eats filled fast at he Australian Institute of Packaging’s (AIP) technical forum at AUSPACK with attendees keen to hear and discuss key issues facing not only the packaging industry, but suppliers and consumers of food items - not the least of which was the issue of Shelf Ready Packaging (SRP).
The program included several independent sessions covering a broad range of topics, including retailer guidelines and deadlines, high impact consumer packaging designs, shelf ready carton design and machinery options for the new styles of packaging.
Both Coles Myer and Woolworths were invited to present their respective companies views on SRP, but unfortunately Coles Myer pulled out at the last minute. This was disappointing for the delegates who had travelled from all over Australia and neighbouring countries to hear from the architects of a change that promises to alter the processes of all facets of packaging like nothing that those alive today have seen.
Fortunately Rod Evenden, senior business manager – supermarket program office for Woolworths expanded his presentation on what the major retailers want to change, and why, in order to allow them to maximise efficiencies, and hopefully deliver better customer service.
A 23-year veteran of the Woolworths organisation, Rod gave a polished presentation and fielded almost a half-hour of questions. Under Woolworths Project Refresh, shelf filling delivered by “one touch” or shelf ready packages is the agenda, but as with all major change there are obviously other agendas.
Woolworths is Australia’s largest grocery retailer, operating in a high-volume low-margin field with over half of the outgoings in the supply chain, and half those costs being between the back door and shelves at the supermarket.
The company has a nine billion item per annum distribution task and, at store, all will be handled twice, with some a number of extra times. This goal of reducing the handling of these items can be addressed through a variety of solutions - SRP being just one of the alternatives.
Rod discussed specifics on Woolworths’ internal tray design guidelines, encompassing around a dozen different requirements, all of which are targeted to make products easy to fill the shelf and for the customer to buy.
The winds of change have been blowing through the corridors of the retailers, with many generational changes being based on models introduced overseas at supermarkets such as Sainsbury and Tesco in the United Kingdom and other retailers in Europe. Fifteen years ago, stores were measured on net profit, then turnover, but now the thrust is to measure all aspects by gross profit on each and every product line.
Evenden stated that products will continue to be ranged based on customer demand, but more and more Woolworths buyers will also consider the overall profitability of a product, and the cost of filling the shelf is part of the overall profit equation.
As buyers become increasingly aware of the cost to manage a product from supplier to shelf, retail ready packaging and matching the number of primaries per shipper for a given product becomes a critical consideration.
The barrage of questions were answered or taken on notice by Rod Evenden which, coupled with his invitation to “come and talk with us”, showed up his true professionalism and collaborative approach to the issue.
Having set the scene giving the wants and needs of the retailers, Rod handed over the lectern to Amcor Research and Technology design manager Chris Davis to enlighten the assembly as to the approach that packaging manufactures were taking with SRP.
As is often said when a story is relayed, “you had to have been there!”
Chris took us through a roller-coaster ride along Darwinian lines to explain that consumers are hunter-gatherers, and all buying decisions are made by the brain.
The brain has evolved to recognise objects quickly and automatically, attach good or bad to all objects, and packaging is a substitute brain as it is a container of the content. External indicators identify what it is and how it will perform.
Raw food is not packaged as evolution retains the need to be able to determine if it is good or bad, and when processed food is packaged, the package has to conquer millennia of evolution.
Chris was able to convince the members that Vegemite is a brand and a label and, having done that, addressed the intricacies of package artwork and presentation.
Underpinning all package design would appear to be European Union research findings which tell us:
• 75% of all purchasing decisions are made in store; impulse buyers select 150 to 200 brands a day
• 80% of shoppers only deride on brand after entering the store; ore select by colour than by shape
Chris reinforced this research when he said “statistical information is a very important tool for package design” and gave a number of examples.
The ageing population needs single individual portion packs, and also get involved in age complexity.
For every product that has an “effect” on the ravages of time, there is one that will allow one to age without showing signs - or that is what the packaging will depict. Now that there are more males parenting, an increase in products to cater for the way males are wired are entering to marketplace.
Income complexity is in itself a whole subject but one must consider that is the driver for the three tiered “home brands” offered by Coles. It is no accident but paradoxical that the proliferation of ready-to-eat meals are the result of the time famine that modern living dictates.
