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Man at laptop entering data for sustainability ratings

Are You Ready for Sustainability Scoring?

For many companies, the economic downturn in 2020 meant that sustainability was less important than survival. Supply chains were tested, shocked, and stretched with the results being an extended wait for critical replenishment or empty shelves altogether.

The need for sustainable policies didn’t evaporate as businesses continued to call for mitigating their impact on the environment. However, keeping the lights on became the number one priority.

As the country begins to return to some sense of normalcy with the coronavirus pandemic receding and companies in recovery mode, many are looking to renew their pledge to sustainability in the supply chain. Prompted by climate change predictions that are growing increasingly extreme, they are implementing changes with a restored sense of urgency.

To accelerate their aims, many companies are utilizing third party sources to evaluate their operations in regard to sustainability. As the pallet industry can be a vital piece in these efforts, many providers in our industry are getting questions from customers about sustainable practices or are learning more about these ratings. In today’s blog post at Nature’s Packaging, we will take a look at one of these popular third-party sources that customers use to help rate and score their sustainability commitments, a company known as EcoVadis.

Sustainability Scoring-EcoVadis

To date, EcoVadis has rated over 75,000 companies worldwide. They provide a multi-dimensional sustainability rating of companies. The EcoVadis sustainability process is based on 7 core principles that are designed to measure the quality of a company’s sustainability policies, actions, and results.

  • Evidence Based – supporting documents are a critical burden of proof. These can be certifications, policy documents, reporting KPI’s. Credit is given only where evidence is provided.
  • Industry, Location, and Size – sustainability management is evaluated considering material industry issues, presence in risk countries, and the size and geographical footprint of the company.
  • Diversification of Sources – in addition to the evidence based internal supporting documents, the viewpoint of organizations around the company are taken into consideration. These can be trade unions, local authorities, and other third-party organizations that work with the company.
  • Technology – a rating system can only become reliable if supported by technology. Technology is the key to learning, growth, and scalability.
  • Assessment by International Sustainability Experts – supporting documents are analyzed by a team of sustainability experts who keep track of the latest best practices in sustainability.
  • Traceability and Transparency – every document used in the rating process is stored securely and can be traced back. Rated companies have access, if needed, to the most detailed results and to each scoring decision.
  • Excellence Through Continuous Improvement – A professional rating methodology is open to quality controls, continuous improvement, and feedback from stakeholders.

*from EcoVadis Ratings Methodology Overview and Principles

The assessment considers a range of sustainability issues, which are grouped into four broad themes:

  • Environment
  • Labor and Human Rights
  • Ethics
  • Sustainable Procurement

The evidence-based assessments are distilled into scorecards, providing zero to one hundred (0-100) scores when applicable.

  • 85-100 Outstanding
  • 65-84 Advanced
  • 45-64 Good
  • 25-44 Partial
  • 0-24 Insufficient

The scorecards provide direction on strengths and areas that may need improvement. The rated companies can use their scorecards to focus efforts and evolve plans that improve their sustainability performance. A rated company can also compare their score to benchmarks in their industry.

Through their services, EcoVadis provides a platform that drives companies to collaborate with their supplier/partners and have them rated as well. All devised to propel continuous improvement in a company’s sustainability program and bring it to a more comprehensive level.

The sustainable supply chain is a strategic directive for many executive leaders. The benefits of achieving supply chain sustainability are numerous. It can reduce the risk of disruption, serve as a guard for brand reputation, lower costs through collaboration with upstream and downstream participants, and add a significant market advantage with consumers who are much more aware of a company’s efforts to implement a green and responsible supply chain.

For our part, the pallet industry doesn’t struggle with sustainability, we embrace it. The ability to incorporate wood products and processes into a customer’s sustainability goals makes for an easy win when it comes to policies in a company green supply chain. As a service provider to companies that utilize third-party sources like EcoVadis, we have many resources available that will help provide that necessary evidence-based documentation. Visit the NWPCA’s website to learn more, download those important documents, and be ready when your customers talk to you about sustainability ratings and scorecards.

wood pallets with shrink wrapped loads

Choosing the Best Amount of Packaging for Your Product

Products need enough packaging to prevent damage, but no one wants to spend more on packaging than needed. Packaging and pallet decision-makers alike will benefit from having a better understanding of downstream supply chain costs.

Over the last several years, consumer products supply chains have trended towards more frequent deliveries and smaller order sizes. Such an approach has enabled retailers to minimize their pipeline inventory while promoting better product availability – having the products that customers are looking for, on the shelf. However, such a strategy poses different challenges.

Smaller orders may require product suppliers to build multiple SKU pallets for inbound delivery to retail distribution centers. Such an approach translates into extra handling during the assembly of the order, as well as at the distribution center when those same orders are sorted and received. Furthermore, smaller, more frequent retail store orders may result in more case touches for distribution center personnel as they are challenged to stack stable pallets for retail store delivery.

According to experts, around 90% of product damage in the CPG supply chain occurs at the DC or retail location. Further downstream in the supply chain there are more interactions between people and products, which increases the likelihood of damage.

So what exactly is the best amount of packaging for your product? Ultimately, it is the amount that delivers the lowest total packaging cost. Take the graph below.

Packaging cost and Product damage

The connection between packaging cost and the amount of packaging is shown in white, while the interaction between the cost of product damage and the amount of packaging is revealed in red. The total packaging cost per package (the sum of packaging cost and damage cost, is outlined in purple.

