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MANAGING THE RETURNABLE PACKAGING IN THE SUPPLY CHAINJEFFREY WONG, DIRECTOR CHEP SEA
OCTOBER 15TH 2008
CHEP RPC – LEANER GREEN SAFER2
THE WINNING RECEIPES FOR THE 2ND DECADE OF ECR
Market Context
Increasing global sourcing of raw materials
An increasing focus on the environment
Greater health and hygiene regulatory pressures
Increasing competition
Changing consumer demand
Loyalty increasingly influenced by the whole shopping experience
The Ingredients for a Winning Recipe….
Leaner, Greener and Safer Supply Chains
“…aimed at better satisfying consumer needs, through businesses
and trading partners working together. ”
ECR Australasia
CHEP RPC – LEANER GREEN SAFER3
RETAIL READY PACKAGING (RRP)
Retail Ready Packaging not new in the market
Referred to different names…Shelf Ready Packaging, One Touch Packaging, etc
Display Ready Cartons is available in the market
– A high percentage of on the shelf products, non-produce shipped in DRC
– *26% of the Retail Produce Volume shipped in DRC in US
Returnable Plastic Crates, sometimes called trays, crates, RPC,
– *has 8% volume of the Retail Produce Volumes in US
Large returnable containers also called Bins are retail ready*Corrugated Packaging Alliance news realease17 May 2005
“…increased speed of replenishment leading to better on shelf availability & increased sales”
ECR Australasia, Retail Ready Packaging, pg 6
CHEP RPC – LEANER GREEN SAFER4
RETAIL READY PACKAGING STRUCTURE
*Consumer Unit
Tertiary Packaging
Merchandise Unit
Dollies
Returnable Plastic Crates
Dairy Dollies
Bins
“How to manage
returnable packaging?”
Easy to Identify
Easy to Open
Easy to Shelf
Easy to Shop
Easy to Dispose
*ECR Australasia, Retail Ready Packaging, pg 6
Display Ready Packaging
Display Inner (In a shipper)
Display Shipper (Trade Unit)
“How to manage
returnable packaging?”
CHEP RPC – LEANER GREEN SAFER5
HOW TO MANAGE RETURNABLE PACKAGING
Considerations in choosing between DRC and RPC
Scoping the project across the supply chain
Prioritizing Products for Returnable Packaging
Understand the total process and consider pooling of returnable equipment
Ensure Supply Chain Costs Reduction Targets are Met
CHEP RPC – LEANER GREEN SAFER6
CONSIDERATIONS IN CHOOSING DRC AND RPC
Requirements and Considerations
Display Ready Carton (DRC) Returnable Plastic Container (RPC)
Usage cycle One time, one way trip Reusable, Multiple trips
Branding and differentiation through packaging
Can be made to be distinctive and differentiated
Blends into the retail surroundings
High Demand Volatility One time costs expensed Invested RPC for peak not utilise during trough unless it is rented RPC
Backhauling transportation Advantages across wider geographical areas or borders esp where volumes are low
Advantages where there are large volumes need to be backhauled and transportation is available
Robustness Can be designed to be robust at a higher cost but not as robust as RPC
CHEP’s RPC build to sustain multiple usage in varying supply chains
Environment – Life Cycle Inventory Measurements (Franklin Associates, Life Cycle Inventory for RPC and DRC for Fresh Produce Applications)
Dispose after use Reuse after wash; requires 39% less energy, produce 95% less total solid waste, 29% less total greenhouse gas emission
CHEP RPC – LEANER GREEN SAFER7
SCOPING THE PROJECT ACROSS THE SUPPLY CHAIN
Finalisation
CHEP RPC – LEANER GREEN SAFER8
PRIORITISING PRODUCTS FOR RPC OR RETURNABLE BINS
Volume of Replenishment
High
Low HighDifficulty of Replenishment
X Watermelons
X Oranges
X ApplesX Bananas
X Parsley
X Lettuce
X CabbageVolume of Replenishment
High
Low HighDifficulty of Replenishment
X Watermelons
X Oranges
X ApplesX Bananas
X Parsley
X Lettuce
X Cabbage
Successful projects will need the participation of the Retailers, the Suppliers and the service providers that store and mover the products
CHEP RPC – LEANER GREEN SAFER9
PRIORITISING PRODUCTS FOR RPC (Examples)
CHEP RPC – LEANER GREEN SAFER10
ENSURE THAT TOTAL SC COST REDUCTION TARGETS ARE MET
(…often total supply chain costs are not captured)
Scope: From factory to organized retail store
Product: FMCG basket of goods
21.9
13.7
100.0
59.7
Transport Storage Handling
0.4
Procurement
0.8
RPC Maintenance &Cleaning
3.6
Other* Total
DEMONSTRATING CHEP’S VALUE PROPOSITION
CHEP RPC – LEANER GREEN SAFER12
REUSABLE PACKAGING INNOVATION – CHEP’S CREDENTIALS
PCA (Packaging Council of Australia) Award Winner
– 2002: Beverage trays
– 2003: RPCs (1st Generation)
– 2005: Folding Bin
– 2005: Holden Automotive Custom Designed Packs & Inserts
Regional implementation experience (ANZ)
– Beverage tray national pool
– RPC national pool
– Foldable Bin national pool
– International pool of auto parts containers
Supply Chain benefits …realised!
