Simultaneous sustainability and savings: Why companies should invest in sustainable packaging

In the drive to reduce costs and environmental impact, companies are focusing on sustainable packaging. To make the right choices, Accenture believes they must look at packaging from a supply chain point of view. Accenture looks at the issues in depth, and considers some detailed scenarios to help companies develop comprehensive strategies for sustainable packaging.

Background

The pressure to reduce environmental impact—and to reduce costs generally—is forcing companies to take sustainable packaging seriously. Indeed, large retailers have pre-empted future regulation and are already shaking up their supply chains.

Wal-Mart, for example, has mandated a 5 percent reduction in packaging across all categories by 2013, and has already taken $3 billion in costs out of its supply chain. Accenture estimates that other retailers can save 3 to 5 percent in supply chain costs by adopting green packaging initiatives, in addition to the revenue uplift from green consumers.

High-performance businesses are thus using supply chain sustainability as a lever of differentiation. However, to be overwhelmed by the scope of change required, they are systematically weighing alternatives by evaluating impacts all the way from manufacturing to the end of a product’s life cycle.

Analysis

To reduce costs in the supply chain, companies should begin by examining the entire life cycle of their products, from suppliers of raw materials to the manufacturers and then to the distributors and consumers. Standard supply chains generate packaging waste at each step between supplier and consumer. A supply chain view of packaging provides the breadth of vision required to develop optimal solutions—for example, the recycling of some packaging materials and the switch to reusable packaging.

Case studies conducted by the StopWaste Partnership indicate that transitioning to reusable packaging decreases solid waste by 95 percent and carbon emissions by 29 percent. Transportation also needs to be factored into this analysis.

In this paper, Accenture examines several options in depth. One is the reduction in the one-time use of packaging materials. By substituting a backhaul transportation leg to return used packaging for reuse, instead of purchasing new packaging products, a US auto manufacturer achieved its goal of zero landfill deposits while reducing the number of empty backhauls. Reusable packaging can increase the benefits because such containers can be double- or triple-stacked in trailers to fill up previously wasted space.

Other scenarios examined are the recycling of pallets and the improvement in the stretch film used to consolidate pallets; inventory planning to strike the right balance between inventory and transportation costs; and better freight utilization.

Recommendations

To address sustainability, companies need to scan their supply chains to determine the true value proposition of different strategies to reduce, reuse, and recycle.

For decades, Accenture has been helping companies optimize their supply chains to achieve high performance.