“Greening” Fulfillment: Making packaging and shipping more sustainable

Authors: Walt Shepard & Henry Walsh

Background

Firms across sectors of the economy are addressing sustainability in more meaningful ways.  Much of their effort today is focused on the processes and materials that go into developing goods themselves, as opposed to the underlying sustainability of a product’s packaging and fulfillment. Both the materials/processes used to physically package & protect goods, as well as the process of moving said goods from point A to B, generate high amounts of waste and have historically been energy inefficient.  This is a problem that has rapidly grown as e-commerce accelerated since COVID-19. To keep pace with customer demand, firms must pay more attention to “greening” the fulfillment process by addressing six key trends:

Sustainable Packaging / Shipping Trends

External pressures driving change

Regulation, consumer demand, and competition are pressuring industry towards best practices. China’s mandates on plastic consumption reporting by retailers, US legislative proposals to ban single-use plastics, the EU’s packaging waste directive, and the UN’s Environment Programme all exemplify the external pressures firms will face to act. Outside of regulation, increasingly eco-conscious consumers are demanding corporations adopt measurable and tangible environmental actions. In response, corporate competition has raised the bar in their implementation of corporate sustainability strategy and best practices. “Greening” the fulfillment process is fast becoming an unavoidable process.

A spectrum of industry standards

BCE has evaluated three industries as examples of current packaging and shipping practices and the range of efforts underway currently.  As you can see in the figure below, some sectors of the economy are far ahead of others when it comes to packaging and sustainability practices today:

Conclusion

Industries must develop meaningful and implementable shipping & packaging efforts to meet increasing expectations of consumers and keep pace with competitors. Several key questions should be at the forefront for companies as they consider how best to approach packaging and shipping sustainability:

  1. [CUSTOMER] How much permission will your customers give you to increase prices in exchange for more sustainable packaging/shipping options in the near term?
  2. [COMPETITOR] Is a more sustainable approach to packaging/shipping a competitive advantage for your firm, or is it required to keep pace?
  3. [BUSINESS MODEL] Can a business model emerge through improved packaging and the implementation of circular product lifecycles
  4. [PRODUCT] Are there certain elements of the product line that can more easily transition to sustainable packaging today?
  5. [REVENUE GROWTH]  What role does a more sustainable packaging and shipping strategy play in helping the firm grow?
  6. [MANUFACTURING/DISTRIBUTION VICINITY] Are there opportunities to onshore manufacturing or disperse distribution strategies to reduce miles traveled in shipping?

The effective implementation of sustainable packaging and shipping practices can help achieve corporate sustainability goals while driving down costs in the supply chain. Corporate action must be taken as customers demand improvements, governments establish regulations, and competitors work towards best practices.

Authors

Walter Shepard

Walter Shepard

Principal, Yarmouth

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