Surveys show that 85% of Australians like to try new brands and the successful marketers create sustainable brand differentiation.
An example may be where a consumer is purchasing block cheese, against a prominent brand.
The price will determine which block cheese a person will buy but the brand will most likely sell the packaged item no matter what the price differentiation may be.
Consumers have lifestyles based around “I can go anywhere”, and to tap into this generation of fast movers products must call-out: “take me, I can go anywhere”.
The emerging information technology where products actually do call out “take me” will put pressure on package design but will also allow designers to tap into a known function of the human brain: to make out to be what you are not. (Dinkies and yuppies everywhere please note)
Having explained in some great detail how Amcor goes about package image and presentation, Chris moved aside to let George Ganzenmuller, not only Amcor’s national development manager but the National President of AIP, take the stage to relate his experiences with SRP options, the impact of the easy open features and compromise solutions.
SRP solutions generally fit into one of the following categories: Multi-Component Corrugated Shipper, Convertible Corrugated Shipper, Tray and Shrink Pack or Easy-Open Corrugated Shipper.
Each has different levels of presentation and protection for the contents.
George reinforced the requirements detailed by Woolworths’ Rod Evenden, and quickly showed how far technology had advanced since the “cracker barrel era”.
Packaging changes need to fit in with differing shelf arrangements between the retailers, but the example of fresh produce changes was discussed.
The retailers are endeavouring to present fruit and vegetables at point-of-sale in a new format, where the last person to touch the produce is the farmer, on new display lounges to accommodate modular packaging optimised for the pallet.
This area of shelf development is a future possibility for grocery and beverage lines.
George stated “nothing is sure except change when it comes to packaging” and as he related some recent trends none could disagree.
What has been done to date pales into insignificance when future trends are considered.
Time indicators for product stability and shelf rotation, multi compartmented and convertible corrugated shippers are all on the planning table.
Amcor has much detail on carton performance in the supply chain, and have mapped many materials to be compatible with the vagaries of the distribution cycle. But for every positive there is a negative.
Shelf ready cartons with perforations start behind the eight ball as the compression strength of the fibreboard is reduced.
Therefore, the future will hold new styles and materials, and the need to fully integrate the development of primary and secondary packaging for performance is ever more important to minimise overall costs.
George finished by saying that “new distribution and retail processes will continue to evolve over the next several years”, and the big ticket number will be the impact of Radio Frequency idenitification (RFID) tagging and other intelligent packaging technologies.
In the changing consumer driven environment, producers’ decisions will be made about such things as: shopping via retail or via direct purchases on the internet, metal cans or composite packs, cheaper weaker primary packs mean stronger shipper requirements, glass or plastic containers and rigid or flexible systems.
The main theme with change in an uncertain future is to stay as flexible as possible.
The packaging technologists will be developing systems to cater for the wants and needs of both the retailer and the one who pays their bills.
It is clear that shelf ready packaging will deliver benefits to retailers and consumers alike in the areas of security, safety and continuity of supply.
Retailers can demand whatever package suits their needs, and it is certain that packaging technologists will be able to deliver, but nothing will be delivered without packaging machinery.
The organisers had catered for this in the programme, and the first speaker was Greg Windsor, Chairman of Fibreking who opened proceedings by saying that SRP had opened up many challenges.
“It’s not just about cartons. It is the whole supply chain and one touch issues which has put traditional packages under threat, and could obsolete the machinery that has been used to make the packages.”
The machinery manufacturers cater for nine diverse products, from fresh to manufactured, and whilst there may be some overlap they are categorised as: fruit and vegetables, meat, poultry, dairy, beverage, household, personal, pharmaceuticals and petro-chemicals.
Products without stacking strength is a challenge for all players in SRP, but wrap around and regular slotted containers are being modified to cater for the new wave order.
Greg said that the wrap around unit is the still the most practical system for SRP.
He encouraged customers to speak with their machinery supplier before making buying decisions, for he said that the challenges listed above are not the “big questions”.
These he sees hidden in the uncertainty of SRP, how many supermarket shelves will be in a new order facility and why the two major retailers are still evolving their needs whilst some international chains have SRP down pat.
