containers must be purchased. Purchasing a larger bulk quantity of product means a longer time between orders—and fewer orders reduces fuel, transportation, and delivery costs as well as the costs to fill and process the order. Further, cleaning solutions in large drum containers are often more concentrated than those in gallon containers. All these components can add up to very substantial cost savings, many of which are passed on to the purchaser.
Optimized packaging: A key part of eco-packaging is streamlining the entire packaging process. Consistent standardization of how products are packaged and delivered ultimately is a cost savings that can benefit the purchaser. According to Siemens Corporation, as an example, in many breweries the filling and packaging of products account for 75 percent or more of total production costs.
Vendor requirements: What can be termed a “business chain of environmental sustainability” is now a part of everyday business for many companies. For instance, say a very large customer insists that all of its vendors meet specific green and sustainability guidelines. To address these requirements, the next business in the chain requires their vendors to also meet these guidelines, which are then passed on down the business stream. Incorporating an eco-packaging program accessible to everyone in the chain helps ensure these concerns and requirements are addressed from the start.
Marketing benefits: Related to this, some companies now select vendors based on how environmentally focused they are. Whereas this consideration may have played a minimal part in vendor selection just a few years ago, today it is often a requirement before a company will even consider doing business with a vendor.
The “Five Rs” in the Eco-Packaging Process
For a distributor, manufacturer, or any other organization wanting to adopt an eco-packaging program, the first step typically entails conducting a waste audit. This determines the types and amount of waste generated in a facility, and helps identify what can be reused or recycled, and what must be discarded. Most of this waste involves packaging materials such as cardboard, plastics, paper, and metal. The audit also serves as a benchmark so organizations can track their progress at a later date in how well they are reducing and reusing packaging materials.
A side benefit of the waste audit is that it helps put everyone in an organization on notice that reducing waste and taking steps to recycle packaging materials to minimize the organization’s overall environmental impact are now priorities. Studies have shown that just this awareness alone helps many organizations speed up the strategy and develop a more effective eco-packaging program.
As to what an eco-packaging program looks like once it is in full swing, a perfect example here in North America is Unilever, a consumer products company. The company markets and distributes products to more than 150 countries so it is taking steps to expand its North American eco-packaging program around the globe. The essence of the program, which we can call the “5 Rs” includes the following:
- Removing: Wherever possible, excess packaging materials are removed, this includes outer cartons and shrink wrap
- Reducing: Shrinking packaging materials to an optimal size to reduce waste and weight
- Reusing: As the name implies, materials shipped to Unilever are reused whenever possible
- Renewing: Using packaging materials made from renewable sources
- Recycling: Finding ways to recycle all packaging materials for similar packaging needs or different uses
What we can learn from the Unilever program, and what many in the distribution industry are realizing, is that eco-packaging is not complicated. It does not necessarily involve the purchase of special equipment or tools. This means that eco-packaging is a solution more organizations can adopt, helping them to reap cost savings similar to those mentioned earlier while conserving natural resources and protecting the environment.
Michael Wilson is vice president of Marketing for AFFLINK, a global leader in supply chain optimization, providing clients with innovative process and procurement solutions to drive efficiencies in today’s leading businesses. He can be reached thru his company website at www.AFFLINK.com
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