Taking steps toward sustainable packaging
To move toward packaging sustainability, companies should take the following steps:
- Conduct in-depth consumer research to determine what sustainability means to your core customer
- Determine how you may need to change your packaging in terms of functionality, appearance, manufacturing processes, material availability, supply chain constraints and product shelf life
- Develop the business case to ascertain financial impact, both in terms of costs to make the change and potential increased long-term value, and create a timeline for the transition
Shifting to fully sustainable packaging could take years, but leaders can approach the task in a phased, strategic approach. They can initially tackle preliminary elements of the packaging value chain that are low in effort and cost but offer visible improvements to the consumer and other stakeholders. Focusing on potential quick wins resulting in cost savings or otherwise creating value can build momentum for the more complex initiatives. Considering a pilot rollout of a sustainable packaging initiative in a targeted test market can help companies validate demand and further understand challenges at risk of being overlooked during planning.
Beware of potential challenges in changing packaging
Shifting to sustainable packaging may have considerable challenges. It is important to evaluate potential pitfalls in your sustainable packaging road map. Is there a consumer subset who may perceive the change to sustainable packaging as lower quality? Is there pending legislation in a particular country that could shift the economics in favor of sustainable packaging? Educating the public about the benefits of sustainable packaging and helping to ensure the messaging is understood before purchasing behavior is affected is key.
Internal resistance to change can also pose a significant challenge. For example, finance can contest a change to sustainable packaging due to a potential cost increase, especially when the cost of goods is already running high and in the face of constrained raw materials. If that is the case, perhaps the first sustainable packaging initiative can be rightsizing or packaging reductions that will result in cost savings.
At the same time, operations can contest sustainable packaging due to the impact on production line run rates. Current packaging materials and manufacturing processes are fine-tuned over decades; introducing new materials and methods will likely require capital expenditures for retooling, thorough production line trials and operator training. One approach can be to leverage third-party manufacturing to initially produce the sustainable packaging offering while demand is validated. Third-party manufacturing can also provide ample time to retrofit company-owned facilities properly.
Change management can be essential in the shift to sustainable packaging. To help overcome transition concerns, supply chain leaders should confirm early buy-in within their organizations. To support this, leaders will need to share a vision of the future and how sustainable packaging is a key component of the organization’s future. Companies implementing these changes now will be prepared when consumer sentiments or regulatory changes require shifts in the future.
How to accelerate sustainable packaging initiatives
To make the shift in packaging, supply chain and operations leaders can help companies consider several options to accelerate their evaluation and transition:
- Take a centralized approach and start with a global-level inventory of all ongoing sustainable packaging initiatives to identify opportunities to leverage lessons learned and consolidate efforts. For example, Kroger is establishing a benchmark of its current product packaging footprint to develop an informed strategy to achieve a goal of transitioning to 100% recyclable, reusable and/or compostable packaging by 2030.
- Educate key stakeholders, including customers, distributors and suppliers, about packaging R&D and innovation and leverage suppliers’ consumer research capabilities to identify and validate sustainable packaging initiatives. For example, Rheem Manufacturing, a US-based water heater and HVAC manufacturer, has made educating stakeholders on sustainable installation and sustainable product recycling a top priority.
- Develop partnerships with companies throughout the packaging value chain to reap opportunities for scaling, exposure and speed to market, such as Procter & Gamble’s agreement to replace some virgin plastics with recycled plastic materials from Eastman. Companies can work with suppliers to develop proprietary offerings that can lead to a competitive market advantage.