He also threw a cat amongst the pigeons when he questioned how the demands of SRP will balance against the waste reduction and reuse actions that are contained in members’ Packaging Covenants.
Although only in front of the audience for a short time Greg Windsor left most with a lot of things to consider over the next year and beyond.
Members who had spent time in the exhibition halls would have come to the forum room with a feeling that automation was all around. Robotics, together with modern version and futuristic versions of traditional machinery and systems, were the order of the day on the display stands.
So it was appropriate that Visy Automation marketing and international sales manager Barton Jory followed Greg.
Barton reinforced the retailers statements that the last 50 metres of the supply chain is where the most cost-down attention is being paid, and SRP is their panacea.
He then listed the demands being placed on packaging systems, but was decisive about SRP and the automation sector, as there are already many systems operating and delivering SRP unit loads.
As with any system, there are alternative ways of doing the same task, but Jory cautioned that quality may be taken out in demand to change output and reduce cost.
Like others he indicated that the package has to survive the whole supply chain but be able to be made shelf ready with minimum of interruption, preferably with little human interaction.
Automation can minimise handling hazards and at the same time increase throughput with resultant labour savings.
There are some conflicting demands in setting up an automatic system, but handle with care and inherent flexibility will carry the day.
Newer technologies are incorporated in machinery with a major shift in control systems from mechanical to pneumatic and from PLC to Servo Control and PC enhanced.
The accelerating acceptance of robotics has taken even the greatest enthusiast by surprise, but the number of robots working in the exhibition hall was proof that there is a long way to go.
Automated systems will in the future be modular, which will need less space both in packaging and the input/output conveyors, as well as being profiled with remote diagnostics for maintenance and problem solving.
We will also see robots making up mixed pallet loads to order for ease of final distribution at those important last fifty-metres.
The benefits of robotics are many: superior reliability, flexibility in production and feed presentation, optimum product handling for fragile or crushable items and rapid change over with minimal downtime.
When Barton came to the end of his presentation he automatically asked for any questions and fended them better than any robot could. [Well in 2005 at least!]
Last, but not least, was a representative of the group most affected by the retailers push to increase profits and introduce SRP.
Golden Circle packaging manager Ralph Moyle had the task to present an overview of the implementation issues and challenges.
‘Challenge’ is too soft a word to describe Ralph’s critical path analyses of the “eighteen months journey after an elusive target” and the trials and tribulations of a packaging technologist in trying to cope with some “appalling demands”.
Although the discussions are back on track, it is quite evident by Ralph Moyle’s contention (reinforced by Rod Evenden of Woolworths earlier) that the retailers are not yet finalised in their demands, and are also putting different interpretations on the requirements.
As if getting the answer to his basic question, “where do we get the value?”, is not frustrating enough, Ralph is often faced with a product manager and retailer buyer meeting and deciding on packaging.
When you become aware that Golden Circle Canneries have 28 primary packs with 22 packaging lines, all of which retailers have put under threat, you start to have empathy with manufacturers. However, our dominant retailers are powerful, and if Australian manufacturers are not able to comply with wishes, they will simply go off-shore and find a supplier that can.
The final outturn of product does not only impact on the packaging aspect of a manufacturers business, as it can give untrue indicators of competence and quality.
As Moyle said, the demand of SRP on Golden Circle also affects their internal sales and marketing decisions, together with warehousing utilisation and carrier selection.
To change packaging lines and containment units there is likely to be a high capital injection needed with ongoing purchasing and unknown line efficiencies issues, particularly as to the future capabilities of what is installed today.
Ralph Moyle has a story to tell, and some attendees were taken aback by his frankness and professional approach to a subject that is far from complete. His final thought provoker was that the replacement processes evolving under SRP principles may impact on manufacturers’ success.
So where to from here?
As presenters often say when grabbing some thinking time, “that’s a good question”.
The AIP will continue to bring members and guests together each month at meetings in the east coast capital cities, and has already slated SRP as a topic at the National Conference in June 2006.
All of this information is detailed on the web site.
* Nerida is a public relations consultant for the Australian Institute of Packaging