Good Things Come From Green Packages
Why are companies sticking with green packaging initiatives in the midst of an economic recession? Because reusing materials, reducing waste, and improving transportation efficiency is not only good for the planet, it’s good for business.
Like nearly all environmental supply chain initiatives today, green packaging has become a hot-button topic for many companies. Supply chain managers, procurement executives, and packaging engineers are working together to revise packaging standards and implement new designs that seek to limit waste and reduce costs.
Though green strategies vary from company to company, most experts agree on a few basic tenets: reduce the amount of packaging used for each product, remove hazardous materials from the packaging, and make packaging easy to recycle.
“Companies are also examining the weight of their packaging. Reducing packaging weight creates a greener product because it takes less energy to transport it,” says Philip Carter, a professor of supply chain management at Arizona State University’s W.P. Carey School of Business.
REDUCE WASTE, RETAIN PROTECTION
Excess packaging has irked businesses and consumers since the days of the CD longbox, and continues to be an issue today. When trying to reduce packaging, companies face one major challenge: balancing the desire to mitigate environmental concerns with the chief reason that packaging exists in the first place—to safeguard the products within.
“The primary purpose of packaging is to protect product during transit and protect shelf life,” says Adrian Gonzalez, an analyst with Boston-based supply chain consultancy ARC Advisory Group. “Companies can’t automatically reduce packaging because their products may not survive the handling required to transport them from point A to point B.”
But there is room for improvement in most cases, says Kevin Howard, founder of Packnomics, a Vancouver, Wash.-based packaging consultancy, who believes that standard design philosophy and test methods drive excess materials in packaging.
“Engineers design packaging to protect the merchandise for an internal lab test that is supposed to represent the hazards of distribution,” he explains. “But the tests are excessive, and they don’t effectively replicate what occurs during transportation.”
At Palo Alto, Calif.-based technology company HP, for example, where Howard formerly worked as a packaging specialist, printers were dropped 26 times in a test lab. If the printer was still viable upon opening, the packaging was approved and sent to production. “These products were clearly overpackaged, taking more drops and from greater heights than would occur in distribution,” he says.
HP has since become a champion of green packaging, completing a variety of package reduction efforts that are among the best-known in corporate America. The company redesigned its print cartridge packaging, for example, to eliminate some 15 million pounds of materials, and reduced the overall package weight of its inkjet cartridge multipacks by 80 percent. Today, the computer giant sells laptops in Walmart that are entirely free of disposable packaging; the laptop is sold inside a padded messenger bag that consumers use to take it home.
LOOK MA, NO PACKAGING
Another company going the packaging-free route is Interface FLOR, an Atlanta-based modular carpet and flooring manufacturer, which forgoes packaging entirely when shipping certain products.
“We stack carpet tiles on pallets and use shrink wrap to secure them for trucking/handling purposes, which is less wasteful than using regular corrugated boxes,” explains Steve Arbaugh, vice president brand marketing, alignment and experience, Interface Americas. In addition to the environmental benefits, this method cuts down the time it takes to unload and stage product installations.
Interface also recycles the packaging and shipping cartons at its Georgia warehouse, and has plans in place to reduce packaging to consolidate shipments; minimize emissions from inbound and outbound freight; and improve trucking load factors by increasing tonnage per gallon of fuel consumed. These programs are all part of Interface’s “Mission Zero” promise to eliminate any negative impact the company may have on the environment by 2020.
Interface’s strategy of tying green packaging programs together with transportation and distribution initiatives is becoming more common. Companies that adopt a holistic approach, and understand that packaging is closely aligned with other aspects of the supply chain, are more likely to see their green initiatives succeed.
“The right approach is to see the interconnectedness of the supply chain and understand how packaging changes impact everything from raw material costs to transportation and marketing programs,” says Gonzalez.
Packaging’s direct impact on transportation is perhaps the easiest to gauge. “If a company uses 25 percent less plastic or cardboard per unit, it will be able to fit 25 percent more product per pallet, resulting in fewer shipments and lower transportation costs,” Gonzalez notes.
