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Article | August 9, 2010
Holistic Packaging Optimization = productivity plus
Times are changing quickly for packaging in so many ways: open innovation on the rise, sustainability designed in, social media, shelf impact, and the consumer/shopper and retailer focus on lower-cost, more value-minded solutions.
That means it’s time to look at packaging cost reductions. Unfortunately, much of the low-hanging fruit has already been plucked where material savings are concerned. You need to look carefully, analytically, and strategically to find meaningful cost reductions in your packaging.
Ready, fire, aim is not going to get it done. A broader, deeper perspective is needed to optimize both packaging costs and packaging productivity. Companies need to look at more than light-weighting, substitution, and removal. Assessing the entire value chain can deliver “innovation” cost savings, not just “efficiency” or traditional material savings. Getting started at a higher level with a collaborative, unbiased, and holistic systems approach is crucial.
Examples include new system solutions like General Mills’ Hamburger Helper, where a change in the shape of the pasta permitted a switch to a 20% smaller carton. Kraft also looked more broadly and used systems thinking when they refreshed their pourable dressing bottle—providing an improved consumer experience, significant material savings, cost savings, and SKU rationalization. In other words, you may need to invest money to save bigger.
Why not innovate your way to packaging cost reductions? Just don’t forget to assess the full lifecycle. You don’t want to do a cost savings project that cuts packaging material costs up front but results in increased landfill waste. Take the time up front to do it right the first time and consider the many tools available. Here are some you should definitely keep in mind:
• Start with the consumer in mind and look to enhance his or her experience with the package.
• Use science and technology—including finite element analysis (FEA) and other modeling techniques—to save money in resources, optimize material use, and improve performance properties.
• Be sure to look at enhanced sustainability solutions and end-of-life consequences. Can you use recycled components? Can you “up-cycle” and improve the overall solution by minimizing the carbon footprint? Saving money and reducing environmental impacts is a win-win.
• Understand your starting point so you can develop metrics/measures to show environmental improvements—yes we will see more regulation in this area so get your programs together now.
• If you are considering low-cost-country sourcing, be sure you factor in the safety and traceability of materials and components you import. Can you trace your materials back to their origins?
• Work with your retailers and understand the channels your product will move through. We have seen BIG problems here—the cost savings may be lost because of reduced supply chain or retail inefficiencies.
• Challenge suppliers, but be sure to provide important marketing and brand value insights so they are not lost in the cost reduction effort. Look to utilize outside resources to evaluate ideas. Remember, suppliers want to help you, but they have a vested interest in what they make and sell.
• Consider a “clean sheet” process that can really open up the innovative solutions to take out system costs.
• Look at other categories for new change opportunities to bring back to your category. Clorox recently converted from a rigid plastic bucket to a flexible solution, providing both a significant cost savings and a carbon footprint reduction.What it comes down to is Holistic Packaging Optimization. Make it a platform in your organization and watch it deliver enhanced innovation, better consumer experiences, improved quality, sustainability, and significant cost savings.
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