Can the "Common Footprint": stamp out the RPC threat? The "returnable plastic container" caught the corrugated container industry by surprise. The industry responded, in part, by developing the "Common Footprint" for produce packaging, a standard that allows corrugated containers to ship, stack, and display more efficiently.
It is usually difficult to get companies (and industries) to pay attention to theoretical business challenges. People can read surveys and trend reports indicating looming problems, yawn, and put them on the shelf. What really gets their attention is a direct and real threat to their own business.
That's what happened to the North American corrugated packaging industry when returnable plastic containers (RPCs) began to make inroads as a shipping container "solution." While the penetration of RPCs in North America is still relatively small, the retail mega-giant Wal-Mart has adopted them for shipping and displaying produce in their superstores. The advantage of RPCs for produce, according to Wal-Mart, is that they offer a modular solution that makes it easier to stack on a shipping pallet and display at retail, among other benefits. By contrast, Wal-Mart said it was dealing with well over 450 sizes of corrugated produce shipping containers, making it difficult to build pallet loads for shipping and causing product damage. This "system" grew haphazardly over the years as grower/packers each designed their own package to fit their commodity--not the supply chain.
A recent study found RPCs represent about 5% of the total North American produce shipping container market and is concentrated in a few retailers--notably Wal-Mart. While the capital cost of an RPC is about five times higher than a corrugated box, that capital cost can be recovered by using it on multiple trips.
THE COMMON FOOTPRINT STEPS IN
The corrugated packaging industry needed to contain the threat from RPCs while offering a packaging solution that addressed the needs of all points on the produce supply chain--growers, packers/shippers, distribution centers, freight carriers and retailers. The Fibre Box Association (FBA), Rolling Meadows, Illinois, USA, and its member companies developed the Common Footprint Standard, which was formally adopted in February 2000.
According to the FBA, the Common Footprint is a container design standard that "provides the benefits of modularity without disrupting a distribution system that the grocery and produce industries have used successfully for decades." The standard specifies one container footprint (597mm x 398mm, or 23 1/2 in x 15 11/16 in) for full size cases, and a second (398mm x 298mm, or 15 11/16 in x 11 11/16 in) for half-size boxes. Full and half-size containers can be stacked together. Display and non-display container designs are included in the standard. It also specifies interlocking design features, assuring uniform stackability.
The Common Footprint is part of an overall plan for growing the use of corrugated packaging throughout North America, according to Dwight Schmidt, executive director of the Corrugated Packaging Alliance, Indianapolis, Indiana, USA. Schmidt made a presentation on the Alliance at the TAPPI 2002 Corrugated Containers Conference and CorrExpo.
"The Corrugated Packaging Alliance, co-sponsored by the American Forest and Paper Association and the Fibre Box Association, is an industry-wide effort to create a receptive environment for corrugated packaging by using facts and data to maximize the use of corrugated packaging versus alternative forms of distribution packaging, such as the returnable plastic container," said Schmidt.
The corrugated industry must stay competitive in today's marketplace, where cost efficiencies have become paramount to grocery retailers in particular, since they operate on extremely tight margins. As a result, the corrugated industry's primary job should be to develop supply chain solutions for customers, he said.
"We've been absolutely negligent in that regard. Until recently, we've watched while returnable plastic containers have taken over or made major inroads in several markets, such as milk, beverage, auto parts and some redistribution markets. RPC manufacturers are representing their products as a supply chain solution, and historically we have not made a similar case for corrugated packaging. While RPCs may be the best solution for some of those applications, in many cases corrugated remains the superior supply chain solution."
Schmidt said there are several corrugated markets under attack by RPC manufacturers, including produce and case-ready meat. "We have to be on our guard and show clear evidence of how corrugated can serve market needs," said Schmidt. "We should also be concerned about other markets. Any product using a closed distribution loop--such as fast food and salty snacks--is at risk."
Part of the problem is how corrugated packaging has been marketed in the past, said Schmidt. Historically, corrugated has been sold to a single point on the supply chain. "We had developed great relationships with the produce grower/shippers and the meat producers, but in the past we hadn't really looked beyond that to what the real packaging need was."
Schmidt identified several key market drivers for distribution packaging:
* The U.S. dollar, while weakening recently, is still strong, making imports more competitive; exports are decreasing.
