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Wal-Mart’s Scorecard Drives Sustainable Packaging

Oct. 8, 2008
The retail giant is beginning to scrutinize suppliers based on the scorecard and package modeling software.

It’s been eight months since Wal-Mart Stores Inc. (www.walmartstores.com), Bentonville, Ark., officially launched the Wal-Mart Packaging Scorecard, a software tool that grades packages on their environmental friendliness. The scorecard is part of Wal-Mart’s broader, corporation-wide sustainability initiative.

Buyers at Wal-Mart and the company’s Sam’s Club (www.samsclub.com) division have begun using the scorecard to help make purchasing decisions for the foods, beverages and other products the stores stock. That means packaging, especially the environmental aspects, is becoming just as important as the product that’s inside. And, at least at face value, is a consideration ranking somewhere up there with price.

As Wal-Mart continues to move upscale (as at this Orlando, Fla., supercenter) price alone is less of a consideration. Packaging sustainability, in theory, will be an important consideration for suppliers.

“On Feb. 1, 2008, the online scorecard was made available to all of our buyers to use as a tool to make more informed purchasing decisions, and buyers may show preference to those suppliers who have demonstrated a commitment to producing more sustainable packaging,” said Wal-Mart spokeswoman Shannon Frederick. The company’s objective is to reduce packaging in its supply chain by 5 percent by 2013.

Wal-Mart suppliers can use the scorecard to measure how their packaging helps the retailer achieve its goals to be supplied 100 percent by renewable energy, create zero waste and sell sustainable products. The package receives a grade based on the results of the scorecard, and suppliers gain insight into how they can improve their packaging.

As of August, 8,199 unique vendors had accessed the Packaging Scorecard Web site, and more than 170,000 items had been entered into the system. 

Introduced initially for suppliers to U.S. Wal-Mart and Sam’s Club stores, the scorecard eventually will be available to companies that supply stores and clubs in other parts of the world. The scorecard currently is rolling out in Canada, and Latin American and European versions are in development. Insiders expect the international versions to roll out in the next two years.

Having up-to-date materials data in the scorecard is important — assuming your new data is more environmentally favorable than your old data in the scorecard — because packaging materials play such an important role in a package’s performance on the scorecard.

Specifically, the nine metrics that form the foundation of the scorecard are:
  • Greenhouse gas emissions created during package production, with a weight of 15 percent.
  • The packaging material’s sustainability, weighted 15 percent.
  • Average distance the material is transported, 10 percent.
  • Package-to-product ratio, 15 percent.
  • Cube utilization, 15 percent.
  • Recycled content, 10 percent.
  • Recovery value, 10 percent.
  • Renewable energy use, 5 percent.
  • Innovation, 5 percent.

In other developments, Wal-Mart is creating updated reports to make it easier to compare packages provided by individual suppliers and those from competitive suppliers within product categories.

“All the raw data in the scores has been entered. Now [Wal-Mart is] trying to take that data and make interpretations and do comparative analysis,” says Drew Gilchrist, business development manager for Wal-Mart and Sam's Club for Vanguard Packaging & Display (www.vanguardpkg.com), Kansas City, Mo. That focus is “helping lead into further dialogue and discussions with the suppliers of Wal-Mart.”

The proof is in the packaging

The fruits of Wal-Mart’s drive for sustainability are apparent in the surge of environmentally friendly packages for food and other consumer goods on its shelves.

No longer a heavily discounted haven for private labels, Wal-Mart is moving swiftly into higher-end grocery products, such as organic dairy from the leading manufacturers.

Earlier this year, Superior Dairy Inc. (www.superiordairy.com), Canton, Ohio, began supplying Sam’s Club stores in several states with a new, boxy milk jug in place of traditional milk jugs.

The new package, which is more space efficient and stackable than traditional jugs, can be packed onto trucks more efficiently. And the new package, unlike the one it replaces, requires no crates for product protection. The square-profile, flat-top jugs are stacked with corrugated trays between each layer, and the stack is shrink wrapped.

The new package’s key environmental benefit is a significant reduction in the number of trucks hauling milk from the dairy to Sam’s Club stores, which translates into reduced greenhouse gas emissions.

