Reusable Packaging In a Circular Economy: Panel Discussion

The following is a transcription of an Innovation Stage presented Monday afternoon, November 9, during PACK EXPO Connects.

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Watch the discussion here until March 31, 2021.



Mike Lawson:

Welcome to the reusable packaging in a circular economy panel discussion. The reuse of packaging products is a preferred interloop activity in a circular economy today. But what does that mean? How does a reusable packaging model bring circular benefits to my business, to your business? These questions and more about reusable packaging will be answered in a live panel discussion featuring our industry experts from the Reusable Packaging Association. In this session we'll learn why the reuse of transport packaging delivers on circular economy principles for supply chains and enables a high performing lower-cost system for the distribution of goods. I'm Mike Lawson, and I'm the chair of the Reusable Packaging Association, chief operations officer for Tosca, and I'm joined by a panel of experts and we'll ask them to do introductions themselves, and we'll start with Dan Martin.

https://www.reusables.org/

Dan Martin:

Thanks Mike. My name is Dan Martin. I'm the president of IFCO North America. IFCO operates a pool of about 350 million assets that are in the circular economy. We've been operating this network and this pool globally for more than 25 years. We operate over a hundred wash facilities across the world. And we operate in about 50 different countries across the globe. So, we feel like we've been in the circular economy since the start of the business like a lot of you guys here.

https://www.ifco.com/about-ifco/

Mike Lawson:

Great. Thank you, Dan. Next up is David Kalan.

David Kalan:

I'm Dave Kalan, I'm with Paxxal. I'm the vice president of marketing for the company. We basically have two business operations, one in Saudi and one in United States which is headquartered outside of Indianapolis, IN in Noblesville. We manufacture... I'll use the word plastic pallets, but we're also doing some hybrid technologies. The idea is use as much reusable product as possible as we manufacturer pallets in variety of ways, and then supply them primarily right now in internal loops and things like that. So the pallets are a part of the circular economy. We use quite a bit of new technologies in it and we also embed a lot of the new IoT track and trace devices in what we do. So we're getting some very good information on what's really happening in a circular economy. So I'm sure more to follow as we get into discussion here.

https://paxxal.com/

Mike Lawson:

That's very great. Thank you Dave. And last but not least, Andy Schumacher.

Andy Schumacher:

Thanks Michael. My name is Andy Schumacher, I'm the vice president of packaging here at Schaefer. I've worked for Schaefer for approximately four years. I've been in the industry for 20. Schaefer is a global leader in logistics. We're highly focused on automation solutions, waste carts and packaging solutions. We manufacture in Charlotte, North Carolina, Lodi, California, and San Luis Potosi, Mexico. And I'm just really excited to be having this conversation today…and how it affects the packaging industry. So thanks for having me.

https://www.schaefershelving.com/t-warehouse-solutions-reusable-packaging.aspx

Mike Lawson:

Great. Thank you Andy. Thank you everybody really look forward to your input. A lot of great content to jump into today, talking about the circular economy, but let's start with maybe the most pressing thing, not just in the news today, but been in the news pretty prevalently for the past six months or so, and that's the COVID 19 pandemic and its impact on supply chain. Certainly the pandemic, it is disrupting and has been disrupting product sourcing, inventories demand and supply chain distribution. A circular economy though could build resiliency in your commercial activities through resource stabilization, continuous availability of product flow of materials, including packaging. Talk to us a little bit about how your business in reusable packaging is responding to COVID-19 challenges and how does that demonstrate that the reuse opportunity is really paying off in this unprecedented time? Again Dan, we'll start with you if we could.

Dan Martin:

Yeah, thanks Mike. Huge question for us in the industry and I think everybody's still struggling to a certain extent to find what the new normal will ever be. I think most importantly in the early days it was a sense of urgency and first and foremost about our people. The people …and the customers we serve. Securing our safety and securing our network was number one and most important that started with making sure people can get to work safely and segregation at our facilities and ensuring that we can commit to the volumes that we commit to for our customers every day. So it starts with the safety of people. We have a huge zero harm culture and really PPE and segregation in our plants was first and foremost. So we've been very, very lucky and fortunate not to have an outbreak in any of the facilities, but you've got to take care of yourself first, before you can take care of your customers and supply chain.