This idea of designing packaging from the inside out can have a substantial impact on the bottom line—and doesn’t always require a complete overhaul of a product or its packaging. “A company can modify a product by as few as three or four millimeters and be able to fit 20 percent more units on a pallet—which can add up to millions of dollars in cost reductions,” says Howard.
One East Coast-based Fortune 200 company simply modified the orientation of its product in shipping containers and was able to load 38 percent more units into the container.
OUT WITH THE BAD
Reducing excess materials is one effective way to start a green packaging initiative—but companies still need to consider the environmental aspect of the remaining packaging. “Replacing ‘bad’ materials with ‘good’ materials is another critical aspect of green packaging,” says Gonzalez. “When possible, companies are now selecting paper-based packaging materials that are easily recyclable, and are made of previously recycled content. They can’t always get away from plastics, but companies are choosing plastics that are recyclable, and they are learning to design packaging that is easy for consumers to put in the recycling bin.”
PVC plastic, one substance that has long incurred the wrath of environmentalists, heads the list of packaging materials being replaced with greener options. Found in the ubiquitous “clamshell” packages used for most consumer electronics products, PVC (polyvinyl chloride) releases dioxins and chlorine—a top contributor to ozone pollution—into the air when produced or burned. It also cannot be recycled.
“There is no good reason to use PVC plastics,” says Howard. “Companies can use other clear plastics, such as recycled beverage bottles, that cost about the same as PVC, and can be recycled again after they are used.”
A growing list of companies including Target, Walmart, Microsoft, Johnson & Johnson, Nike, and Apple have cracked down on PVC use. Target, for instance, recently asked its packaging vendor for iPod carrying cases to replace its clamshell packaging with a recyclable cardboard case. The company has also committed to eliminating PVCs from the packaging of its private-label products.
But not all packaging materials are as easy as PVC to label unequivocally “bad,” which complicates the search for green packaging alternatives. Most people incorrectly conclude that paper-based products are always more environmentally friendly than plastic, which is not always true, says Howard. He cites the example of slip-sheets, the pallet-sized sheets used to support unitized loads during shipment. Though many companies have replaced plastic slip-sheets with corrugated paper ones in an attempt to go green, it is not a foolproof switch.
The corrugated or fiber slip-sheets need to be made of 100-percent virgin fiber (as opposed to containing recycled content) and must be laminated together with a non-water-based adhesive in order to withstand transit. “That’s why paper slip-sheets cannot be recycled. But plastic slip-sheets are made from recycled content—mostly old milk jugs—and can be recycled again or sold back to plastic slip-sheet manufacturers for reuse,” Howard explains.
DRINKING IN THE GREEN
One company familiar with navigating the complexities of green packaging is Green Mountain Coffee Roasters. In 2006, the Waterbury, Vt.-based specialty coffee company introduced its Eco-Friendly Cup—the industry’s first hot beverage cup made from all-natural paper—but it received some criticism because the cup is made from virgin material.
“Advocates of post-consumer content wanted the cup to contain some recycled material,” says Paul Comey, Green Mountain’s
vice president of environmental affairs. “But the mill that manufactures the cup produces 70 percent of its own energy from the scrap wood chips that result from paper production. Introducing a recycling process would have taken away the mill’s fuel for energy-efficient day-to-day operations.”
In addition, he explains, when you recycle paper, the fibers become shorter than in virgin paper. So the recycled paper material for a cup would need to be thicker material to be as strong as virgin paper fiber.
“As you increase the thickness of the cup, you increase the shipping weight, which uses more energy in transportation. You have to look at each packaging example from all angles to determine what is best for the environment; there is no easy answer,” Comey notes.
The lack of an easy answer, however, has not deterred Green Mountain from taking on numerous green packaging initiatives. About six years ago, the company began to focus on reducing its waste streams, with a goal of preventing excess waste from ending up in landfills by trying to reuse, sell, or compost leftover materials.
“We realized we were hauling material to the landfill that could be recycled or composted—and it was costing us money to do so,” says Comey. The company decided to sell its used cardboard shipping boxes to a Canadian company for reuse, and realized at the same time that any broken boxes could be shredded and used as packing material.
“Instead of having to buy packing material, we produce our own from materials we were previously discarding,” Comey notes.
