Keeping Score: Wal-Mart’s Packaging Initiative

Having exploded into industry, supplier, and consumer consciousness, Wal-Mart Stores, Inc.’s "Packaging Scorecard" directed to an overall 5% reduction in packaging employed by its suppliers should be pondered in perspective. Announced earlier to its retailers and elaborated at the 2006 Packaging Machinery Manufacturers Institute’s Pack Expo in November, the initiative has stirred more than considerable discussion, some positive, some skeptical, and some blatantly opportunistic.

Goal: 5% Reduction
Wal-Mart plans to achieve a 5% reduction in packaging across its supply chain by 2013. In addition to preventing millions of pounds of spent package materials from reaching landfills, the scorecard initiative is predicted to save energy and reduce emissions.

More than 2,000 Wal-Mart private-label suppliers have gained access to the packaging scorecard, which incorporates their ability to input information and measure their performance against competitors. For other suppliers, an automated online demonstration is available at www.scorecardlibrary.com.

On February 2, 2007, Wal-Mart plans to share its packaging scorecard with its global supply chain of more than 60,000 suppliers. During a one-year trial period, suppliers will be able to input, store, and track data, learning and sharing their results as desired.

In February 2008, Wal-Mart anticipates beginning to apply the packaging scorecard to measure and recognize its entire supply chain based on each supplier’s ability to use less packaging, utilize more-effective materials in packaging, and source these materials more efficiently relative to other suppliers.

Wal-Mart’s packaging scorecard is a measurement tool that allows suppliers to evaluate themselves relative to other suppliers, based on specific metrics that evolved from a list of favorable attributes previously announced, the "7 R’s of Packaging": Remove, Reduce, Reuse, Recycle, Renew, Revenue, and Read.

The Packaging Sustainable Value Network, a group of 200 leaders in the global packaging industry, including suppliers, experts, and internal and external stakeholders, outlined the following reduction metrics for the packaging scorecard: 15% based on greenhouse gases/CO₂ per ton of production, 15% based on material value, 15% based on product/package ratio, 15% based on cube utilization, 10% based on transportation, 10% based on recycled content, 10% based on recovery value, 5% based on renewable energy, and 5% based on innovation.

These criteria are offered as valuable tools for suppliers to determine how their packaging innovations, environmental standards, energy efficiencies, and use of package materials match up against those of their peers.

Many larger packagers, of course, have analogous internal packaging evaluation systems that they apply routinely. In the Wal-Mart proposal, suppliers will receive an overall score relative to other suppliers, as well as relative scores in each category. This model affords suppliers the opportunity to focus on specific changes within the context of a fluid environment, driving constant change and improvement in the supply chain.

Because most Wal-Mart products are non-food, greater attention appears to be focused on this segment than on food. With Wal-Mart representing about 20% of all retail food sales in the United States, food and food packaging scientists and technologists must comprehend that much of their packaging will be evaluated. Furthermore, the influence of the country’s leading retailer certainly will be felt as other retailers, food processor/packagers, converters, and other suppliers adopt their own versions of this action.

Perceived Limitations
The scoring procedure consists of a review of each package followed by quantified scoring derived from specifics of those classifications enumerated above. The score for each package is computed from models suggested by Wal-Mart’s operating agency. Scores may be compared with other packages or suppliers in analogous categories.

As a next step, suppliers are encouraged to identify improvements and/or innovations that may or will be made to reduce mass, cost, and energy consumption anywhere in the system, or to increase recycling rate, or to employ renewable resources.

The model scorecard has been developed with obvious care and is quite comprehensive. However, to believe that it is a finished program that cannot and will not be altered is a mistake. Emphasis appears to be on the distribution-packaging elements, even though the largest proportion of food and beverage packaging costs are for primary packages such as cans, bottles, and pouches.