            I think the next thing you have to rely on your digital platforms at this point really and understand where are the assets? How can you accelerate the assets? We all saw I think a huge spike in immediate volume panic buying that took place. So we had to react to that and we had to be able to at least say we had a good foundation in place to be able to serve that immediate new demand. We relied on our sales and operations planning infrastructure to be able to really understand and accelerate the velocity of the assets in the market in the pool. The third thing is you can't discount the over-communication that has to take place with your customers. I'm sure you guys all went through this. We almost had daily huddle ups with some of our biggest customers, retailers in particular.

            Really had high volatility in what their demand was going to be. They didn't know day to day what was going to be needed. That regular daily huddle up was really important and the last thing we did was we drastically increased the production of new RPCs. Even though we thought it was going to be a short term demand, we didn't want to stock out at any of our customers. So all those things, you can't discount what you put in place previously, because you can't rebuild your business in eight or 10 weeks to solve the problem. So you really got to rely on the people, the systems and the processes you've gotten.

Mike Lawson:

Great point. Taking care of the people certainly the most important thing. Dave, how about your perspective on that?

David Kalan:

Yeah. It's interesting being in the pallet business, we didn't have quite the challenges everybody else did to be honest. We are already a remote company, so our day-to-day operations, people were used to using zoom, et cetera, RingCentral for communication and everything. But what we found was we were getting a lot of immediate inquiries for new business as other companies did not have inventories. Unfortunately we didn't have inventories either depending on what was required let's put it that way. So this taught us, I think everybody, a lesson in response. There's certain things that we can and can't do. But the biggest challenge was our vendors weren't prepared. We got cut short on supplies, we needed to make certain things. I'm sure that probably affect a lot of people. So again, the people are reusing pallets typically were internal. They were already using them in a loop. They already had the volumes they needed, but it was really handling the needs of new customers.

Mike Lawson:

Great. Thank you. And Andy, how about you?

Andy Schumacher:

In all those, a few different effects in my opinion, that the market had to accept and face head-on. The first one is like Dan mentioned is employee safety. Spent a lot of time and energy on that I remember, back in March and April and … for us personally, we had some tools being produced over in Wuhan China. So we had some supply chain issues there. You can imagine what that meant. We were busy canceling purchase orders actually before the pandemic hit North America. So just some interesting tidbits there. But as we got through that panic stage and through the concern for our employees, I think that the next phase was really watching the different market segments have to adjust to the new challenges and some markets had a ton of shortages as it relates to packaging. So you look at companies that are dotcom companies and you saw massive shifts in demand for dotcom businesses.

            So that was interesting and I think all companies had to adjust to that. And then on the other side of the things you saw, other industries like retail and restaurants, and just more traditional business models have the exact opposite situation where they had excess inventories of tons of packaging, and that really affected the entire marketplace and affected the returnable packaging segment in a really big way. It was fascinating to me, a lot of these trends and issues that we were experiencing, I never thought we would witness or see, especially after 2008, when we went through that, I thought a lot of things that we were ready for and planned for.

            What you realize is that there's some things in this world that …From my perspective, that's really the big things that I witnessed and I don't think it's done yet. I think we're going to see a continuation of this, but I think there could be a lot of new trends that come out of this. I think all of us need to be looking at what technologies are generated and created by the new norm, if you will. So that's my two cents on it.

Mike Lawson:

Yeah, it's great Andy, thank you. A circular economy also relies on the ability to get assets back, right? To remove products from the waste stream. Talk to us a little bit about how this pandemic... But maybe even by building a resilient supply chain organization, how have you found, or what have you found maybe to be the most important factors in establishing and managing a system to recover assets and keep them out of the waste stream? And again Dan, we'll start with you.

Dan Martin:

Sure. Yeah, I think it begins with having the right network, and the right infrastructure. You typically serve a customer's need and you really have to develop your network flexibility and be able to deliver on time in full, in most cases to sporadic markets. We happen to serve the fresh market quite a bit in all of our products and you guys know the same thing. I mean, there's a lot of volatility, especially in fruit and veg. So you need to have a nimble, flexible network. We're fortunate enough to have built that over time and have a good infrastructure to be able to build off of. I think following up with that is really having a good digital platform both to interface with customers, to know their demands, to really be able to forecast and predict which we have a platform that does that.

            But really I think all of us have talked a little bit about that is digitizing the assets to the extent that you can really have good predictability in your flow. I think the third, most important thing is food safety, right? We've got to have the ability if you're in the food grade business, like we are to clearly have this solved and exceed expectations of the food industry. And the FDA and that comes with certifications, it comes with predictability, it comes with a network and a pool that can be washed and cleaned the right way. And I think the last thing is what happens at the end of the usable life of these things, right? So we all have broken assets. What do you do with those assets? We're fortunate enough to be able to re grind and use high 99% of those assets back into the supply chain almost immediately. So I think you really have to be able to close the gap on all those things to really have a good business model in the business.

