International Track: Containers and Materials Tuesday, November 11, 2008 Building the Business Case for Reusable Transport Packaging

Transcription

1 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

2 Rehrig Pacific Background A family tradition of growth, service & innovation Established in 1913 Fourth generation family owned & operated Technologically advanced plastic product manufacturer Focused supply chain solutions provider World-class product design and innovation Nine (9) state of the art manufacturing facilities 750 employees 2

3 Rehrig Pacific s Manufacturing Locations Sales Offices: Europe United Kingdom; Asia Hong Kong; Licensees - Worldwide 3

4 What customers use Rehrig Pacific? 4

5 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 5

6 Reusable/Returnable Packaging and the Environment So what is most green? One-Way OR Reusable 6

7 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 7

8 Reusable/Returnable Packaging and the Environment cont. Open Loop Supply Chain for Grocery Retail 8

9 Reusable/Returnable Packaging and the Environment cont. Closed Loop Supply Chain for Grocery Retail: Reusable/Returnable Packaging 9

10 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. 10

11 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 11

12 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 12

13 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. 13

14 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 14

15 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 Reusable plastic crates require 60% less total energy Reusable plastic crates produce 91% 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. Film with corrugated tray Reusable plastic crates require 75% less total energy Reusable plastic crates produce 95% less total solid waste 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. 15

16 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 Reusable plastic crates require 9% less total energy Reusable plastic crates produce 81% 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. Film with corrugated tray Reusable plastic crates require 46% less total energy Reusable plastic crates produce 89% less total solid waste 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. 16

17 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 17

18 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. 18

19 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 19

20 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. 20

21 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 request after this presentation. 21

22 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. 22

23 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. 23

24 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. 24

25 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. 25

26 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. 26