International
Track: Containers and Materials
Tuesday, November 11, 2008
Building the Business Case
for Reusable Transport
Packaging
Presenter:
Brian Lindell, General Manager, Food and Beverage Division
Rehrig Pacific Company
Blindell@rehrigpacific.com
770-339-9888
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Rehrig Pacific Background
“A family tradition of growth, service & innovation”
Established in 1913
Fourth generation family
owned & operated
Technologically advanced
plastic product
manufacturer
World-class product
design and innovation
Nine (9) state of the art
manufacturing
facilities
750 employees
Focused supply chain
solutions provider
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Rehrig Pacific’s Manufacturing Locations
Sales Offices: Europe – United Kingdom; Asia – Hong Kong; Licensees - Worldwide
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What customers use Rehrig Pacific?
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Reusable/Returnable Transport
Packaging Topics
Both a User and Non-User Perspective
• Reusable/returnable packaging and the
environment
–
Including a recently commissioned study on the energy use
and the solid waste and greenhouse gas impact of reusable
plastic crates versus one-way corrugated packaging
• Benefits of reusable/returnable packaging
–
Including cost drivers of reusable packaging
• How to get the reusable/returnable packaging back
and reduce shrinkage
–
–
Including a typical cost-benefit financial model for reusable
transport packaging
The important issue of asset management
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Reusable/Returnable Packaging
and the Environment
So what is most green?
One-Way
OR
Reusable
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Reusable/Returnable Packaging
and the Environment
Sustainability – balancing three components:
–
–
–
Environmental
Social
Economic
Reusable – continued use
Renewable – replenished by natural processes at a rate
comparable or faster than its rate of consumption
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Reusable/Returnable Packaging
and the Environment cont.
Open Loop Supply Chain for Grocery Retail
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Reusable/Returnable Packaging
and the Environment cont.
Closed Loop Supply Chain for Grocery Retail:
Reusable/Returnable Packaging
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Reusable/Returnable Packaging
and the Environment cont.
Carbon Footprint or Global Warming Potential (GWP) –
The measure of greenhouse gases (GHG) that are either directly or indirectly
emitted to sustain a human activity, normally expressed in CO2 equivalent.
Life Cycle Assessment (LCA) –
A complex study that is the most accurate way of calculating the carbon
footprint of a product.
LCA analyzes every single part or process involved in the life of a product and
gives a clearer picture of a product’s effect on the environment, but not its
social or economic impact.
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Reusable/Returnable Packaging
and the Environment cont.
Sustainable packaging systems*–
–
–
–
–
Society – effective, add economic and social value
Packaging system – efficient with minimum use of materials and
energy
Packaging material – recyclable or compostable
Packaging component – safe, non-toxic to humans and
ecosystems
*from a Michigan State University presentation
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Reusable/Returnable Packaging
and the Environment cont.
In accordance with ISO 14000,
Franklin Associates, an independent laboratory, used the Life Cycle Analysis
methodology for determining the environmental impact of three packaging
types.
Franklin Associates’ September 2008 study compared
1,000 cases of 20 oz. bottles packaged in the following
three ways:
Reusable Plastic
Crates
Corrugated Pad with
shrink film, one-way
Corrugated Tray with
shrink film, one-way
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Reusable/Returnable Packaging
and the Environment cont.
The three categories in which the packaging was
measured:
–
–
–
energy use
solid waste contribution
greenhouse gases
The Life Cycle steps analyzed in the study include:
–
–
–
–
–
extraction of raw materials from the earth
materials and container manufacture
outgoing transportation of containers
backhauling of empty plastic shells, and recycling
and end-of-life disposition.
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Reusable/Returnable Packaging
and the Environment cont.
Two scenarios were analyzed:
Baseline:
–
–
Plastic crates: 10 turns/year, 6-year life, 5% annual losses
Both corrugated packages: 25% recycled content, 95%
recycling, 50% film recycling
Alternative (to provide a more favorable scenario for one-way
systems and less favorable for reusable plastic crates):
–
–
Plastic crates: 10 turns/year, 3-year life, 10% loss
Both corrugated packages: 50% recycled content, 95%
recycling, 95% film recycling
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Reusable/Returnable Packaging
and the Environment cont.
Results: Baseline scenario for reusable plastic crates versus film
with corrugated pad and film with corrugated tray.
Per the Wall Street Journal, U.S. residents generate an average of 118 pounds CO2
equivalent per day, or 20 metric tons per American annually.