Relatively less attention appears to be paid to package conversions, either recent or potential. Notions of reducing package mass (which have been overtly in effect by food packagers for four decades) by, for example, moving from glass to plastic or from paperboard to flexible film or from corrugated fiberboard to shrink film, have not received sufficient credit despite their major past and future impacts on achieving the same goals as Wal-Mart has proposed. Wal-Mart’s repetitious elevation of biomaterials over plastic as package materials might raise the question of whether this initiative is targeted at package cost reduction or to promote "sustainable" package materials.

Food packaging professionals have been aggressively addressing packaging costs, package mass, recycling, and planetary environmental protection for decades with enormous success. Perfection appears to be an ever-receding target, but we continue to pursue these objectives vigorously.

A drawback of the model, for foods at least, is the indispensability of protection from environmental components that are far beyond vibration, impact, and compression. Moisture, oxygen, and microorganisms, among other deteriorative vectors, are critical to ensuring against food loss during distribution. Might food spoilage and losses increase as an unintentional result of altering the packaging scene? And the irrational suggestion that packaged processed foods (as contrasted to "natural ") are responsible for such food losses would revert us rapidly into an agrarian society.

Conceptually, the Wal-Mart proposition is outstanding. Relatively few food and beverage packagers have the resources or the incentive to review their packaging specifications on a regular periodic basis with an objective of optimizing their packaging. Studies over the years have demonstrated that intensive review identifies many opportunities for mass and cost reduction, especially in secondary packaging.

If this initiative induces food and beverage packagers to perform the needed evaluations, then the effort would be well warranted. If, however, the target of 5% cost reduction involves less consideration for total systems variables, then the risk of increased food content deterioration rises markedly.

Every food packager continuously engages in the unending search for cost savings in labor, materials, capital expenditures, utilities, and distribution to deliver to the target consumer the best product and accompanying service at the lowest price. As energy prices climb, the costs of components dependent on energy necessarily are affected.

Certainly, packaging is not the largest cost but is still a major expenditure essential to food and beverage packagers. The dilemma has always been to maintain or even enhance functionality while reducing costs of materials, labor, utilities, and maintenance.

The Wal-Mart initiative prompts the new issue of sustainability linked to a 5% cost reduction for all packaging. Can packaging continue its value-adding role while returning its end products and reducing costs?

Food and beverage packaging technologists must receive credit for their superb accomplishments in protecting the food supply at low cost and environmental insult. That their efforts are now being recognized by major external initiatives supports their long contention that packaging is indispensable to total food and beverage value. Our responsibility is to ensure that the food and beverage supply chain continues to grow and supply our nation with the safest, most nutritional, and most diverse foods and beverages in world history.

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The Scoring System
To begin the scoring process, the product is identified in detail, with a number of categories, including both "perishable" and "non-perishable" foods, a grouping that will undoubtedly be expanded as the data are generated.

The present protocol calls for each package to be dissected with each component identified and detailed:
• Percentage of cube utilization.

• How many materials are used to transport the selling unit package (the shelf package, usually but not always the primary package).

• The shipping platform for the package (e.g., pallet).

• How many on-shelf packages are shipped in the distribution packages at all levels.

• Total package material weight.

• Distance of package converting to packaging operations.

• Distribution distance (not always relevant for many "perishable" foods).

• Other materials for distribution package (to identify such adjuncts as wax coating, even though such adjuncts are infrequently applied for food packaging).

• Fraction of package manufacturing operating on renewable energy sources.

Metrics for the existing package in the model, each of which is weighted, include:
• Product to package ratio.

• Cube utilization, including headspace measures.

• Recycled content.

• Recovery.

• Renewable energy to power each package manufacturing facility.

• Greenhouse gas emissions from package production.

• Process waste.

• Package materials discarded at various distribution channel sites.

The scoring system model then forces the evaluator to propose alternate package systems—with apparent encouragement to reduce plastics and to attempt to increase the application of biomaterials.

by Aaron L. Brody, Ph.D.,
Contributing Editor, President and CEO,
Packaging/Brody, Inc., Duluth, Ga.
[email protected]