Tom Middlemiss, Head of Projects at Culina Logistics, who has been instrumental in the set up of the supply chain packaging joint venture, Culina IPS, believes that suppliers could be missing a trick when it comes to meeting the trend towards retail ready packaging.

I was interested to read recently about a new report published by the Institute of Grocery Distribution (IGD) entitled: Global Retail Ready Packaging and how suppliers are responding to this new challenge to increase their competitiveness. In drawing upon those who have already responded to the challenge, the report seeks to provide insights on approaches to retail ready packaging (RRP).

This included:

Deciding whether it was for them from the outset — in his analysis of the report Stewart Samuel, Senior Business Analyst — Market Intelligence at the IGD, commented that suppliers needed to consider the merits of RRP from a “more ideological or strategic standpoint”, including:

• What is the scale of the change being proposed?

• Can we work to the timelines that have been outlined?

• What degree of internal change will this process drive?

• How does this initiative fit in with other plans that my company is working on?

• What is the business risk of not being part of this programme?

• How are my competitors likely to respond?

 
Level of engagement — the research revealed that suppliers typically adopt one of six different engagement levels when faced with a request to convert their products to RRP. Even for those which are fairly resistant, many continue to maintain some form of engagement in order to understand how roll-out plans are progressing and to better understand the implications for their businesses. Samuel in his analysis concluded that over time, it is likely that many suppliers will develop a different response to the initiative, partly due to their experiences (e.g. gaining benefits and overcoming challenges), and partly due to the response of their competitors.

Offsetting costs: to address increased costs, according to the research suppliers have shown that a range of tactics can be adopted to minimise the overall impact, including

• RRP maximisation — designing solutions to enhance brand appearance in the category, functionality and customer communication 

• Efficiency measures — including converting all customers to the RRP solution and driving procurement savings  

• Negotiation strategies — increase product listing or distribution, increase share of space within the category.

Reviewing supply chain management

Whilst the above are all key insights into ensuring a successful RRP strategy, the report does not cover the importance of food manufacturers reviewing their supply chain management strategies.
Currently there is very little consideration amongst suppliers of integrating supply chain and co-packing activities. This can lead to two highly inefficient and costly scenarios. Firstly, an international supplier of food and drink products could co-pack at source before exporting them to the UK. This means that due to packaging type, efficiency may be lost in the supply chain in pallet and vehicle fill; also where multiple SKUs and clients are involved, the final decision regarding product destination or specialisation needs to be made earlier which can result in higher wastage.

Secondly, suppliers tend to outsource to an independent co-packer which means that product has to be transported between a stockholding facility and a co-packing operation, thereby increasing food miles and inefficiencies. Both of these scenarios and associated inefficiencies can be avoided by selecting a logistics provider that can provide a co-packing solution at their stockholding facility.

This was one of the key reasons behind the formation of Culina IPS. Culina IPS provides true collaboration and integration in the supply chain in order to deliver an RRP solution. This development means that we now offer specialist contract packaging services within our warehouses, negating the need for goods to be transported to and from another location for packing.