Mike Lawson:

That's great Dan, thank you. Dave how about you?

David Kalan:

I'm a big, big believer in all the new technologies of track and trace and what that data collection does for you. For example, in pallets, we're able to tell a real movement of where the pallets go. So we're able to show how to reduce loss rates. One of the biggest issues with using reusables is that, well, if they lose that asset, what does that cost me? Well, the track and trace does more than just say here's where your asset is. It also says here's how long your asset has been sitting there. Here's how long the chain of custody has been. All the different people who've had your assets, so you can sign responsibilities for losses, et cetera. You can also now accurately charge people frankly for the length of time they've had the assets as it goes throughout the economy.

            There are incredible breakthroughs just in the last 30 days and some of the technologies to drive the cost of these tracking devices down. When I say down, down to where you can actually finally put it on a collapsible tote or bin, you could put it on assets that only costs $10. And these are all connected now through IoT, which does not require an infrastructure. So they start working tomorrow morning and the data that's collection, these devices will give you a temperature. Now they'll give you a light. You don't know if a truck trailer opened up on you, your palate can tell you that. It will tell you shock, altitude, speed, it'll tell you how fast it acts at actually move throughout the supply chain. But what it does, it allows you to reduce your inventory, the size of your pool. You're going to become more efficient. So I'm leading into some of the other questions I think we're going to talk about, but we're big believer in the importance of wherever possible, creating smart assets for this circular economy.

Mike Lawson:

That's great. A quick personal example as well on the IoT. We're working with a supplier into a retailer where the supplier can tell if the retail ready display package is displayed properly at the store level. They can tell if it's in the front of the store, the back of the store and end cap, where it belongs and they can see that in real time, rather than sending auditors out to every retail location that the technology... Amazing, right? And by enabling that visibility, not just encouraging proper payment or proper charging to the customer, but really encouraging better behavior and through better visibility, through better traceability and trackability, it encourages better behavior that further encourages a more circular economy eliminating waste at every turn.

Andy Schumacher:

No, that's awesome. Great point Michael I mean, great example too. For me personally it's not fun being third on a panel when you talk … systems and technology, obviously those are fundamental cores to communication in making sure your system is set up properly. I'll take a little different spin at it. I think for me looking over the last year, at least, a lot of our customers and the marketplace rely on us to have a disaster recovery plan. And ironically, I think what I've learned over the last especially seven, eight months is that, I think that the marketplace for returnables really needs to look at itself and make sure that most of our customers need to have their own disaster recovery plan as it relates how they manage returnables. We talked earlier about inventories, some the shortages, what I've noticed already is a lot of companies working on their supplier development to make sure they have multiple sources for packaging solutions, whether it's on the service side or the manufacturing side of things, and then vice versa, right?

            A lot of these companies that have excess packaging, they needed a place to put it. They need to have a backup plan on where are we going to store these excess products. And it affects a lot of different industries. I've read tons of articles about companies in the rental car business, right? They had millions and millions of cars sitting around our country with no place to put them. That's just one example, but no one planned for this, obviously and I think that to me, it's just one of those things that when we look in the mirror over the last year, definitely we need to have a lot more conversation with our customers about what they're going to do during ups and downs within their marketplace. So a little different spin on it.

Mike Lawson:

That's right. That's a great example, indeed too. Let's talk a little bit about the commercial side of reusable packaging, right? A circular economy creates growth opportunities. Creates growth opportunities because it extends the life of the product, it eliminates things from the waste stream, the material add greater value by extending the life of it. And core to that is designing and building reusable packaging products that will outlast durability better performance than any single use package would. That's a little bit about like a commercial application, a real world example of how we have built reusable packaging designed to add value in a circular economy and I'll mix it up. Andy, you make a good point. We'll start with you if we would.

Andy Schumacher:

I didn't mean for you to do that, but thank you. I think for me, returnables in general are circular, right? Just that the nature of what we're talking about. So for our business as a manufacturing company, we're really looking how to take it to the next level. So there's already the circularity, how do we make it even further? How do we divert products from going to waste streams? And for us, it's really... The focus has been centralized around a couple of different areas. There's obviously post-consumer resins, which is a big thing, a big conversation point today. But the newest one and we're really excited and we're working very, very heavily on is ocean bound plastics, which is taking plastics out of the ocean and then reusing them in returnable packaging. And in particular we've just seen a massive demand from fortune 500 companies across North America, really demanding this and looking into this.

