Value-added packaging from Georgia-Pacific

With its Packaging System Optimization Program, Georgia-Pacific Packaging looks beyond the container to save its customers money.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 4/12/2007

Back in the 1990s, Georgia-Pacific Packaging was a run-of-the-mill packaging company, according to Brian Reilly, GP Packaging’s director of marketing and business development.

That meant the packaging supplier looked at a customer’s problems through the lens of what it made and how GP could sell more of it into a manufacturing plant or distribution center.

About that time, GP went lean in its manufacturing facilities. When the company started reaping the rewards internally of doing more with less, it realized the way to deliver real value to customers might come from helping them optimize their processes. “Even if that means selling them less of the materials we sell them,” says Reilly.

While every company wants to save money, minimizing packaging is now an imperative, especially for consumer packaged goods (CPG) companies shipping to Wal-Mart, which wants to reduce packaging 5% by 201 as part of its sustainability program.

Enter the Packaging System Optimization Program, or PSO for short. The program was developed at Georgia-Pacific’s Innovation Institute, a creative, collaborative environment where Georgia-Pacific and customers identify and reduce supply chain costs, increase shelf velocity and measure sustainability factors. The Innovation Institute simulates retail and packaging environments, allowing customers to experience sustainable innovation and novel package design solutions in action.

The process begins with a one-day audit by of a customer’s processes by a team of GP PSO engineers.

“We’re going to look at how they use packaging in their operations from the time our product hits their dock door until it leaves the shipping dock, and sometimes all the way to their customers’ dock doors,” says Reilly.

The audit
The audit examines nine points for cost cutting.

The first five points look at the packaging itself, including package design, the amount of fiber content in a corrugated box, and opportunities for alternative packaging.

“Forty percent of the savings we can deliver come from those areas,” Reilly says. The other 60% comes from looking at the bigger picture. “We’ll look for processes where automation, like an inexpensive case erector, might reduce labor costs on the line,” says Reilly. “In the warehouse, we’ll look for different ways to stack and store packaged products and more efficient materials handling solutions.”

Using the PSO program, GP Packaging has identified more than $180 million in annual savings for customers participating in the program like A.O. Smith. “For many of our customers, Wal-Mart is their biggest customer,” says Reilly. “Our message to them is: Why wait until 2012 to meet the Wal-Mart mandate. They can begin to cut costs and drive sustainability now.”