The new jug “ships more efficiently, allowing 9 percent more product on a truck, or approximately 400 more gallons,” says Wal-Mart spokeswoman Frederick. “Trucks packed more efficiently—or ‘cubed out’—will result in fewer trucks overall needed to ship the product.”

Canton, Ohio-based Creative Edge Design Group Ltd., which is owned by Superior Dairy, designed the new jug.
Wal-Mart is working with the suppliers of its private-label products, as well, to improve packaging sustainability. Even small changes to packaging are yielding valuable rewards, as illustrated by a change to Wal-Mart’s Great Value yogurt packaging.

The yogurt, with sales of approximately 120 million cups per year, originally was packaged in a cup with a plastic lid over a plastic seal. The redesigned package features a foil lid printed with product information. Wal-Mart estimates that replacing the plastic lid and seal will eliminate 930 tons of greenhouse gas emissions annually.

No longer just a dry goods store, Wal-Mart has become America’s leading grocer.

For a different private-label product, Member’s Mark apple juice, Sam’s Club worked with the supplier to create a more earth-friendly package. The redesigned packaging is produced using 100 percent renewable energy generated from hydroelectric plants that use moving water to generate electricity. The package converting process also has realized a 35 percent gain in energy efficiency by integrating new technologies.

Wal-Mart also uses packaging made from a corn-based biopolymer manufactured by NatureWorks LLC (www.natureworksllc.com), Minnetonka, Minn., to package fresh produce. All of Wal-Mart’s cut fruit and 40-oz. vegetable trays currently are packaged using this sustainable material, and some 9-oz. vegetable trays, bags of spinach and green onions also are packaged in it.  

Wal-Mart reports that when it changed the packaging on just four produce items to the biopolymer in 2005, it saved approximately 800,000 gallons of gasoline and prevented more than 11 million pounds of greenhouse gas emissions from entering the atmosphere.

Those kinds of examples are music to the ears of packaging suppliers that sell environmentally friendly packaging, like Delkor Systems Inc. (www.delkorsystems.com), Circle Pines, Minn. 

Much of Wal-Mart’s organic produce already has been packaged in NatureWorks biopolymer, which is biodegradable and made from a renewable resource (corn).

Delkor produces a materials-saving alternative to corrugated boxes called the Spot-Pak package. The package’s design uses corrugated pads to provide rigidity and hot-melt adhesive to temporarily bond individual packages to the corrugated. Shrink wrap secures the packed bundle.

Wal-Mart’s initiative, and the sustainability movement overall, “give license to a lot of manufacturers to try something new and unusual” in packaging their products, says Peter Fox, director of sales at Delkor. More beverage companies, for example, are starting to use the Spot-Pak package; dairies were the concept’s early adopters.

Companies that have historically felt strongly about packing their products in a conventional corrugated box are rethinking that model. “Now they’re getting a big retailer like Wal-Mart saying it’s OK not to put it in a box,” Fox says. “So suddenly there’s a lot more interest in talking with us and seeing what we can do.”

Contemplating phase 2

The scorecard has been perpetually evolving since Wal-Mart introduced it in test mode in November 2006. Packaging industry trade groups continue to gather information on the environmental impact of specific packaging materials — data that will be imported into the scorecard as a basis for calculations.

The Fibre Box Assn. (www.fibrebox.org), Elk Grove Village, Ill., is nearing the completion of a life-cycle study that will deliver updated data on the environmental impact of corrugated board. When the results become available, the association will hand over the data to GreenBlue (www.greenblue.org), Charlottesville, Va., a sustainability-focused nonprofit that has partnered with Wal-Mart to funnel the data into the scorecard.

Others providing data for the scorecard include the U.S. Environmental Protection Agency, the American Chemistry Council and Wal-Mart and Sam’s Club associates in functions such as merchandising, logistics, transportation, operations, global procurement and marketing.

Throughout 2008, the Wal-Mart Packaging Sustainable Value Network (SVN) has been fine-tuning the calculations used in the scorecard’s calculations. The SVN includes several hundred members from government, non-governmental organizations, academia and industry.

