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The Meeting of
Two Minds:

Combining “Going Green” with Sound Business Principles

By Elizabeth Abrahams

Take a walk down the aisles of your favorite grocery store. Look at the labeling on those juice cartons and four-packs of butter. Notice anything different? These days, it’s nearly impossible to find a staple item with intricate, much less artistic, packaging. And if you think about it, that new look hasn’t exactly stopped you from purchasing your orange juice, has it?

Why? Because packaging, while important to the consumer, is nowhere near as heavy a factor in determining sales than it used to be. Anymore, shoppers are basing their purchasing decisions on price, and they know ‘green’ shouldn’t equate to expensive. So while tea and coffee manufacturers stick organic certifications and buzz words on their labels but keep their pricing the same, your sales won’t be nearly what they could be. By definition, sustainable goods should actually be priced lower than their synthetic competitors since efficiency improvements result in cost savings. How do you apply this consumer trend to packaging? Understand it’s less about aesthetics and more about functionality. Reducing your packaging or using environmentally-friendly materials and focusing more on practicality rather than image will cut your costs, resulting in lower pricing. And in the process, you become not just a proponent of sustainability, but a true sustainability practitioner.

Form Meets Function
It’s not the first thing you think of when designing your inner or outer packaging, but the density and weight of your boxes and cartons accounts for a large amount of your transportation costs, with some estimates as high as 20%. With the price of fuel increasing as well as your need to replenish your inventory, now is the time to consider alternative packaging.

Start with the obvious and ax the cardboard box from your packaging portfolio. It might be inexpensive on the front end, but waste disposal will be less of a cost center if you rely on reusable containers. Consider the latest move by Rishi Tea to pack their teas in Cell-O biodegradable air cushions. According to the provider, the cushions are 100% biodegradable in the presence of micro-organisms and occupy a small carbon footprint. They also eliminate infestation and humidity issues associated with starch-based packaging. And because they can be deflated and shipped using less than 1% of their original volume, they are lightweight and continually reusable.

If costs look too high for such a dramatic change, consider smaller but equally effective options like improving pack-out. Ask logistics providers who specialize in your product how to increase case and pallet density. They can identify ways to reduce the amount of air you ship with your orders and cut your transportation costs. Not only will you see sustainable and monetary benefits, but you’ll score higher on Walmart’s sustainability and packaging scorecards in the process, strengthening your retailer relationship.

Packaging + Provider = Perfection
A word of caution: Just because you’ve found a way to reduce your packaging or swap biodegradable materials out for synthetic ones doesn’t mean your big idea will find its way into implementation. Cutting logistics costs is impossible if by using lighter materials, you open yourself up to increased damages or contamination. Teas and coffees in particular are highly sensitive to heat and humidity and are liable to take on the aromas of products near them without proper protection. The key to success is balancing sustainable, efficient and sturdy materials with a logistics provider skilled in handling your product.

A reputable provider will understand the complexity of your product, placing it in either a larger, cooler warehouse or storing it an area near the refrigerated section of their facility. They will also know not to place your goods next to items like perfumes and cosmetics that emit. Look for superior customer service with one point of contact and a web-based tracking and ordering system whose technology connects you both to the warehouse floor and to the shipper.

Such is the case with International Coffee Trading, a Miami-based coffee distributor. For their product to be safe, company President Lisa Bagley said they found a logistics provider who not only understood the fragile product’s warehousing needs and provided solid customer service, but partnered with carriers who take extra care to ensure the packaging does not break in transit.

“A provider needs to know coffee is delicate and shipped in burlap bags that easily pop holes or break when you life them with lift gates,” Bagley said. “You want to know you are dealing with people who handle coffee on a regular basis. Look for solid carriers. Stuff happens, and from my experience when providers don’t use truckers that are experienced in moving coffee, I always run into a problem.”

Bagley’s relationship with CaseStack, a leading third-party logistics provider, ensures these problems are rare occurrences. “We’ve had very few problems, and so I’ve gotten to love CaseStack. They take care of the good and the bad, and they work with great carriers.”

The final determining factor when selecting your provider should be the presence of forward-thinking collaborative tools like retailer consolidation. As opposed to sending your pallets less-than truckload, these providers combine your shipments with those of other suppliers headed to the same destination, reducing your transportation costs and potential for damages.

Companies like CaseStack, Hanson Logistics and Millard collaborate with each link on the supply chain to ensure efficiency. The technology-driven program allows retailers to speak directly with the logistics provider. By combining less-than-truckload orders into full truckload shipments you reduce cost and cut carbon emissions at the same time.

Dan Sanker, CEO of CaseStack explained, “Lowering logistics costs doesn’t require lowering service levels or distribution. With our retailer consolidation program, our customers reduce their costs 20-60%. Their transit times are cut in half, on-time deliveries go up at least 20% and the amount of greenhouse gas emitted is much lower, giving them a higher sustainability rating.”

With all the money saved, suppliers can pump more resources into what truly increases business - sales and marketing. They can also renovate their packaging with the savings. Going green is more than just adding organic ingredients and statements like, “all-natural” and “100% pure” to your labels. Consumers are intrigued by the new free trade and 100% pure elements of their tea, but not intrigued enough to pay exorbitant costs. By retooling your packaging with logistics in mind and finding a provider who understands both the connection and your product, you stand to reduce your costs and dramatically increase your sales.

Tea & Coffee - March, 2010
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