Click to edit Master title style

Packaging Challenges for the Contract Packager Tom Blanck, CPP | CPA Fall Workshop | November 8, 2011 Click to editIntroduction Master title style

 Contract Packagers are responsible for packaging performance.  Contract Packagers are often responsible for finding cost reductions.  Can Contract Packagers affect sustainability?

2 Click toSession edit Master Agenda title style

Packaging’s Impact on the Supply Chain

Packaging Performance

Sustainability AND Savings

Practical Cost Reduction Opportunities

3 Click toSession edit Master Agenda title style

Packaging’s Impact on the Supply Chain

Packaging Performance

Sustainability AND Savings

Practical Cost Reduction Opportunities

4 Packaging’sClick to Impact edit Master on the title Supply style Chain

Storage Distribution Retail Supplier Manufacturing Warehouse Center Store Customer

Storage Distribution Retail Supplier Manufacturing Warehouse Center Store Customer

Storage Retail Supplier Warehouse Store Customer

Supplier LTL

Small Parcel

5 Packaging’sClick to Impact edit Master on the title Supply style Chain

Storage Distribution Retail Customer Supplier Manufacturing Warehouse Center Store

Storage Distribution Retail Warehouse Center Store Customer

Supplier Manufacturing Storage Retail Warehouse Store Customer

Supplier LTL

Small Parcel

Supplier

6 Packaging’sClick to Impact edit Master on the title Supply style Chain

Inbound Materials Opportunities • Reduce Packaging Storage Requirements • Reduce or Eliminate Waste, Disposal Issues • Inbound Transportation Cost Reductions • Reuse Packaging (Multi-Tiered Suppliers)

7 Packaging’sClick to Impact edit Master on the title Supply style Chain

8 Packaging’sClick to Impact edit Master on the title Supply style Chain

Supplier Distribution Retail Storage Center Store Customer Manufacturing Warehouse Supplier Distribution Retail Center Store Customer Storage Manufacturing Supplier Warehouse Retail Store Customer

Supplier Storage Warehouse

LTL

Small Parcel

9 Packaging’sClick to Impact edit Master on the title Supply style Chain

Finished Goods Opportunities • Pallet Optimization • Slip Sheets, Clamp Handling • Trailer or Container Loading • Minimized Handling, Increased Throughput • Packaging Automation

10 Packaging’sClick to Impact edit Master on the title Supply style Chain

11 Packaging’sClick to Impact edit Master on the title Supply style Chain

Supplier Retail Manufacturing Storage Distribution Store Customer Warehouse Center Supplier Manufacturing Retail Store Customer Storage Distribution Supplier Warehouse Center Retail Store Customer

Supplier Storage Warehouse

LTL

Small Parcel

12 Packaging’sClick to Impact edit Master on the title Supply style Chain

Storage + Warehouse Opportunities • Reduced Storage Costs (Frozen, Refrigerated) • Stacking, Floor Space, Footprint • Reduced Handling, Forklifting • Reduced Safety Stock • Labor Reallocation

13 Packaging’sClick to Impact edit Master on the title Supply style Chain

14 Packaging’sClick to Impact edit Master on the title Supply style Chain

15 Packaging’sClick to Impact edit Master on the title Supply style Chain

Storage Distribution Supplier Manufacturing Warehouse Center Retail Store Customer Storage Distribution Supplier Manufacturing Warehouse Center Retail Storage Customer Supplier Warehouse Store

Supplier Retail Store Customer

LTL

Small Parcel

16 Packaging’sClick to Impact edit Master on the title Supply style Chain

Customer’s Systems Opportunities • Damage Avoidance • Breakout for Mixed Loads (Store Deliveries) • Reduced Waste, Disposal Issues • Handling Efficiencies • Increased Stocking Levels, Shelf Counts

17 Packaging’sClick to Impact edit Master on the title Supply style Chain

18 Packaging’sClick to Impact edit Master on the title Supply style Chain

Storage Distribution Retail Supplier Manufacturing Warehouse Center Store Customer

Storage Distribution Retail Supplier Manufacturing Warehouse Center Store Customer

Storage Retail Supplier Warehouse Store Customer

Supplier

LTL

Small Parcel

19 Packaging’sClick to Impact edit Master on the title Supply style Chain

Less-than-Truckload Opportunities • Weight-Related Weights • Increased Product Density • Freight Class Improvements • Damage Reduction

20 Packaging’sClick to Impact edit Master on the title Supply style Chain

21 Packaging’sClick to Impact edit Master on the title Supply style Chain

Storage Distribution Retail Supplier Manufacturing Warehouse Center Store Customer

