Smurfit Kappa: Leading the move towards sustainable packaging
Smurfit Kappa is one of the leading providers of paper-based packaging solutions in the world, with approximately 46,000 employees in over 350 production sites across 35 countries.
As pressure grows on global brands to become more sustainable, both from consumers and forthcoming legislation, paper-based packaging is becoming the obvious choice for many companies. Smurfit Kappa is working with its customers to help reduce packaging waste through development of innovative, sustainable packaging solutions. This is enhanced through the benefits of its integration with optimal paper design, logistics, timeliness of service, and its packaging plants sourcing most of their materials from Smurfit Kappa’s own paper mills.
As a result, Smurfit Kappa offers a wealth of experience in sustainable packaging and guarantees its customers will receive packaging that is 100% sustainable.
Arco Berkenbosch, Vice President of Innovation and Development at Smurfit Kappa, spoke to us to explain. “Smurfit Kappa was the first in the industry that made the promise to customers that all our packaging is made from sustainable sources; it’s part of our service,” he says. “We simply say, when dealing with Smurfit Kappa, you can tick the sustainability box.”
As well as conscious efforts to reduce waste internally and introduce other companies around the globe to more sustainable practices, Smurfit Kappa has launched, and been involved in, several sustainability-focused initiatives around the world.
Better Planet Packaging is an initiative introduced by Smurfit Kappa to create more sustainable packaging solutions for the future. The initiative seeks to reduce packaging waste and ultimately address the challenges of waste and litter ending up in oceans and landfills.
“We aim to facilitate broader, more meaningful discussions and action on how we can all be more sustainable in our design and use of packaging,” says Berkenbosch. “As leaders in sustainable packaging, we have a responsibility to address this challenge. Better Planet Packaging will help create the sustainable packaging solutions of tomorrow.”
For World Cleanup Day 2019, over 8,000 Smurfit Kappa employees joined with family and friends across 28 countries to collect 10,000 bags of litter and put the Better Planet Packaging initiative into practice. As a company, Smurfit Kappa is committed to making its local communities cleaner and more sustainable places to live both now and into the future.
“It is important to all of us that we live by our sustainability promise outside of work and have a positive impact on our local environments and communities. We are already looking forward to participating in the initiative in 2020,” says Berkenbosch.
As part of its Better Planet Packaging initiative, Smurfit Kappa North America has also become a Planet Partner sponsor of the Earthx2020 event in Texas that will bring together record numbers of concerned environmental citizens, educators, businesses, non-profit organisations and thought leaders to celebrate global sustainability. Smurfit Kappa shares much of the same vision as Earthx2020; promoting environmental awareness and impact through conscious business, collaboration and community-driven sustainable solutions.
As the discussion on sustainable practices is pushed to the forefront, there has been a cultural shift in both corporate attitudes and public perception with heightened awareness of the consequences we could face should we choose to ignore the warning signs. However, the transition from ‘business as usual’ to a more sustainable model has its challenges, not just in the methodology of manufacturing but also the attitudes of retailers and producers.
One of those areas is waste, and Smurfit Kappa encourages businesses to reconsider their perspective on it. Often, waste products can be fed into other aspects of a business to great effect. Smurfit Kappa’s circular approach to manufacturing means that waste is an important material. Berkenbosch explains, “What makes our industry and our products a little bit special is that, when a consumer thinks about old paper, they call it waste; we call it valuable raw material. We always look at everything and think, is there any value in that? The main complication for business, is that they need to think circular, and many businesses cannot do that on their own because they need to consider the entire supply chain. To really make a difference they need to talk to their suppliers, producers, retailers, and governments. This is a nice concept on paper but very challenging in reality. There needs to be cooperation between all kinds of different stakeholders.”
The consideration of necessary resource use has also become a topic of discussion with retailers and consumers adjusting their attitudes towards the use of single-use plastic in everyday packaging. Recycling plastic is a significant step in our journey towards a sustainable future, but even recycling has its limitations and requires resources to carry out. The questions shift towards our use of single-use plastic and how we can cut it out of manufacturing completely.
“The fundamental problem on top of recycling is that we use plastic bottles for drinks. Those bottles have a reason to exist for maybe two years, and yet they will stay on our planet for 500 years. Most plastics used for packaging have a lifespan of 500 years, yet the product it contains has a much shorter lifespan. For example, fruit or vegetables that are wrapped in plastic. You have to recycle plastic many, many times over so the question is: how can we develop more sustainable packaging that can be recycled with the product when it comes to end of life? Is it really necessary to wrap plastic around a cucumber?” explains Berkenbosch.
Speaking of the future of sustainability and the kind of education required, Berkenbosch adds: “To make things move forward, we need to focus more on the long term. From the perspective of the packaging industry, reusing and recycling is great, but the fundamental problem is the lifetime the packaging has in comparison to the product. This needs to be considered.”
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”