Know the Score

How much packaging considerations are worth in the Wal-Mart scorecard

Greenhouse gas emissions 15%
Packaging material sustainability 15%
Distance transported 10%
Package-to-product ratio 15%
Cube utilization 15%
Recycled content 10%
Recovery value 10%
Renewable energy use 5%
Innovation 5%

Food companies participating in the SVN include Kellogg Co., Tyson Foods, Del Monte, Kraft Foods, PepsiCo, Unilever and Procter & Gamble. Packaging suppliers also are represented on the SVN.

At its spring 2008 meeting, the SVN began discussion of phase 2 of the scorecard’s development. Phase 2 of the scorecard is expected to roll out in 2011.

In Phase 1, the SVN has focused on populating the scorecard with data and metrics relating to the environmental impact of producing packaging materials from raw materials. The initial work has not looked at the impact of converting those materials into more complex materials, such as multi-layer laminates.

“In Phase 2, we’re moving into the actual converting operation—if your converting operation is bringing on renewable energy, things of that nature,” says Vanguard’s Gilchrist. Vanguard is a member of the Packaging SVN.

Improved modeling software

The scorecard’s adoption has fueled many side projects, including development of package-design tools. Wal-Mart’s Package Modeling software, as an example, enables suppliers to determine how changes in materials and processes can improve their scorecard results and reduce their packaging’s environmental impact.

Wal-Mart, together with Solon, Ohio-based ECRM (www.ecrm.marketgate.com) and ECRM corporate affiliate Thumbprint Ltd. (www.ithumbprint.com), developed the Wal-Mart Stores Inc. Package Modeling software. The software is available through Retail Link, Wal-Mart’s supplier-only web site.

In just the past few months, “We have made some really huge improvements to the Package Modeling software,” says Thomas Velardo, IT publications editor with Thumbprint. “Back in February 2008, the Package Modeling software mirrored what was available through the scorecard. You had to fill out a scorecard and set up a list of packages you would make comparisons with. The new version of Package Modeling is a lot more powerful. It lets you do comparisons on the fly and makes the management of those packages a lot easier.”
Specific improvements to the Package Modeling software include:

  • A new layout that make it easier to access the program’s features and, consequently, find possible sustainability improvements.
  • A feature through which users can enter custom material costs to determine the total material cost of a package.
  • The ability to import/export package and comparison data for easy sharing among users and for scorecard submission.
  • Custom report printing.

In addition, information about packaging suppliers is now easily accessible through the Package Modeling software, which encourages collaboration between packaging buyers and suppliers. Product and company data for packaging converters also is available for raw material suppliers.

Note to Logistics

Minimizing product damage during distribution always has been essential, and it remains a key component in reducing waste and improving sustainability. Thus Sam’s Club has partnered with the International Safe Transit Assn. (ISTA) (www.ista.org), East Lansing, Mich., to develop packaged-product performance tests based on the Sam’s Club distribution environment.

The project teams have been visiting suppliers’ manufacturing sites in countries such as India and China to collect data on distribution conditions that packaged products experience between the factories and Sam’s Club stores.

The test protocol will subject packaged products to simulations of the hazards inherent in distribution, such as shock and vibration, at realistic hazard levels. The protocol will enable suppliers to design packaging that doesn’t under-package — or over-package — their products.

Some suppliers may find they have been testing their packaged products to too high a standard and that a less robust package would provide sufficient product protection in Sam’s distribution environment. Reducing the amount of package materials could improve the package’s score on Wal-Mart’s Packaging Scorecard, as well.

“If you’re using too severe a test, that would make you over-package,” says Ed Church, executive director at ISTA. The test protocol “will give you an idea of how over-packaged you may be against specific hazards.”

Of course, the test protocol also will indicate which hazards the packaging is not standing up to and what parts of the packaging need to be redesigned to provide better product protection.

Sponsors of the ISTA/Sam’s Club research include ConAgra Foods, General Mills, Hershey Co. and Kraft Foods. ISTA hopes to recruit five more sponsors for the project.

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