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How Distribution is Getting Greener

wilson, michael, afflinkSegments 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.

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