GIVING GREEN A HAND
Next, the company shifted its attention to reducing excess materials in its packaging process, and started by greening the cartons that it uses to package the portion packs for its single-cup brewing system.
“Our employees formed each carton by hand. The cartons used to be delivered from the manufacturer as pre-folded, pop-up cartons that use overlapping cardboard to create the bottom,” Comey explains.
Today, Green Mountain uses a machine to form these cartons by gluing two cardboard flaps together for the bottom, reducing the amount of extra material needed. “This is a more efficient use of cardboard, and helped reduce costs because we use less material per box and less labor,” says Comey.
Green Mountain is also committed to reducing its environmental impact by using renewable materials in its packaging. Its Eco-Friendly Cup, for instance, uses a bio-plastic lining made from 100-percent natural and renewable resources, as opposed to conventional cups, which are lined with a petroleum-based plastic. Under the proper conditions, the cup will break down into water, carbon dioxide, and organic matter.
Green Mountain also recently redesigned its 10- and 12-ounce coffee packages so that the bag is made of 19 percent polylactic acid, a polymer made from plant-based renewable resources.
“It’s not 50- or 100-percent environmentally friendly, but our philosophy is that the journey starts with a single step,” explains Comey, who notes that the company has already asked its supplier to increase the amount of polylactic acid in the film.
COSTS: A GREEN ROADBLOCK?
Many companies emulate Green Mountain’s desire to embrace sustainable packaging, but often that desire is tempered by cost considerations. Only initiatives that reduce, or at least do not increase, costs get the green light.
“While green supply chain initiatives are a growing concern, today’s economy has pushed cost-cutting to the top of the corporate priority list,” says ASU’s Carter, noting that many green champions have lost their jobs in this recession.
But at its core, green packaging is a waste-reduction exercise that can help companies remove needless costs from their supply chains. And though switching standard but not environmentally friendly materials for greener alternatives may require up-front investments, there is usually a tradeoff.
“Some companies may incur higher packaging costs due to the materials, but because they can fit more product per truck, the transportation savings usually outweigh the increased packaging costs,” explains Gonzalez.
When a project can deliver both results—environmentally friendly packaging that is also cost-effective—it is a sure-fire winner. Such was the case with the U.S. Postal Service’s (USPS) recent cost-neutral green redesign of its expedited packaging products—the boxes, envelopes, tubes, and other containers and mailing supplies available to customers at Postal Service retail outlets and online. While committed to obtaining the environmental benefits of a green redesign, USPS was also tasked with keeping costs under control.
“Our goal was to try to reduce costs if we could, but at a minimum be sure not to increase costs,” explains Susan Brownell, USPS vice president of supply management. “We ended up not increasing costs at all.”
To undertake the redesign, USPS partnered with MBDC, a Charlottesville, Va.-based consultancy that helps companies revamp products and processes in accordance with its “cradle-to-cradle” philosophy, which aims to eliminate waste entirely. Together, USPS and MBDC used the cradle-to-cradle protocol to assess the materials used in the expedited packaging products.
With some 200 suppliers of everything from paper products to inks and adhesives, as well as 1,400 ingredients to examine, the complex project took about two years. During that time, MBDC visited supplier sites to obtain product samples and ran tests to verify cradle-to-cradle requirements were met.
As a result of their efforts, USPS made several important changes, including a reduction in the number of packaging types it offers. “We used to have separate packaging for international and domestic expedited shipping, and we consolidated to one envelope type,” notes Brownell.
The bulk of changes, however, were made to the inks and adhesives. Small ink pigment changes, for instance, helped meet MBDC’s requirements, explains Joseph S. Han, contracting officer for USPS. In addition, the redesign has netted an annual carbon emissions reduction of 15,000 metric tons.
Part of the reason USPS was able to complete this project and remain cost-neutral was its close collaboration with suppliers. USPS could look to its suppliers to come up with alternatives if proposed solutions were deemed too expensive. In one instance, MBDC’s recommendation to make changes to the red ink on the expedited envelopes would have caused a significant cost increase. USPS and its red ink supplier worked together to make minor changes to the ink’s pigmentation that would remain cost-neutral.
