The Business Case for Reusable Packaging. Samantha Goetz Marketing Communications Manager ORBIS Corporation

The Business Case for Reusable Packaging Samantha Goetz Marketing Communications Manager ORBIS Corporation

The Business Case for Reusable Packaging Evaluation of reusables requires a systemic view Understand how the system will work Understand impacts on economic and environmental performance metrics

When do reusables make sense? High volumes of solid waste Recurring single-use packaging costs Damage to product from stacking, shipping, or material handling Under-utilized trailer space in transportation Inefficient storage/warehouse space Worker safety or ergonomic issues Significant need for cleanliness/hygiene Need for unitization Multiple component parts or complicated assembly operations Frequent trips Well managed open loop, or traditional closed loop

Building blocks for the reusable business case How will the system work? What s the impact?

Financial Justification: Open Pool Applications

Pooled RPCs in the retail produce supply chain Producer Pooler Retail DC Retail Store

Indirect costs total up to 85% of packaging-related costs

Quantifying Indirect Costs Step 1 Step 2 Step 3 Identify cost drivers of each indirect cost Investigate impact of packaging on cost drivers Convert impact to cost

Case Study: RPC Packaging Cost Evaluation Tool for fresh produce retailers Study and tool commissioned by IFCO, performed by Cal Poly Enables customized modeling of indirect costs impacted by produce packaging Compares impact of different degrees of standardization via RPC use

Identify cost drivers of each indirect cost: Labor Inbound Transport DC Operations DC-Store Transport Store Operations Asset Recovery Activities Unload truck Break down pallet Take into inventory Slot Pick Order Secure unit loads Load Truck

Identify cost drivers of each indirect cost: Product Damage Inbound Transport DC Operations DC-Store Transport Store Operations Asset Recovery Activities

Investigate impact on cost drivers: Product Damage

Convert impact to cost: Customize

Convert impact to cost: Results SCREENSHOTS OF RESULTS

Financial Justification: Closed Loop Applications

Identify cost drivers of each indirect cost: Labor Labor reduction Box set-up Knockdown for disposal Safety with box cutters Labor for recycling

Identify cost drivers of each indirect cost: Inventory Space Expendable May be difficult to double stack Potential burden on inventory space Safe stacking concerns Reusable Packaging Improve space usage for inventory Potential to free up inventory space to create more production space Inventory count accuracy

Identify cost drivers of each indirect cost: Logistics Improvement Expendable Packaging Difficulty to double stack Tendency to shift or fall Product susceptible to damage Reusable Packaging Increased utilization of trailer space Faster load/unload

Financial Analysis Clearly Understand The Input to Generate The Output

Create Project Assumptions Standard Input Assumptions: 1. Working days packaging used 2. Program length (years) 3. System days needed 4. Cost of expendable vs. reusable 5. Cost of Sq. Ft. used

Expendable and Reusable Comparison Freight comparison: Expendable doesn t have reverse logistics factor Ongoing expendable cost Product damage analysis (Scrap) Packaging storage costs

Tons of expendable waste generated and disposal Cost of washing containers (If Necessary) Annual cost of repair/replacement based on the initial investment.

Comparison of expendable and reusable costs Savings Calculation & Project Payback The specific reusable packaging information needed to support the analysis Savings of $55K per year, with a 4 month payback, for just one part

Important Financial Considerations -Each application is different -Consider holistic benefits for supply chain vs. each single application -ROI calculators and help is available. Metrics are possible. -Identify champion

Environmental Analysis: Closed Loop Application

EPA s Waste Management Hierarchy

Success Story Industry: Auto manufacturing Location: Fremont, CA Reusables Used: Custom Racks Company Snapshot: Designs and manufactures premium electric vehicles, produces 240 cars per week. The Model S is an all electric sedan that seats up to 7 people.

Success Story: Tesla Motors

Success Story: Tesla Motors

Success Story: Tesla Motors Before: Windshields arrive at TESLA individually packaged by manufacturer 370 miles away 312 / truck Labor to unwrap each and move into production line Left with 5 lbs of OCC & 3.3 lbs HDPE per car

Success Story: Tesla Motors 5 lbs OCC (recycled) 3.3 lbs HDPE (landfilled) X 240 cars / day X 21.5 production days / month X 12 months 309,600 lbs / year OCC 204,336 lbs / year HDPE

Annual GHG Reductions: GHG Emissions Analysis Summary Report 383 MTCO2E from Cardboard 154 MTCO2E from HDPE www.epa.gov/epawaste/conserve/tools/warm/index

Lifetime GHG Reductions & Equivalencies 1,915 MTCO2E from Cardboard 770 MTCO2E from HDPE Total: 2,685 MTCO2E or www.epa.gov/cleanenergy/energy-resources/calculator

Logistics Efficiencies 1 delivery every 1.5 days 1 delivery every 5.5 days [740 miles roundtrip] After: 1,300 windows/truck Before: 312 windows/truck Reduction in VMT: 112,480 / year

Questions