Storage Distribution Retail Supplier Manufacturing Warehouse Center Store Customer

Storage Retail Supplier Warehouse Store Customer

Supplier

LTL

Small Parcel

22 Packaging’sClick to Impact edit Master on the title Supply style Chain

Small Parcel Opportunities • Dimensional Weight Charge Avoidance • Damage Prevention, Product Protection • Packaging Selection, Envelopes • Expediting Charges, Overnighting

23 Packaging’sClick to Impact edit Master on the title Supply style Chain

24 Click toSession edit Master Agenda title style

Packaging’s Impact on the Supply Chain

Packaging Performance

Sustainability AND Savings

Practical Cost Reduction Opportunities

25 ClickPackaging to edit Master Performance title style

 Real Life Shipments The Real Cost of Product  The Problem with “Let’s Try It” Damage  Singular Event? Smooth or Rough Journey? • Loss of Product  Testing Replicates a Harsh Environment • Spoilage to Other  Controlled, Predictable Packaging  Implementation • Return Shipment Cost and Time  Find Out if it Works Before your Customer Does • Field Service Cost  Trials, Pilot Shipments • Refurbishing  Roll-out Plan • Manufacturing Time Lost

• Customer Experience and Satisfaction

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ClickPackaging to edit Master Performance title style

 Product Damage vs. Package Damage (Unsaleables)  Justifiable Amounts of Damage  “Sweet Spot” Costs in Line with Cost of Damage

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 Shipping Rules and Regulations  DOT (Department of Transportation)  Hazardous Materials  Motor Freight  NMFC (National Motor Freight Classification)  NRFC (National Rail Freight Committee)  UFC (United Freight Classification)  Package Testing Standards  ISTA (International Safe Transit Association)  ASTM (American Society for Testing and Materials)  ISO (International Organization for Standardization)  Custom Protocols

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Examples of Hazards and Associated Tests

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ClickPackaging to edit Master Performance title style

Packaging Test Labs, Facilities

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ClickPackaging to edit Master Performance title style

Packaging Test Labs, Facilities Primary Pack

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Packaging Test Labs, Facilities Unitized Loads

32 ClickPackaging to edit Master Performance title style

Packaging Test Labs, Facilities Unitized Loads

33 Click toSession edit Master Agenda title style

Packaging’s Impact on the Supply Chain

Packaging Performance

Sustainability AND Savings

Practical Cost Reduction Opportunities

34 AlignClick Savings to edit Masterand Sustainability title style

Sustainability Savings  Many Companies Want to Improve  Many Companies Have Cost Sustainability Reduction Goals  Common Perception of Packaging  Does this conflict with sustainability? Sustainability:

 Recyclable

 Reusable THE BOTTOM LINE  Biodegradable Packaging Sustainability  Broader View of Packaging Provides Savings Sustainability: • Reduced Transportation and  Reduce Logistics Costs Distribution Costs • Minimized Packaging Waste,  Reduce Environmental Impact Energy Consumption

35 RecognizeClick to Savings edit Master and Sustainabilitytitle style

 Packaging Improvements Extend into Distribution and Supply Chain  Measure the Business Results  Measure the Sustainability Improvement  Calculating Sustainability  Reference Formulas from Websites  www.climatecrisis.net/takeaction/carboncalculator/howitwascalculated.html  www.worldshipping.org/pdf/WSC_fuel_statement_final.pdf  www.replanttrees.org/biz%20calc/BusForm.htm  www.papercalculator.org  www.design-compass.org/  www.epa.gov/sustainability  www.nrel.gov (National Renewable Energy Lab)

36 RecognizeClick to Savings edit Master and Sustainabilitytitle style

 Packaging Improvements Extend into Distribution and Supply Chain  Measure the Business Results  Measure the Sustainability Improvement  Calculating Sustainability  Reference Formulas from Websites

 CO2 per Combusted Gallon of Diesel = 22.2 lbs/gal  Tons of Diesel Consumed during 14-day Ocean Vessel Trip = 3,052  Max. Load of 40’ Containers per Ship = 3,875  Diesel Weight ~ 7 lbs/gal  Average MPG for Diesel Truck and Trailers = 7.5  101lbs of Corrugated Material = 1 Tree

37 ClickCalculating to edit Master Sustainability title style

ABC PROJECT RESULTS BUSINESS RESULTS SUSTAINABILITY RESULTS Material Savings Paper Reduction Freight Savings Pallets Eliminated Labor Savings Warehouse Savings

