When Wal-Mart Speaks
Wal-Mart is a behemoth. When it moves, lots of things move with it, and these usually include many of its more than 100,000 worldwide suppliers.
Wal-Mart made a big splash back in 2003 when it announced it would require RFID labeling on pallets and cases supplied to its stores starting in 2005. The announcement initiated much development activity throughout the supply chain, and most likely advanced the development of RFID in these applications by a notable degree. However, the overall program became a shadow of the original goal because of significant cost and technological issues.
Today, RFID implementations are moving forward, albeit at a slower pace that is more dictated by market drivers based on costs/benefits. In fact, item-level RFID implementations in the apparel market are gaining traction and could be a major "foot in the door" for longer-term growth of RFID in general.
In 2006, Wal-Mart set its sights on another initiative, sustainability, when it announced its Packaging Scorecard. This Scorecard is designed to be a key element in the company's stated commitment to reduce packaging across its global supply chain by 5 percent by 2013. There are many factors why this Wal-Mart initiative will go a lot further than its RFID efforts, not the least of which is that the typical Wal-Mart's customer can relate to sustainability far more than RFID.
Another significant component can be seen in the overall objective to "reduce packaging." Many factors that will meet this criteria will also directly or indirectly reduce costs throughout different areas of the supply chain. Several criteria included in the Scorecard's nine metrics are closely related to cost reduction. These include product/package ratio, cube utilization, and transportation. Granted, Wal-Mart will use its leverage to get its "fair share" of the cost reduction, but with good management, others in the supply chain should benefit from both cost reductions and the potential for increased business.
Two package printers recently featured on the cover of packagePRINTING—CardPak and Diamond Packaging—are doing just that. Tim Budic, marketing manager for CardPak, believes that sustainability will continue to drive growth. "Sustainability initiatives have provided a large segment of growth over the last 2 to 3 years, and this will continue to be the case as more and more companies look to become environmentally focused and friendly with their products and packaging," he states. "Whether it is done so for the good of the worldly order, to execute smart business, or to comply with guidelines, standards, and requirements like the Wal-Mart Scorecard, more and more companies will continue to explore sustainable packaging options."
He also believes sustainability provides an opportunity to enhance deeper relationships. "Not only are there opportunities to increase sales, but the sustainable initiatives provide a platform to build relationships." Sustainability issues are more deeply rooted than simply offering competitive pricing, he says.
Dennis Bacchetta, director of marketing for Diamond Packaging, concurs with this assessment. "We foresee growth opportunities in developing more sustainable packaging," he says. "The biggest drivers are social responsibility, cost savings, consumer demand, and of course, Wal-Mart's Packaging Scorecard. Even those companies that do not directly supply Wal-Mart have been impacted due to the increased awareness of sustainability. They see it as an opportunity to support a sustainable use of resources and cultivate a positive emotional connection to their brands."
What's the score?
Wal-Mart is doing what any good business should do—using its supply chain to help it reduce costs and improve profitability. With sustainability, it can also gain the goodwill of knowledgeable customers and others throughout the community. With such a significant undertaking, it is not surprising that additional business opportunities are popping up to support implementation of the Scorecard.
June Anderson is a partner with PKG (Packaging Knowledge Group, LLC), a consultancy that provides custom solutions in the packaging arena and in sustainable supply chain practices. PKG also provides training for clients on Wal-Mart's Packaging Scorecard, and is the only authorized trainer for the Scorecard in the U.S., she says.
Anderson gives much credit to Wal-Mart for its focus on packaging sustainability. "I believe the the Wal-Mart sustainability initiative and the introduction of its Sustainable Packaging Scorecard is what started the 'sustainability revolution' in packaging, as well as other industries," she says. "Because of it, a lot of people, companies, and industries started to initiate programs and set goals and objectives that would not have otherwise happened. It will be a corporate and company advantage moving into the future for those people implementing sustainable programs."
As it relates directly to printing, Anderson believes the impact of the Scorecard is just beginning. "Up to this point, there has been minimal impact in the printing industry," she notes. "Having said that, this does not mean that there won't be an impact; it is just that people are starting to strategize and think about how to drill down the sustainability concept to the printing level of the packaging industry.
"At this point, I believe that the area of the Scorecard that package printers can impact is in Section 4 which is the additional information section," she continues. "We have had printers approach us trying to develop a way to quantify different ways in which they are making an impact. We have suggested that they record the information in the open text field in that area of the Scorecard. That is the most appropriate place for sustainable programs or items that are not quantified anywhere else in the Scorecard."
Anderson says that suppliers, in general, are getting a good return from participating in the process. "I do believe that suppliers are getting value from the entire process, especially when they incorporate available modeling software into the process. When they run packaging changes and different ideas through the modeling software, they can actually see what kind of impact their decisions are having on the nine different metrics."
Of course, use of the Scorecard doesn't come without effort and companies need to apply resources to its implementation. "The administration of the Scorecard can become burdensome to some suppliers," Anderson acknowledges. "It is normally the case when suppliers do not have their packaging information as organized as it should be. Numerous companies do not have packaging engineers or specifications. In those circumstances, trying to put data into the Scorecard can be very cumbersome."
Scorecard in action
According to Wal-Mart's 2010 Global Sustainability report, packaging information has been collected for about 329,000 items since the Scorecard's initial rollout in 2007. From Anderson's experience working with clients, she doesn't see any one approach that is more commonly used in addressing the Scorecard's metrics. "I don't think that there has been a most common approach that companies have changed to influence their score on the Scorecard," she says. "Companies have differing strategies and objectives, which normally will drive the types of changes that they will pursue in their attempt to improve their scores."
Even so, material lightweighting is one method that can achieve positive results. For this year's annual Sustainable Packaging Expo, held by Wal-Mart, Anderson says that one of the new requirements for exhibitors was to include a success story that had a positive impact on sustainability and the Scorecard.
PKG worked with many material and product suppliers in generating the data for their individual success stories. "One in particular was a package change that lightweighted the material of the currrent package, and because of that lightweighting process, the greenhouse gas emissions were cut in half from the original package," she reports. "But that was only one of the impacts; six of the other metrics also had improvements."
Whether or not Wal-Mart should be given credit for starting the sustainability revolution in packaging, as Anderson says, is open to debate. What should not be debated is the significance of the effort and results that have been, and will be, achieved because of use of the Scorecard. Wal-Mart is moving the industry's sustainability efforts forward to a degree that probably only Wal-Mart can. pP