External Influences Will Impact Your Packaging

Consider this recent headline: “Tesco pledges to cut packaging by a quarter…”

Supermarket giant Tesco today pledged to reduce by a quarter the amount of packaging used in both branded and own-label products within the next three years.

Uh-Oh! Are you worried? Well, you should be. External influences can shape the face of packaging materials for now and in the future. Many times this will be totally outside of your control. Legislation could be enacted, there could be a product security scare or another incident like 911. All of which could dramatically shape the success and failure of your product and its packaging.

Each January I write a packaging trends piece. It’s about where the packaging industry is going now and in the future and what external influences will drive that change. Trends are an important predictor of where the market is moving. Trends are more long lived than fads. Trends will influence product development for several years and sometimes they will become mainstream.

After reading the headline above, what’s your gut reaction? It better be that this is a serious trend. Not only is the reduction of packaging materials big news so is the use of environmentally friendly materials. What’s driving this trend? It is big box retailers like Wal-Mart and Tesco and more recently consumers.

Read this paragraph:

BENTONVILLE, Ark., – Today at the second annual Sustainable Packaging Exposition, Wal-Mart Stores, Inc. (NYSE:WMT) released the initial results of its Packaging Scorecard. The scorecard, which was officially unveiled at the Clinton Global Initiative in September 2006 and launched on February 1, 2007, evaluates Wal-Mart and Sam’s Club suppliers on the sustainability of their packaging and offers suggestions for improvement. The results from the first month of operation show active use of the scorecard and a strong interest from product suppliers to make their packaging more sustainable. The scorecard implementation is Wal-Mart’s next step in moving toward achieving a five percent reduction in packaging by 2013.

Are you getting the message loud and clear? It is plain and simple, material reduction and more sustainable packaging materials. If you are not considering this as part of your long term packaging plan, then you might have problems down the road. “Green” is here to stay this time.

Besides the green movement what other factors can influence product packaging? What about product security and integrity? Given the rash of recent product recalls (for a variety of reasons) product security has become paramount. States could enact legislation or at the very least mandate that your product packaging has a tracking device. Now this is not the same as RFID, similar, but not the same. The latest devices allow you to track products all the way back to the field it was grown in and it provides a track back for every step along the way.

Some retailers may mandate that RFID be included on all product packaging. Will you be prepared? RFID interestingly is a two edged sword. There are some watchdog groups the feel that the RFID mandate is being taken too far. That is tracking what you buy, how you use it and ultimately how you dispose of it.

Recently, a major outlet demanded that all their vendors not only source their products but their packaging not from China but from the US. Trends like this are hard to ignore. If you are outsourcing your product and your packaging or even just the packaging to another country, do you have “Plan B” in place should this happen to you?

It’s your product and you will need to package it properly while being careful to keep all the external influences in mind. The warning signs are out there. Its up to you to look for them and anticipate the possible influence on your product.

About the Author:

JoAnn Hines is the Chief Executive Officer at J.R. Hines International, a firm providing consulting services in the packaging industry. For over 30 years, Ms. Hines has been engaged in packaging trends, forecasting, ideation/brainstorming and implementing innovative new packaging technologies.

Need insights on packaging trends that can impact your business? Get the Packaging Diva on your team. Visit PackagingUniversity.com to find out about the latest packaging innovations.

How To Become A Wal-Mart Supplier

Wal-Mart Stores, Inc. is the world’s largest retailer, with $218 billion in sales in the fiscal year ending January 31, 2002. The company employs more than 1.3 million associates worldwide through more than 3,200 facilities in the United States and more than 1,100 units in Mexico, Puerto Rico, Canada, Argentina, Brazil, China, Korea, Germany and the United Kingdom. More than 100 million customers per week visit Wal-Mart stores worldwide.

Now, imagine having your product sold in their stores.

From time to time we have customers ask us if we know how to introduce products into Wal-Mart or other large retail stores. The answer we provide is, visit Wal-Mart’s corporate site and look under “Supplier Information“.

