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Letter from Ed: Wal-Mart Packaging Reduction: How Will It Impact Pallets?
Wal-Mart has announced that it plans to go green by incorporating environmental sustainability into its corporate framework. Wal-Mart’s changes are likely to profoundly impact pallets and packaging.
By Edward C. Brindley, Jr
Date Posted: 2/1/2007
Just a few years ago Wal-Mart put RFID on the front burner of business concerns. The winds of change were blowing in the direction of identifying inventory flows. While RFID did not develop as quickly as Wal-Mart and the Department of Defense may have hoped, the wheels of change in that direction did start rolling and continue their trend today.
Well, Wal-Mart is doing it again! The company has announced that it plans to go green by incorporating environmental sustainability into its corporate framework. Wal-Mart’s changes are likely to profoundly impact pallets and packaging. According to its new initiative, this February marks the time to line up at the starting line for packaging change with an eye toward the environment.
Wal-Mart’s private-label suppliers (over 2,000 of its 60,000 suppliers) have already been introduced to its online “green” packaging scorecard, a list of metrics Wal-Mart calls the 7 R’s of packaging. This month, Wal-Mart plans to share its scorecard with the rest of its suppliers. After a one year trial period, Wal-Mart indicates it will use the scorecard worldwide to measure how its suppliers compare with each other when it comes to reducing packaging materials. While the focus is on product packaging, pallets promise to be in the center of action since most packages and boxes move on pallets.
Wal-Mart’s 7 R’s are remove, reduce, reuse, recycle, renew, revenue, and read. The initiatives include removing unnecessary packaging, use materials that are made from renewable resources, achieve goals without increasing costs, and educate suppliers about environmental sustainability.
Issues such as how much greenhouse gas is produced when creating a package, achieving better cube utilization, and use of materials with recycled content are going to be among the things considered.
Retail product suppliers will be seeking ways to improve their environmental scores. Expect them to be looking for suppliers who have more environmentally friendly products using Wal-Mart’s new life cycle analysis.
Pallet suppliers who understand this new paradigm are likely to score points with customers who supply Wal-Mart. If Wal-Mart pushes its environmental initiative, packaging and pallet suppliers who adjust to this new environmental thrust may be able to parlay their own products and services into other markets and customer bases as well.
Since wood is environmentally friendly and easily recycled when compared to other pallet materials, one could argue that our industry should have a good shot at doing well in what may become an interesting battleground. However, I suspect that wooden pallets will present an attractive product in the changing market environment only if we do a good enough job of promoting it. That will include individual company efforts and steps taken by industry leaders, such as the Pallet Enterprise.
Wal-Mart has an ambitious ten year plan to reduce its total worldwide packaging by 5%, which reportedly could save the world roughly $11 billion in packaging during that period. Wal-Mart is talking about significant savings in transportation costs, such as diesel fuel and trucking miles. If it significantly reduces the units loads shipped, it will probably require fewer pallets. But if significant packaging reductions are made, it is possible that heavier pallets to protect more delicate packaging could have a future.
The driving force behind Wal-Mart’s packaging reduction program appears to be reducing box sizes, hereby getting more on a pallet and more in a truck. The net effect is supposed to be a major decrease in packaging. Wal-Mart believes it can reduce solid waste from its stores by 25% within the next three years. Suppliers that aggressively initiate environmental sustainability programs may position themselves to be tomorrow’s pallet suppliers.
Wooden pallets have always been environmentally friendly products because they are made from a renewable resource that contributes very little pollution. Recycled wooden pallets have been around so long that they are now taken for granted, which may reduce the credit that customers are willing to give our products for being recyclable. Our industry has focused on reducing the amount of lumber in a pallet and recycling pallets back through society. We have made significant environmental strides in the past twenty years and may not get much credit for past efforts from our customers.
We have told readers about Dr. Mark White’s Big Idea of looking at the pallet, packaging, and material handling equipment as a complete system, not three individual ingredients. There appears to be a natural tie between the Big Idea and Wal-Mart’s new initiative.
The concept of reducing the use of packaging has to be attractive to society. A successful packaging decrease will probably reduce the number of pallets that are needed. But any shift toward more environmentally friendly packaging may bring with it opportunities for progressive pallet companies. The future could be positive for progressive pallets suppliers. It is certain to be a challenge.