Costs and containment Featured

8:00pm EDT March 26, 2009

In any industry, you know what can happen when your sales and marketing departments are not on the same page as your manufacturing and operations. Robert Pierson encountered this type of disconnect at a chicken processing company in Northern Ireland.

“A supermarket chain wanted to buy chicken from the processor, but the market had very expensive packaging requirements,” he says. “Their salespeople had agreed to material requirements for the packaging that they didn’t really understand. So it ended up not being nearly as profitable as it would have been if they had understood the cost of the packaging.”

As chair of the department of food science and management at Delaware Valley College, Pierson has developed a certificate program in packaging that fills the void of college-level packaging courses that are available online.

Smart Business spoke with Pierson about how the industry is changing and how you can adapt to keep up.

How can learning about packaging benefit business owners?

It’s an inexpensive way to educate your staff so all the parts of your company work together and save a lot of money.

If you go into an average supermarket, there are about 10,000 items on the shelves. Every one of those has packaging and a series of people involved in the packaging of it. There is the design of the box, the design of the product, the safety of the product, the shelf life of the product, how the product fits into a box, how the box fits into a case, how that case fits into a pallet and how we get it from here to there safely, without all the potato chips getting crushed.

Say you’ve designed these great containers, but you can only fit four in a case. To ship a pallet costs a fortune because the product is not an efficient shape to ship maximum quantities or there is too much breakage from one point to the other. If you are aware of this ahead of time, you either work with everyone to make sure it happens right or you don’t make the product at all because it’s not practical. You can have the greatest product in the world, but if you can’t get it from here to there, what good is it?

Understanding the packaging process and that relationship between marketing and manufacturing solves a lot of problems.

How are recent changes affecting the packaging industry?

We’ve seen a lot of innovations in the food and pharmaceutical areas. Traceability is where you’re seeing the most changes, because of today’s concern with food safety. They have technologies today that can label foods with edible micro-tags. You can scan a bag of lettuce and know exactly what part of the field it was harvested from.

Many companies are going beyond the government’s regulations. For example, Wal-Mart wants to implant radio frequency chips on every product. This would allow them to track products so they can tell exactly where their inventory is at all times.

Basically, you could get in line at Wal-Mart and they could just scan the radio frequency of the items. You wouldn’t even have to unload your cart. Just fill up your bags and walk through and it will tell you how much your items cost. I think that’s something you’re going to see within the next four or five years.

There are many different devices to coordinate traceability, and one benefit is cutting down on store theft. You used to have a big, clunky device that they would deactivate for you in the store. The new anti-theft devices remain in place for the life of the product. If thieves can’t remove the devices, shoplifting goes down pretty dramatically.

How are changes in the industry making an impact on safety and environmental issues?

You see the importance of environmental issues every day. Bottled water, for example, has become very popular. It’s pure profit. So companies put that money in the packaging. You’re seeing the reverse of that lately. Companies like Pepsi and Coke have the largest market for bottled water. They own Dasani and Aquafina, but they also own the small brands like Deer Park and Poland Springs. They’re going with packaging that is more environmentally sound. By using less plastic in their packaging, they convince consumers that they could strain the environment a little less by drinking this bottled water as opposed to a competing brand.

Companies know that environmentally friendly packaging can also help them cut costs. If they can save a penny on a bottle, it doesn’t sound like a lot, but by taking a little plastic out by re-engineering the packaging, a company like Aquafina or Dasani could save millions of dollars a year.

You need just enough packaging to protect the product and make it attractive and convenient to consumers. For the sake of the bottom line and the environment, less packaging is more.

ROBERT PIERSON is the chair of the department of food science and management at Delaware Valley College. Reach him at (215) 489-2474 or robert.pierson@delval.edu.