Film with
corrugated pad
Film with
corrugated tray
Reusable plastic crates require 60%
less total energy
Reusable plastic crates require
75% less total energy
Reusable plastic crates produce 91%
less total solid waste
Reusable plastic crates produce
95% less total solid waste
Reusable plastic crates generate 64%
less total Global warming potential
(GWP)
Plastic crates generate 145 pounds
CO2 equivalent, while corrugated
with pads generate 407 pounds.
Reusable plastic crates generate
81% less total Global warming
potential (GWP)
Plastic crates generate 145
pounds CO2 equivalent, while
corrugated with trays generate
762 pounds.
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Reusable/Returnable Packaging
and the Environment cont.
Results: Alternative scenario for reusable plastic crates versus
film with corrugated pad and film with corrugated tray:
Film with
corrugated pad
Film with
corrugated tray
Reusable plastic crates require 9%
less total energy
Reusable plastic crates require
46% less total energy
Reusable plastic crates produce 81%
less total solid waste
Reusable plastic crates produce
89% less total solid waste
Reusable plastic crates generate 32%
less total Global warming potential
(GWP)
Plastic crates generate 244 pounds
CO2 equivalent, while corrugated
with pads generate 360 pounds.
Reusable plastic crates generate
65% less total Global warming
potential (GWP)
Plastic crates generate 244
pounds CO2 equivalent, while
corrugated with trays generate
705 pounds.
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Benefits
of Reusable/Returnable Packaging
Product protection – reduced unsaleables
Product display – improved merchandising
Financial economics – continuously lower cost per case
Warehouse space – space savings, improved stacking
and stability
Ergonomics – improved for handlers, stock employees
and drivers
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Cost Drivers
of Reusable/Returnable Packaging
Product development cycle: Things to consider
Main cost drivers:
–
–
–
–
Product weight - over 50% of cost
Tooling - varies dependent on process
• High pressure injection molding - most expensive
Material, HDPE and PP (100% Recyclable)
Color, black is least expensive and allows
for recycled material.
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Cost Drivers
of Reusable/Returnable Packaging cont.
Float size – how many turns does your business average
5 turns = 10%
3 turns = 17%
Recycled materials – tremendous cost savings, but
difficult to source if color other than black
Decoration – hot stamping vs molded-in logos
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Reusable Packaging Companies
Recommend Purchasing
More Containers and Pallets Because:
Your business is growing
Reusable packaging makes business sense
for your application
Not because of loss.
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How to Get Reusable/Returnable
Packaging Returned
and Reduce Shrinkage
Asset management
– Loss due to theft
*Asset tracking
*Third party logistics companies, pooled
floats
*Radio Frequency Identity (RFID)
*Due to time constraints, this presentation will only explore Asset
Management, but to represent a complete picture of ways to get packaging
returned and reduce shrinkage, these three items are also listed here. More
information about them is offered in the copy of my notes which you may
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request after this presentation.
Asset Management
Asset Management has successfully reduced packaging
purchases by as much as 20%.
Steps involved in Asset Management process should
include:
–
–
–
–
–
Objective assessment – execute with management to determine
expectations (Goals)
Preliminary preparation – interview key stakeholders already
involved in the process
Financial study – examine past performance
Supply chain analysis – conduct case float analysis
Planning and assessment – format information flow to educate and
build awareness.
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Asset Management cont.
Implementation – Hold key meetings to kick off initiative, test and
monitor.
Identify results – Comprehensively review how the new system is
working, present the results to all stakeholders.
Structured and timely reviews – Process must be ongoing and
have continued support of upper management and continuous
feedback to all stakeholders.
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Loss Due to Theft
Loss* represents less than 5% of missing assets
Misperception exists around how many assets
are actually stolen
*The loss-due-to-theft study was partially funded
by Rehrig Pacific Company,
– Private Investigators were hired in South Florida,
Los Angeles, Baltimore and Atlanta.
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Loss Due to Theft cont.
Findings:
South Florida – no illegal recycling was found.
Baltimore – no illegal recycling was found.
Southern California – one illegal recycler was found with approximately
150K lbs. of mixed products.
Atlanta – one illegal recycler found with approximately
25K lbs. of mixed products.
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Summary
Reusable packaging and the environment
–
The recently commissioned study revealed that
reusable/returnable plastic crates require less total energy,
produce less total solid waste and generate less total GWP than
the two corrugated options.
Benefits of reusable packaging
–
Ask for a cost-benefit financial model – make sure it works for
you.
How to get the reusable packaging back
and reduce shrinkage
–
An asset management program can be beneficial.
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