– Retail Ready
– Resource savings
– Capital benefits
– Product quality benefits
– Environmental benefits
– Warehouse efficiencies
– Transportation efficiencies
CHEP RPC – LEANER GREEN SAFER13
EXAMPLE OF AN INNOVATIVE DESIGN
CHEP RPC – LEANER GREEN SAFER14
RPC AND BIN PROCESS MANAGEMENT
INSPECT
FORECASTDEMAND
WASH
REPAIR
RETRIEVE
TRACK
CRATE USE
SUPPLY
RELOCATION SOURCE
CAPEXCRATE R&D
CHEP RPC – LEANER GREEN SAFER15
CHEP’S CORE VALUE PROPOSITION
Recognised as the global leader in pooling solutions, CHEP offers pooled platforms, pooling systems and services which collectively represent a single supply chain logistics service.
Core benefits delivered include:
1.Reduced costs Reduced platform manufacturing and maintenance expense Reduced transportation costs Reduced process management costs Reduced losses Trans Tasman produce movements coordinated in Australia and New Zealand
2.Reduced risk Customers’ products are protected in transit meaning reduced damage, loss & ullage A single pooling solution that operates throughout the customer’s supply chain meaning integration and
simpler, risk-free systems compatibility
3. Revenue protection Customers’ products are shipped and arrive in ready-to-use or ready-to-sell condition Speedy turnaround ensuring faster cash-flow Continual monitoring of supply chain to ensure Vendor costs minimised
4. Reduced CAPEX Customers do not need to invest in their own pooling infrastructure, pooling processes and pooled
platforms
CHEP RPC – LEANER GREEN SAFER16
CHEP’S CASE STUDY: PRODUCE SUPPLY CHAIN IN ANZ
ChallengeTo help a major regional retailer move, store, merchandise and protect a range of fresh produce lines from a base of >1,000 suppliers into 800+ retail stores
Replacing60 million Styrofoam and cardboard containers per annum
SolutionCollapsible, returnable, vented, column & cross stackable RPC – and a sophisticated tracking system
BenefitsImproved product quality, reduced handling, transport efficiencies (outbound), 40% reduction in reverse logistics, reduced packaging waste, improved supply chain visibility eg. cycle times, stocks & flows
CHEP RPC – LEANER GREEN SAFER17
IN SUMMARY
Supply chains are constantly changing, needing to be LEANER, GREENER and SAFER
CHEP can help you achieve operational excellence through:
Efficient, safe & environmentally friendly packaging design
Synchronisation of reusable & returnable packaging with forecasts
Network leverage (physical & knowledge)
RFID enabled visibility & control
Standardisation & customisation
CHEP RPC – LEANER GREEN SAFER18
WHO IS CHEP TODAY?
Brambles owned and part of a global CHEP business in 45 countries around the world
Provider of managed reusable & returnable supply chain packaging solutions
Working to make logistics in Asia-Pacific leaner, greener & safer
Serving customers in:
– FMCG
– Fresh Food
– Auto
– Industrial
– Transport & Logistics