There, you will find a complete guide to becoming a Wal-Mart supplier. Some of Wal-Mart’s requirements include:

• Completing the Supplier Questionnaire available on their web site
• Listing your most recent financial information with Dun & Bradstreet (D & B)
• Providing a copy of your most recent financial statements
• Providing Wal-Mart with a copy of your product liability insurance
• Providing your Uniform Code Council (UPC) information

In order to allow you the proper opportunity to formally analyze if your product or service fits within Wal-Mart’s corporate strategies or the market as a whole, Wal-Mart requires that you answer the following key questions. These questions are great questions to ask yourself prior to bringing any product to market.

• Who is the customer with regard to age, average income, median family size, geographical location, population size and expected growth?
• Where is the demand for your product going to come from in the future?
• How will this product help position Wal-Mart to take advantage of this future demand?
• How can Wal-Mart gain market share with your product and, at the same time, control the cost of doing business to maximize sales?
• Who is your direct competition in this market?
• Who is your indirect competition in this market?
• What added value does your product have over your competition that can be passed on to the customer?
• How will your product impact other related products in Wal-Mart’s stores?
• How does your packaging enhance the image and appearance of your product as compared to the current Wal-Mart assortment (i.e. how does the packaging sell the product)?

As you can see, there is quite a bit of legwork that has to take place prior to having your product sold at Wal-Mart… but with more than 4,300 stores world-wide, even a small order from Wal-Mart would have to make your day!

RFID Packaging For Wal-Mart

Do you do business with Wal-Mart?

Soon, all suppliers to Wal-Mart will be required to affix special radio frequency identification, or RFID tags onto all cases and pallets.

Many of the top suppliers are still trying to figure out all this out. How will these new tagging requirements affect them, as well as the effort necessary to meet the goal? Several leading suppliers acknowledge it will be a huge effort.

Once again contract packagers across the national may be called upon to assist in this tagging challenge. As these new scope of work requirements are really no different than changes in the marketplace during the 1980’s when Sol Price opened the first Price Club warehouse stores. Clients are asking for something a little different and until they can find or develop manufacturing systems to handle the problem contract packagers may have the least cost, most effective, and quickest solution to manage the opportunity.

Wal-Mart has identified several key advantages to having these RFID tags used…

• Better tracking and moving of inventory
• Faster receiving and shipping
• Improved quality inspection
• Fewer out-of-stock items resulting in improved shopper satisfaction
• Greater predictability in product demand
• Better value for shoppers as efficiencies occur
• The right products, in the right stores, at the right prices

The RFID tags are not without problems today and Wal-Mart has advised their 20,000 suppliers that they will work with them to address and potential problems:

• Tags cost thirty cents today and Wal-Mart hopes that the price will be driven down to the $0.10 range as more and more suppliers purchase them
• Lack of agreed upon industry standard
• Smart Tag technology is far from perfect, as about 20% of today’s tags do not function properly
• Physical limitations of tags still exist, as tags can not be read through liquids or metals
• Nylon conveyor belts and other radio frequencies can disrupt the tags transmissions in warehouses

Wal-Mart is pushing the envelope of today’s tag technology before this technology is mature. Suppliers too are challenged by the equipping of warehouses and trucks with devices to read data from the tags. These devices will have to have integrated readers that can return real-time information to corporate computer networks. This means that there will be additional costs related to hiring tech consultants and additional hardware.

Wal-Mart is asking nothing more creative than Sol Price did when he started selling multi-packs of product or larger size containers. These companies have pushed the edge of the envelope out for the whole industry.

Contract packagers were there providing special handling and multi-pack services for warehouse club stores then, and many within our industry will be there this year for Wal-Mart’s RFID tags special handling services as well. Finding solutions for uncharted new packaging technology is what many contract packagers, including Aaron Thomas Company, do best.

CNBC reported through MSN Money recently wrote, “Do you speak RFID? Get used to it. This is the tech acronym most likely to get big media play in 2004. It stands fro Radio Frequency Identification Tracking, and with Wal-Mart, the Pentagon, Visa, and American Express behind it, the technology will generate a lot of excitement.” Sounds a lot like what we read about Y2K a few years back.

Four public companies were identified to watch: Zebra Technologies and Printronix as they are both bar-code printer makers that are expanding into RFID printing, Checkpoint Systems a maker of integrated systems for retail security systems, and Symbol Technology a maker of the wireless networks needed to collect data from RFID tags.