* Manufacturing, a traditional major North American packaging customer, is moving overseas. Manufacturing as a percentage of U.S. GDP continues to decline.
* Retailer purchasing power is consolidating. High volume, low-cost supercenters are the fasting growing U.S. retail segment. Supercenters and other high volume retailers maintain low operating costs by focusing on supply chain effectiveness. They are demanding modular packaging solutions that can help them further reduce costs.
A STEP FORWARD
The Common Footprint addresses many of these concerns, said Schmidt, and has been endorsed by major retailers like Albertson's, Kroger, and Wal-Mart. "The Common Footprint directly addresses the perceived benefits of RPCs by matching their modularity and display features," said Schmidt. "The Common Footprint not only distributes well, it redistributes well and can be placed directly on the retail shelf for easy replenishment." He noted that the Common Footprint has been adopted by other countries and by the International Corrugated Case Association, making it a worldwide standard--an important feature, since many retailers use a global supply chain for produce.
Schmidt said retailers are enthusiastic about the Corrugated Common Footprint, but are concerned about reported surcharges from growers who perceive it as a "custom pack."
"We have to convince grower/shippers not to look at this as just another cost to them; we need to present this as a solution for them and their customers. We need to let them know about the benefits, such as increased payloads with reduced damage." For example, research at the University of California/Davis found that the Common Footprint box generated significantly less tree fruit bruising and allowed for a 6% larger payload of fruit than RPCs.
"We also need to offer machinery leases or ownership programs to larger customers, and we need to deliver corrugated Common Footprint boxes already assembled to smaller customers or those who want it as a special pack," he stated.
Roger Landrum, corrugated category director for ConAgra Foods, Omaha, Nebraska, agreed with Schmidt that reduced damage is critical for retailers. He was part of a panel of retailers and manufacturers that discussed food packaging issues at the TAPPI Corrugated Containers Conference.
"The most important product attribute for packaging, especially in the produce industry, is product integrity," said Landrum. He also noted that the modular Common Footprint makes it easy to order and select products at the warehouse and to integrate pallets for shipping to stores. "It also makes it easier to put that product on the shelf right from the truck."
Landrum said display-ready cases can be beneficial for stores and warehouses. "We need packages that are efficient, easy to use, and easy for workers to understand, manage, and display."
Bruce Peterson, senior vice president and general merchandise manager of perishables for Wal-Mart Stores, Bentonville, Arkansas, USA, echoed Landrum's comment about the need for easy-to-use packaging. "Wal-Mart employs about 1.3 million people worldwide. Through attrition and growth, Wal-Mart hires about 750,000 people per year, so simplicity becomes very important. We have to execute a merchandising plan across literally thousands of stores."
He noted that the produce industry uses 470 different sizes and shapes of corrugated containers. "That makes it very difficult to accumulate this merchandise and send it out-bound to a store on a standard 40 in x 48 in pallet."
FOOT IN THE DOOR
Peterson recounted how Wal-Mart began using RPCs. The company was approached by a manufacturer of RPCs for European markets that wanted to sell RPCs to Wal-Mart. "We put this idea through a series of testing methodologies and found that they could be shipped across the country and still arrive at our distribution centers in good shape," he said. "We also determined that we could handle these containers through our existing warehouse racking and picking systems. Finally, we found that we could send a returnable container out to a store and have it successfully returned to the distribution center." The RPGs used by Wal-Mart are collapsible so that they can be shipped flat back to the distribution center.
Wal-Mart also tested merchandising produce directly from RPCs. while this practice is common in Western Europe, it was virtually unknown in the United States, where store employees generally pack the produce out of the box and hand-stack it in display cases. "We round out that merchandising produce direct from RPCs was not only functional, it was desirable."
While noting the benefits of RPCs, Peterson also praised the development of the Corrugated Common Footprint, which was developed with detailed input from retailers and other parts of the supply chain. "For the first time, box manufacturers had come to retailers and asked us, 'how can this box be more than just a transport vehicle? How can it work through a logistics system?' My experience with the Fibre Box Association was terrific."
During the panel discussion, Dwight Schmidt of the Corrugated Packaging Alliance was asked to comment, and he noted that Wal-Mart's use of RPCs was a catalyst for action by the corrugated industry. He also said that he had worked personally with all of the panelists on devising better corrugated packaging.
