Sustainability in the Supply Chain: The Role of Green and Reduced Packaging
(Source: Alfonso Navarro on Unsplash)
Reducing waste and pollution in the supply chain has been a hot topic for years, but the need is becoming more urgent. Climate change and waste in our oceans have dire implications for the global economy as well as the health and wellbeing of those living on our planet.
In much of the discussion about sustainability in the supply chain, the reduction of greenhouse gases is taking precedence. For example, McKinsey & Company reports that by 2050, consumer-packaged-goods (CPG) companies must reduce their greenhouse gas emissions by 90% relative to revenues to help achieve global climate goals while meeting growing demand.
But another topic of interest is in these discussions is sustainable packaging—particularly "green" packaging and reduced packaging. In this context, sustainable packaging refers to the use of sustainable packaging strategies as well as materials that can be reused, recycled, or reduced, thereby achieving a smaller or negligible impact on the environment.
This is a relatively new and emerging concept in supply chain sustainability. But it's an important topic for procurement teams, logistics providers, and suppliers alike, especially considering the role packaging plays in generating waste in our oceans and ecosystem.
Green, Recyclable, and Reusable Packaging
According to another McKinsey & Company article, pursuing "packaging recyclability" is a key component of achieving green packaging goals among suppliers and logistics providers: "Large amounts of packaging produced today cannot be recycled in existing recycling systems. This is especially true for multi-material packaging, which today poses a significant and unresolved challenge in recycling."
Plastic is perhaps the biggest culprit in this regard. Plastic packaging is extremely difficult to recycle.
For example, the EPA data reveals that, in the United States, only a small percentage of plastic containers and packaging waste is recycled. Most of the remainder is destroyed using combustion or placed in landfills.
This is compared to paper and paperboard containers, the majority of which are recycled.
Despite long-standing plastic recycling programs around the world, most plastic waste never gets recycled or reused, and in many countries, plastic waste from consumer-packaged goods is leaking into the environment at epidemic levels.
Although paper packaging is easier to recycle, it is less often reusable. The solution then is a combination of reusable packaging solutions to extend the lifecycle of a packaging product and packaging made of recyclable materials to reduce the amount of waste generated during shipping.
Reduced Packaging and Packaging Optimization
Anyone who has ordered a small product online only to have it delivered in a box that is five times too large can understand why reduced packaging is important. On a small scale, the overuse of packaging products seems like an annoying quirk. But on a large scale, it can have dramatic implications for waste—including wasted spend—in the supply chain.
Packaging optimization requires organizations to take a systematic approach to select the right type, size, and quantity of packaging to ship a good or product. Many organizations approach this with a set of guidelines, training, or signage. But ultimately, the type of packaging that is used in a shipment might fall to the employee who is packing the product for shipment.
But "smart" packaging solutions, including programs that use AI to select packaging types and sizes, are becoming more widely available. With the widespread use of this technology, organizations throughout the supply chain could realize benefits like the following:
- Reduction in damaged goods
- Lower carbon footprint
- Less packaging waste
- Cost savings
- Faster and more efficient delivery
This makes packaging optimization not only a sustainable objective for organizations, but also an important strategy for reducing costs and making operations more efficient.
How Procurement and Supply Chain Leaders Can Help
For many procurement teams, it may be challenging to prioritize sustainable packaging when companies further upstream in the supply chain are making choices about how products are packaged and shipped. But there are a few things procurement can do to encourage sustainable packaging practices in their supplier relationships in addition to their internal programs.
Conduct a Life Cycle Analysis
The first step any organization can take is to conduct a life cycle analysis (LCA). According to Elsevier's ScienceDirect, LCA is "a method used to evaluate the environmental impact of a product through its life cycle encompassing extraction and processing of the raw materials, manufacturing, disruption, use, recycling, and final disposal."
This step enables supply chain managers and procurement leaders to conduct measurements of how the products they use, produce, and sell impact the environment, from the moment the materials are extracted to the moment the product is consumed. This is an in-depth analysis of an entire supply chain, but the insights it generates can help the organization set measurable goals in its sustainability efforts.
Locally sourced products and services generally come with a smaller carbon footprint and may result in a reduction in the amount of packaging used for shipments. Shorter supply chains also lead to more predictable delivery outcomes and can reduce lead time when ordering essential products.
Prioritize Sustainable Suppliers
With the right procurement management tools, procurement teams can obtain supplier intelligence about several factors, including diversity and sustainability. With this information, the procurement function can choose suppliers based on their commitments to sustainable packaging, reducing their carbon footprint, and equitable trade practices.
This intelligence can also be used to foster competition among suppliers, thereby reducing costs. If suppliers that use sustainable packaging are favored over others, it will also encourage more suppliers to adopt sustainable practices.
Procurement and Supply Chain Sustainability at the Next ProcureCon Event
Sustainable packaging is just one part of the drive to establish sustainable practices in the supply chain, but every business that interacts with goods, from the moment they are produced to the moment they are used, has a role to play in making this change.
If you'd like to learn more about how your organization can promote sustainability in its procurement practices, don't miss the ProcureCon Indirect Virtual Summit and Expo, happening online from May 18th to May 20th. Register now for free.