            It's an exciting time. If you can't get excited about being an advocate for planet, then there's something wrong with you, in my opinion. So that's really the big thing. In my opinion, is trying to find different ways to use different materials and divert things from going to waste streams. And today our focuses is really on the rigid exterior container, but I think the next wave will be working on the dunnage stuff that goes inside of the box or inside of the containers and finding solutions that also divert waste streams to the next level. So for me, that's really the big trend and there was a huge demand for it, which is probably the most exciting part of it all.

Mike Lawson:

How about Dave?

David Kalan:

I look at it that there's two circular economies. There's the industrial circular economy of which we all participate in and then there's a consumer circular economy. I think that too. If you don't mind, I got to grab a couple of prompts. I grow up... I'm a little older, I could tell then most of you, but I grew up in Indiana. We had a milkman that delivered these to our door twice a week. And when they were empty, the milkman picked it up and he brought it back. That was the circular economy back then. It was reusables back then. It's amazing how we went from that, totally got away from it and now we're coming back to it, if you really think about it. Same thing with coke products.. .because all this used to be glass. And the same thing happened and we returned, went back and forth. And then one last one with Dan.

Dan Martin:

I'm on the back already working on this. This is a chewy box. I don't know if you could see that look at all this cardboard and everything. It's crazy.

David Kalan:

Yeah. 36 of those were delivered to my house last year, 36 of them. Why couldn't that be put in a collapsible bin and a system set up which it can be, and it can be. And I go back and I harp on the technology because you can track and trace these things very inexpensively now. There are ways to... So that loss asset isn't out there. So I see that as a huge marketplace for the RPA and all its members and everyone who produces those type products. I see it a huge benefit for the planet. You talk about doing things … imagine, and I'm sure Amazon and everyone is already looking at this stuff. So I think they're open-minded to it.

            They just need to know how do we do it? And that's responsibility. We've got to go and show them how to do it. So that's the challenge I give to all of us, how to do it. So, basically that in a tall... This happens to be a large tracking device that lasts 15 years and it could ping four times a day and tell you wherever it goes, and they'd go on and on and on. This an exciting time to be a part of this. And what all this means is, I'm a big believer because we can reduce the loss rates of reusables. We can develop better products. Maybe that product that we're so scared to death about or price point must be this or no one will ever buy it. But what happens if we raise the price point a bit? But now that asset lasts 150 trips, not 90 trips.

            Those are the things I think that I see happening in the industry where people are going to look at different materials that might be a little more expensive, but the return on your investment is going to be there. So, that's basically my take on that whole thing, that right now, there is no better time to be into this business. No better time. Their people are going to change. They have to.

Mike Lawson:

Great David. And Dan, how about you from your perspective?

Dan Martin:

Thanks Mike. Dave, all great points. I'll take a little bit different spin on, on the commercial side. I think we all know what's going on the labor workforce here in North America. I just read a stat from economic forum that said 42% of the jobs that are done by general labor are going to be automated by the end of next year. Almost half of the entire workforce is going to be eliminated by automation. I think a business case in our world does revolve around the commercial side as much as anything today. I think David is right. Eventually we really, really do have to go all the way to consumer, but today the line share of the value is going to revolve around all these automated systems and technologies. So we do some evaluation before we enter into an agreement with the customer to really determine where we see those savings elements, in particular taking labor out.

            We have a lot of retail ready displays that immediately go on a shelf. I think this is huge. And we track and measure the amount of waste that develops versus a one use package that ends up like a chewy box flattened out in a baler. The amount of time to the baler. We quantify and calculate that and many value almost to the point where it's a dollar of savings. $1 savings in the supply chain to eliminate one of those boxes and all the value you get between efficiency and labor reductions and shrink reduction and... Forget about all the sustainability piece, the business case is strong, but when you add all that other stuff up, you're really talking about significant savings, financial savings to our customers.

Mike Lawson:

Yeah. It's great Dan. And we think about it very similarly, right? So you touched on eliminating waste and the trips to the baler, but it also means fewer trips to the landfill. It means that those employees, instead of taking a trip to the baler are adding value at the retail store level. They can be helping customers instead of stocking a shelf by enabling that retail ready packaging. Similarly, we know that reusable packaging is much more standardized. We touched on automation a little bit, right? Reusable packaging, plastic packaging enables automation significantly better than corrugated does, or one way packaging does. It's a standard package, which means you don't have variability. It doesn't flex and shift. It's more ergonomically friendly and mostly feeding our customer and our buyers are at less risk of getting hurt while moving things. Right, so, so many value adds there.