“There are many good lessons in this example,” ASU’s Carter says of the USPS project. “Private companies can learn that cost reduction is not the only way to achieve good results. It is better to be cost-neutral than to do nothing—which is what many companies do when it comes to environmental projects because they don’t see the benefit.”
THE BOTTOM LINE
Those benefits are what forward-thinking organizations such as USPS, Green Mountain, Target, and Interface seek when they undertake green packaging initiatives. Whether they are driven by a goal of eliminating waste, an internal desire to be good corporate citizens, a wish to drum up support from environmentally aware consumers, or the need to comply with mandates such as Walmart’s packaging scorecard (see sidebar, page 50), companies adopting green packaging initiatives are helping both the environment and their bottom line.
That double-duty aspect is key to getting these programs up and running, and keeping them in the good graces of C-level executives. “Almost all our green programs could also be billed as operational programs to reduce costs,” says Green Mountain’s Comey. With both economic and earth-friendly aspects covered, it appears that good things come from green packages.
Not Sure Where to Start? Follow the Leader
Companies looking to embark on green packaging initiatives don’t need to reinvent the proverbial wheel to develop their strategies. Instead, they can take a cue from the world’s largest retailer.
“Companies can adopt Walmart’s packaging scorecard metrics to create a framework for their own initiatives,” says Adrian Gonzalez, an analyst with ARC Advisory Group.
Started in 2006, Walmart’s packaging scorecard was designed to encourage its suppliers to reduce packaging and conserve natural resources. It measures specifics such as greenhouse gas emission per ton of production; product-to-package ratio; cube utilization; and percentage of recycled content. The idea is for suppliers to determine how their packaging innovations, environmental standards, energy efficiencies, and material usage match up against those of their peers. But even companies not conducting business with Walmart can use these metrics to plan and evaluate their own green packaging initiatives.
“These metrics are a great jumping-off point to help companies focus on where they can make the biggest improvement,” Gonzalez notes.
Another tip is to start small—select a doable packaging project that is likely to yield success and build momentum for a larger initiative.
“Companies need a success story to gain executive buy-in for a whole green packaging strategy. Start with packaging changes for a new or minor product to get positive results and prove it can be done,” advises Philip Carter, a professor of supply chain management at Arizona State University’s W.P. Carey School of Business.
When A Is More Than Just A Box
Some companies attempt to make their boxes “greener” as part of their business operations, but at Entropy Solutions Inc., green boxes are its business. The Minneapolis-based thermal technology company created the Greenbox, a temperature-controlled and reusable shipping solution composed of 100-percent organic-based materials.
Utilized by pharmaceutical and biotechnology companies such as Health Canada, Celator Pharmaceuticals, and LifeNet Health, the Greenbox provides important cold chain protection for high-value products, while also offering companies a greener packaging and shipping solution. “Shippers are attracted to the reliable temperature control the solution offers, but Greenbox also provides them a way to reduce packaging waste,” explains Steve Skallerud, the company’s vice president of sales and marketing.
The three-part system begins with a corrugated plastic outer container that is recyclable, crush-resistant, and resilient to water, puncture, and tear. “By contrast, the common corrugated cardboard outer container is difficult to reuse because it absorbs moisture, is easily damaged, and often rips when packaging tape is peeled off,” says Skallerud.
Inside the outer container is a thermal-lock insulation panel that eliminates the ability of heat to transfer through the panel. A patented phase-change material controls temperature inside the shipping system. Using the latent heat of fusion to protect the package contents simultaneously from heat and cold, the materials are used in place of the frozen gel packs found in most other temperature-sensitive shipping containers.
In addition to being composed of earth-friendly materials, the Greenbox system is completely reusable. “When users receive a shipment in a Greenbox, they affix a pre-paid courier label to the outside of the box and send it back to the company that shipped it, or to a third-party reclamation center where it is inspected, cleaned, repalletized, and shipped back to the original sender,” explains Skallerud. The components are also modular, so they are easily replaceable. If an outer container needs to be replaced, for example, the insulation panels and phase-change material simply go into a new box.
The Greenbox system also helps companies reduce costs. The box’s tight temperature control allows product to stay in the box safely for longer periods, so users can select a slower shipping method. “Switching from overnight shipping to second-day or ground creates significant savings,” notes Skallerud.