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Sustainable packaging essential in modern supply chains

Sarah McMullin, director of Product at Tecsys, explores why sustainability is essential in modern supply chains, particularly when it comes to packaging.

I did all my holiday shopping online this year, proud of the time I saved. The aftermath of all that convenience, though, was evident when I dragged my recycling box to the curb, brimming with corrugated cardboard packaging. And yet, my packages are only a drop in the cardboard bucket. 1.5 million packages are delivered daily to NYC alone with estimates of 178 million daily parcel packages shipped, the equivalent of over one million trees a day consumed.

The cardboard problem really begins at sourcing — getting the right product volumes to the right destinations. Tribal knowledge and spreadsheets are simply not dynamic enough to make sure your on-hand supply equals customer demand. I remember touring a global athletic apparel company with stores in Chicago. They couldn’t keep a particular type of shoe in stock, while other stores on the west coast had that shoe in abundance. When pressed why those stores shouldn’t just send that shoe to the Chicago locations or why they even had them in the first place, they didn’t have a good answer — only that supply was determined by demand planners that sat in headquarters with outdated intel.  

Overstock and out-of-stock are far too familiar terms in an era of intelligent demand planning. While the terms may never be eliminated altogether, intelligent supply chain planning levers like micro-demand signals can help find demand patterns and refine stock levels.

With intelligent demand planning, you can move closer to that ‘supply equals demand’ formula. Then it’s about knowing where your stuff is. Do you have a view of all your inventory, wherever it may live (not just at the warehouse)? Can you allocate that inventory against any order? Distributed order management systems live for this problem. These systems can virtualise and segment your inventory across all your systems: enterprise resource planning (ERP), ecommerce platform (ECP), warehouse management (WMS) and in-store. Not only can you have one view of inventory across all your systems, but you can effectively allocate that inventory.

REDUCE PACKAGING

With effective cross-network visibility, inventory can be consolidated from multiple locations and then forwarded as one single shipment to an address. You can ship all inventory to a central consolidation location or you can consolidate via milk-run (i.e. location-to-location). For the supplier, it means they can leverage internal shipping rates to consolidate; for the customer, they get one cardboard box, not 50.

Meanwhile, cardboard isn’t the only option. Startups like smartsolve and Evocative Design, and larger companies like 3M, are all innovating in the packaging space today to move beyond cardboard. From water-soluble cardboard (I’m not sure how that works when my package is sitting on my doorstep in snow) to packaging that doesn’t require stuffing, greener packaging solutions are emerging. There is also the reuse option, similar to frogboxes when moving, however it does rely on the consumer returning the original packaging.

ADDRESS LAST MILE TRANSPORTATION

Let’s say you have streamlined order fulfilment to one box, and it’s not even cardboard. The next logical step is to reduce the transport to get the package from the supplier source to the end consumer. A bevy of articles point to reducing transport’s carbon footprint by replacing trucking fleets with electric vehicles. Fewer focus on the lower hanging fruit of leveraging the consumer instead.

Click and collect, Buy Online Pickup Instore (BOPIS) and locker pickup options each lean on the consumer to do the last-mile, and it turns out they don’t mind doing so. 64% will pick up their shipment to avoid shipping fees, and even more are likely to do so if it is a part of their routine (i.e. on the way to work). The peripheral benefit is that if the pickup location is a store, the likelihood of another purchase is 85% higher. We are not too far from a future of co-op pickup locations just for purchased goods similar to post offices given the consumer convenience.

CLOSE THE LOOP

I would be remiss to suggest sustainable supply chain ends with goods being received by the consumer, because there are always returns to think about. This often-ignored segment of the supply chain is a source of more cardboard use, and increased carbon footprint. Luckily, it can be optimised to be green with the same intelligent inventory allocation used for demand planning; rather than ship returns back to a warehouse, you can intelligently ship returns back into your supply, routing them to wherever they are most likely to be sold again.

It’s no longer a question of if or when, but how supply chains will move towards sustainability. Cardboard is just one symptom of a list of inefficiencies plaguing supply chains ill-equipped for the modern consumer’s expectations. Today, we have the technological means and the societal will. Sustainability is not a fad; supply chains need to adapt.

 

TAGS: Packaging News
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