The lowest cost per package is located at the intersection point of cost and damage. At this point, an extra penny spent on a package would generate a saving of under a penny’s worth of product damage reduction. In the other direction, cutting the amount of packaging by a penny would result in more than a penny’s worth of incremental damage.

While this approach seems obvious, we are left to ponder why product damage is still an ongoing issue. One reason might be a lack of visibility into supply chain damage that happens further downstream.

If the package design does not reflect all product damage costs associated with a package, then the packaging decision will be suboptimal. A suboptimal package design leaves an unrealized opportunity for supply chain improvement.

By better accounting for actual costs, the product damage cost shifts upward, resulting in a new intersection point – one that dictates an additional investment in a package, as shown in Figure 2, below.

Optimal packaging costs graph

Another way to visualize packaging optimization is with the Innventia AB Model (formerly known as the Soras Curve), shown below.

Innventia AB Model

When a product is underpackaged, excessive damage results in a negative environmental impact. When a product is overpackaged, likewise there is a negative environmental impact resulting from excessive resource consumption and residuals.

When it comes to determining whether or not your package provides the perfect amount of product protection, a collaborative supply chain process is essential. With packaging as with pallets, more accurate supply chain feedback can make a positive difference.

Armed with better information designers and decision-makers can better identify costs downstream, enabling them to select the best package – or pallet – for the job.

warehouse racks with pallets of goods

COVID-19, Supply Chain Trends, and Pallet Selection-What’s Important Now!

warehouse racks with pallets of goods

COVID-19, Supply Chain Trends, and Pallet Selection-What’s Important Now!

The COVID-19 pandemic has impacted supply chains and consumer behaviors worldwide. It has heightened the awareness of sanitation and is accelerating shifts involving shopper format preference and palletized handling automation. Here are three changes to consider from the pallet usage perspective.

Sanitized Wood Pallets

In the wake of the COVID-19 pandemic, concern about pallet sanitation and cross-contamination briefly became a talking point during initial concerns about contact surfaces as a means of spreading the infection.

While that conversation has somewhat faded, sanitation remains an ongoing item of interest for savvy shippers. According to the U.S. Food Safety Modernization Act (FSMA Final Rule on Sanitary Transportation of Human and Animal Food, the design and maintenance of transportation equipment, including pallets, must “…ensure that it does not cause the food that it transports to become unsafe.”

As such, pallet users should ensure that pallets used for food shipments are clean, dry, and sound.

Wood pallets compare favorably to pallets made from other materials. Recently released research undertaken by Institut für Holztechnologie in Dresden on behalf of the European Pallet Association (EPAL) in Germany compared the microbial properties of wood and plastic pallets. It found that bacteria had a lower survival rate on the wooden surface than on plastic.

The wooden pallets are suitable for use in hygiene sensitive areas, including food processing and transport. As stated in the report, wood has natural antibacterial properties that prevent microorganisms from spreading. It reported that wooden pallets have an antibacterial activity that is more than 13x higher than that of comparable plastic pallets.

Consumer Behavior and Wood Pallets

Consider that in April 2020, online retail sales grew by 120%, accounting for almost 10% of everything sold. COVID-19 has acted to change shopper behavior, with more people moving to online ordering and frequenting smaller footprint retail locations.

Likewise, there has been a significant shift away from the food service sector to online and grocery retail as restaurants struggled with closures during the pandemic. Online shopping and the retail formats favored by customers could influence pallet selection in the future.

Smaller pallets can provide easier handling in the narrow aisles of convenience stores and help speed up delivery. An increase in small format retailing would suggest a greater opportunity for smaller wooden pallets.

However, a decrease in supermarket shopper traffic and more home delivery or curbside pick-up would suggest less demand for display pallets for floor and in-aisle placement. The influx of new technologies, such as automated micro-fulfillment systems at retail, increases the efficiency of ecommerce and will help accelerate this trend. Such a shopper behavior shift could dampen the anticipated growth of half and quarter size pallets, as well as point of sale displays.

Current and future consumer behavior shifts add a layer of uncertainty to optimal pallet selection in the food sector. Wood pallets, which can be easily customized to a specified size, as opposed to plastic pallets that require costly molds, provide much greater flexibility and a much quicker response to possible shifts in the wake of the pandemic.

COVID-19 and Supply Chain Automation

Another area of uncertainty is how the pandemic will influence the uptake of automation. A report from McKinsey suggests that in the short term, COVID-19 has negatively impacted capital investment. Several observers, however, feel that the pandemic will escalate interest in automated solutions.

“Automation that shields workers from sickness while ensuring the delivery of critical goods and services could initially be welcomed by workers and the public at large,” one expert observed recently. He observed that companies that invest in automation are “likely to come out faster – and perhaps stronger – as the economy rebounds.”

Automation can affect pallet requirements. Typically, automation requires a quality-controlled and uniform pallet. Issues such as poor-quality or missing bottom boards, missing or damaged components, and excessive deflection can impact pallet performance in automated systems.

If we do witness a rush to automation, pallets must be considered an element of the project design process. And after installation, a robust quality assurance program will help ensure that wood pallets will continue to perform at a high level.

The pandemic has resulted in several uncertainties for supply chain participants, and changes may impact pallet selection. Luckily, the flexibility offered by wood pallets and the industry’s professionalism will enable operators to keep pace with any shifts in customer demand as we transition into the future.

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