            And when we think about that circular economy piece, right. Having the ability to create that infrastructure, not just where we're providing it, we're eliminating it from the waste stream and then bringing it back, cleaning it, sanitizing it, repairing it and issuing it all over again means we continue to add value. And I think that's one of the things we have seen again in this strange economy that we're all in today, is that reusable packaging providers and reusable packaging consumers, and in this case the consumer might be a fresh product supplier, It might be a retail company, but they are a more resilient supply chain. We're able to add value by taking labor out of the equation, by taking waste out of the equation which means we're building a more resilient supply chain globally. So I really appreciate everybody …

            Let's talk just a little bit about closing comments. We all have so much value to add, certainly all of our industries and in my panel are industry leaders in this space. Dave, why don't we start with you? You've been the middle child this whole conversation. Any closing comments for the group?

David Kalan:

No. That's some wonderful thoughts there, both Andy and Dan, you've got my mind going on a couple of things you said, so thank you very much. Now, I've said it earlier, the industry is poised to explode. Everyone I'm talking to is finally saying, yes, I need to do it, but it's just simply, how do I? People are willing... When I say people, companies are willing to invest more money in this. And the reason they are is because I think our association is showing the payback better, where before we said... Trust me on this, you all know how good it is until you use it. We're able to say like Dan, you said the industry saves a dollar for every corrugated that (it) eliminates.

            That data is what we need in order to really get to people. So it's good that the industry is doing this, the association. It's nice that we're sharing somethings like this. I hope there's more data like that we can find and share to help us grow the industry because as big as it is right now, I think we're just right here. There's so much more we can do. So anyway, thank you for this opportunity Mike.

Mike Lawson:

Thank you, Andy. How about you?

Andy Schumacher:

Yeah, thank you. And I'll start with one of the things that Dave just mentioned. I am old enough to know what a milkman was. And that is a great example of coming full circle. I was interested when Dan was talking about the labor shortages in really the world, but especially in North America and in Western civilization, Europeans have had the same issue. The labor shortage is interesting to me. And I think that is really the current trend like you mentioned. I think the next big trend is going to be land shortages in a long Monday 2:00 p.m.term, right? I mean, what we see in Europe with landfills and the extra charges and taxes associated with sending stuff to landfills that is only a matter of time till it comes our country. I think that in general, we take land for granted here and I think that trend will end soon.

            I think we'll start to look at it differently and... I'll give you... I work for an automation company and we're working on something in Europe right now that I think is a long ways off for North America, but it's interesting. We're working on urban farms and using technology in what's called a vertical lift module. And so it it's just like literally going vertical with farming instead of using land the way we do today. And to me it's an example of something very futuristic, but maybe not as far away from the future as we think. So just fascinated, lots of interesting topics today. I really appreciate the opportunity to be part the board or the panel and, yeah, thanks. I think it was a great conversation.

Mike Lawson:

Thank you Andy. And last but not least Dan.

Dan Martin:

Yeah. Thanks Mike. And great comments by the entire panel. I think this kind of thing, collaboration is the key. We're not a dominating industry group, just look at the RPA in general, it is growing massively in popularity as of late, but it's been slow adoption. And I think collaboration is the key to get the word out and we all have to bend together to a certain extent while we all try to develop and innovate and compete. Right? So there's a lot that goes on there, but we've got to look at the long game really.

            And in my case, I think about Walmart who just published their sustainability goals for the next five years. I think what's critical is that we all think about that in terms of our own business and focus on it. In our particular world, our product takes out 60% of the CO2 into the greenhouse gas emissions and we reduce water by 80% in the packaging, damage reduction, all that stuff. But I think we've got to bend together and get the message out because that combined with all the economic value you guys just all talked about is really the gravy and where the rubber meets the road. So I look forward to collaborating more and more in the future.

Mike Lawson:

Yeah, Dan. That's actually the best closing comment I think that we could make. Collaboration around reusable packaging really is the key. The best place for everybody to collaborate is that the reusable packaging association. So to close this out first off, I want to thank the panel. You guys have been terrific. Thanks for lending your expertise for a little bit. Thank you to those attending the panel discussion. We look forward to hearing more. Thank you to Pack Expo for giving us the time. And again, please, if you'd like to learn more about a circular economy or about reusable packaging, please visit the RPA at https://www.reusables.org/ Again, thanks everyone and appreciate the time.


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