People have been developing better, smarter ways to improve efficiencies and save time and money in the supply chain for as long as goods and products have been bought and sold. It seems there are always more inventive ways to improve efficiencies.
The most significant breakthroughs in supply chain optimization came with the advent of advanced computing technology and have evolved dramatically over the past 25 years. And now, executives can break down every level of manufacturing, processing and transportation of goods to find ways to reduce supply chain costs, improve margins, lower inventories, increase manufacturing throughput and increase overall ROI. Sustainability issues have also recently been introduced into the mix, adding another wrinkle to an already complicated list of measurable concerns.
Just as optimizing the supply chain is about saving money, so is creating more sustainable processes. As much as eco-friendly practices send a positive corporate message, they can also improve efficiency and profitability.
Examples of the synergies between cost savings, process efficiency and sustainable practices are everywhere. From improved package designs that save on gas or refrigeration costs to advanced corporate programs that play on energy-efficient, green building designs or commitments to using wind energy and other green alternatives for large percentages of operating costs, sustainability can help a business from top to bottom, helping grow new business, save costs and retain market share with increasingly sustainability-conscious consumers.
Georgia-Pacific's Packaging Systems Optimization (PSO) program was developed with these synergies in mind. At the heart of the program is the intent to provide industrial and consumer product companies with new ways to streamline operations and reduce total systems costs. Like proprietary process management systems that have come before it, the program hones in on efficiency and waste reduction throughout the supply chain and maps out sustainable fixes that improve the bottom line. Everything from material optimization and package design to material handling and distribution are analyzed.
Less Is More
Consumer packaged goods (CPG) companies are on a constant hunt to build more with less, but some of the biggest advancements in recent years have come from developing ways for companies to do more with the material they already have. From developing new package designs and reengineering old ones to create the same package shapes with less material, we see this trend in virtually every consumer package company. Creating new shapes in juice bottles that save material but don't sacrifice filling volume is just one example. The new milk container available in Sam's Club that is square-shaped and caseless is another example.
Even label makers are getting into the game. Eastman Chemical's new shrink labels can be made with 20% less material than traditional labels. Part of Georgia-Pacific's contribution to this area of study is creating corrugated boxes that have reduced fiber content, saving material costs and reducing package weight while maintaining strength and support.
Increasing Serving Size
While larger package sizes may not seem like a sustainable packaging decision at face value, multi-pack options like those found at clubs and superstores are, in actuality, far more eco-friendly than their single-serving rivals. Take the case of Honest Tea, an organic iced tea brand that Georgia-Pacific helped to move into club stores by transitioning to a 24-drink multi-pack. The new option gave the brand more shelf appeal and visibility and was 41% lighter, saving on shipping and fuel costs.
In addition, the new multi-packs are made with 35% post-consumer waste, and the handle is made with 45% post-consumer waste. Annual reductions in fiber use were 1,200 tons. Also, 2,600 tons of carbon dioxide emissions were eliminated based on the manufacturing process, and 12,369 MM BTU of energy savings were calculated per year as a result of the transition.
Function Meets Form
Similarly, the rise of functional packaging has given way to a whole new approach to sustainability. Think back to one of the earliest forms of functional packaging — microwave popcorn. The package could also be used as the eating bowl, eliminating unnecessary waste and saving water and washing detergent. Now, we see this same packaging technique in everything from pint-sized ice cream containers to yogurt, where granola and other toppings can be packaged separately on the same container.
Saving costs during warehousing, routing and delivery is just as important to supply chain optimization. The bigger the warehouse, the greater the lease costs, so ensuring that inventory is kept at a minimum is job number one for any industrial manager. In addition, maintaining an eye on inventory allows management of products from the time they arrive to the time they reach the customer.
As part of its PSO program, Georgia-Pacific began encouraging CPG companies to consolidate SKUs. The recommendation was a matter of economics. Companies with 50 or more SKUs pay more for packaging because suppliers must use shorter production runs to account for greater variety. Shorter print runs also lead to more downtime and wasted time, energy and capital. By simply designing packages that meet more universal needs, SKUs can be drastically reduced, saving time and money and improving supply chain processing down the line.
The Load on the Road
There must be a dozen ways CPG companies have learned to save money and become more sustainable when it comes to transportation. From the square, caseless milk packages mentioned earlier, which save on milk crate costs and stack better in the store, to advanced, aseptic packaging that allows perishable products to be shipped without refrigeration, sustainable practices can be found anywhere on the transportation side of the supply chain.
While shape has been a big area of innovation for consumer brands, so has material choice, and a good deal of the change is the result of weight. Heavier materials like glass have given way to new corrugated boxes and other lightweight containers. The lighter the load, the less fuel it takes to haul. It's that simple.
Georgia-Pacific has also used its PSO program to push forward advanced cube utilization practices. Cube utilization is one way to optimize operations by examining the best use of pallet space, maximizing productivity and further controlling costs.
Supply chain optimization will save your company money while reducing your long-term negative impact on the environment. While the concept is not new, many companies are constantly on the hunt for the next big idea. Cost, material and energy savings are areas of constant scrutiny for any organization. By staying connected to companies on the forefront, you'll always be in the loop.
Pat Smorch is director of packaging sustainability at Georgia-Pacific's Innovation Institute in Atlanta.