"Wal-Mart gave as a wakeup call and for that we should all be thankful. They've taken transport packaging to a new level, so now the question is how the corrugated industry can capitalize on that. There are certain products that don't lend themselves very well to RPCs and work best with modular corrugated, and vice-versa. The ultimate answer is an integrated system where certain products will be in RPCs, certain products will be in modular corrugated, and both will work within an integrated system."
Wal-Mart's Peterson commented that communication is one of the most important aspects of packaging design. "One of the most insightful things that Dwight (Schmidt) just said is that he knows the panelists personally. If you go back just 18 months, how many people in the corrugated industry could stand up and say, 'I know the retailers personally'. Why is that important? To paraphrase James Carville, Bill Clinton's campaign strategist, 'It's the logistics, stupid' The biggest transformation in transport packaging has come out of the discussions that have taken place over the past couple of years. The box has become more than just a conveyance from point A to point B. It's become part of a logistical distribution system. Understanding that dynamic is the first step of the corrugated industry adapting to whatever the new world is going to be. The Fibre Box Association and the American Forest & Paper Association have been extraordinarily active, at least with our company, in trying to understand where the future of packaging is leading us."
A BETTER FIT
Bud Babcock, manager, logistics packaging & product identification for Procter & Gamble, Cincinnati, Ohio, USA, noted that historically packaging has been designed to fit the contents that go in it. Consequently, there are hundreds of box sizes that fit individual items very well but the supply chain poorly.
"If you begin to restrict the number of boxes that you have from a dimensions standpoint, this will ultimately provide better logistics as the product moves through the supply chain. Instead of designing a box for the product, you design the product to fit a limited range of boxes," he concluded.
THE CORRUGATING PACKAGING ALLIANCE MAKES THE CASE FOR CORRUGATED
The Corrugated Packaging Alliance, Indianapolis, Indiana, USA, is a non-profit group funded by the American Forest & Paper Association, Washington, D.C., and the Fibre Box Association, Rolling Meadows, Illinois. The CPA's mission is to foster corrugated packaging applications where it can be demonstrated, based on credible and persuasive evidence, that corrugated should be the packaging material of choice. The Alliance sponsors research, studies, marketing and communications. The Corrugated Packaging Alliance has several primary goals, according to Executive Director Dwight Schmidt:
* Change the perception of the corrugated packaging industry from being a single-point solution to a full supply chain solutions partner.
* Prevent government agencies and other organizations from biasing packaging choices in the marketplace. "We oppose legislation that is favorable to RPCs and puts corrugated packaging at a disadvantage," said Schmidt. "We want to make sure that no misrepresentation of evidence about corrugated packaging goes unanswered."
* Address marketplace concerns over non-recyclable corrugated packaging--wax boxes. "This is our Achilles' heel; wax corrugated must be replaced by other forms of corrugated packaging that can he recycled in the normal OCC waste stream," Schmidt noted.
* Implement a coordinated communications strategy to inform target audiences of the corrugated industry's progress and successfully promote corrugated as a packaging material of choice.
* Identify the next market area where corrugated will be challenged. "We got caught napping in the produce area; we don't want that to happen again," said Schmidt. "Our success indicators are that we'll successfully challenge any new market segment penetration by RPCs where we can demonstrate that corrugated is the best solution."
* Establish cooperative relationships between corrugated manufacturers and industry associations to maximize synergy and eliminate redundancies in promoting corrugated packaging.
* Identify and fund projects that generate factual information, and communicate the information to positively affect the attitude and behavior of people that influence the use of corrugated
IN THIS ARTICLE YOU WILL LEARN:
* Why RPCs are a competitive threat to the corrugated container industry
* How the Common Footprint was developed, in part, to help fend off that threat
* What retailers and manufacturers think about the Common Footprint
* The Fibre Box Association, www.fibrebox.org/ModularityStandard. This site includes a description of the Common Footprint, technical specifications, and an informational brochure
* The Corrugated Packaging Alliance. Phone: 800 886-5255, or +1 317 805-4750. Web site is under development
* TAPPI Corrugated Packaging Division. Go to www.tappi.org, click on "Divisions" and then "Corrugated Packaging Division"
About the author: Alan Rooks is editorial director of Solutions! Magazine. Contact him at +1847 472-9065, or by e-mail at email@example.com
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|Publication:||Solutions - for People, Processes and Paper|
|Date:||Feb 1, 2003|
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