THE BOTTOM LINE $ Tons Tons Costs Saved Fiber Reduced CO2 Eliminated

38 Click to editCase Master Study title style

OBJECTIVE • Global Telecommunications Company • Manufacturing Sites in Mexico and Asia • Inbound Logistics, DCs and Varied Customer Distribution • Interest in Reducing Logistics Costs

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SOLUTION • Redesigned Primary and Secondary Packaging • New Unit Load Configurations • Improved Over-Pack Methods and Procedures

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SOLUTION

41 Click to editCase Master Study title style

SOLUTION

OLD CONFIGURATION NEW CONFIGURATION Number of Cartons = 120 Number of Cartons = 300 Area Efficiency = 77% Area Efficiency = 91%

42 ClickCalculating to edit Master Sustainability title style

RESULTS (ACROSS 10 PRODUCT FAMILIES) BUSINESS RESULTS SUSTAINABILITY RESULTS Material Savings $820,000 Corrugated 1,859,500 ft3 Inbound Freight > $1,000,000 Reduction Savings Diesel Reduction 17,800 Gal Reduced EPS Foam 188,000 ft2

THE BOTTOM LINE $1,800,000+ 320 Tons 196 Tons Costs Saved Fiber Reduced CO2 Eliminated

43 Click toSession edit Master Agenda title style

Packaging’s Impact on the Supply Chain

Packaging Performance

Sustainability AND Savings

Practical Cost Reduction Opportunities

44 What is theClick environmental to edit Master impact title styleof packaging?

Natural Resource Greenhouse Gas Consumption Emission

45 Practical Steps to Minimize the Environmental ClickImpact to edit of Master Packaging title style

 To Reduce Material Consumption (Fiber):  Reduce or Eliminate Materials  Substitute Packaging Materials  To Reduce Greenhouse Gases (Diesel, Energy):  Reduce Weight  Increase Shipping Densities

46 Practical Steps to Minimize the Environmental ClickImpact to edit of Master Packaging title style

 Focal Points for Packaging Improvement Opportunities:  Packaging Materials  Packaging Volume

47 Practical Steps to Minimize the Environmental ClickImpact to edit of Master Packaging title style

Reduce Material Examples • Reduced Expenses • Right-weighting Packaging • Less Material in Waste Stream Materials • Shared Load Packaging • Fewer Disposal Challenges Strategies • Reduced Weight • Minimize Internal Packaging • Cube Utilization • Proper Amounts of Cushioning

48 ClickMaterial to edit Reduction Master titleExample style

SITUATION • Ready-to-Eat Food Manufacturer • Original Package – Maximum Billboard • Looking to Preserve Margin

Current Configuration New Configuration 486 in2 245 in2

49 ClickMaterial to edit Reduction Master titleExample style

SOLUTION • Reoriented Product Arrangement • Reduced Packaging Blank Size by 241 in2 • Nearly 50% Material Reduction per Unit

Current UL

Proposed UL

50 Practical Steps to Minimize the Environmental ClickImpact to edit of Master Packaging title style

Reduce Volume

Examples • Decreased Freight Costs • Eliminate Headspace and Voids • Minimize Case Dimensions • Decreased Small Parcel Ship • Pallet Unit Load Optimization Costs • Primary Packaging Size • Increased Throughput • Storage, Warehouse Savings • Handling, Labor Savings

51 ClickVolume to edit Reduction Master Exampletitle style

SITUATION • Global Consumer Products Company • Manufacturing Sites in Mexico and US • Varied Retail Product Mix (Light Weight) • Removing 3/8” from the Carton Height = $15K in Material Savings on Cartons and Cases

1.125” Removed from Case (OD)

52 ClickVolume to edit Reduction Master Exampletitle style

SOLUTION • Logistics Savings ~ $89,000 Annually • UL Increase from 21  28 Cases ~ 33% Improvement • 24% Trailer Reduction from 62  47 Truckloads • Freight Class Change from 100 to 92.5 for LTL Shipments

Original UL Improved UL

53 Click toSession edit Master Agenda title style

Packaging and Product Distribution

Packaging Testing

Sustainability AND Savings

Cost Reduction Opportunities

54 Click to editSummary Master title style

 What should you look for in your system?  Pallet Overhang or Underhang  Headspace or Unused Space in Cases, Totes  Floor Space Challenges in Warehouse  Racking Systems Fully Utilized  DIM Charges or Penalties  If you can’t get to this yourself, get help!

55 Tom Blanck, CPP [email protected] (612) 812-3372

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