Study Substantiates Paperboard Substrate Affects Store Shelf Damage Performance
Phenix City, AL - A unique, supplier-requested, two-phase study conducted by industry guru Mike Ghassali, Sr., Vice President of Genco Damage Research, a Pittsburgh-based company, substantiates that MeadWestvaco's Coated Natural Kraft® (CNK) folding cartonboard can net frozen food manufacturers an amazing 44% reduction in unsaleables. The study, which tracked over 6,500 frozen food products from manufacture to supermarket shelf, also demonstrated that virtually all package damage occurs after the product reaches the supermarket loading dock.
Mr. Ghassali's company, which contributes to the annual Unsaleables Benchmark Report jointly sponsored by the Grocery Manufacturers of America and the Food Marketing Institute, is typically retained by food manufacturers to study distribution, pallet configurations, etc. This is, he indicates, the first time he has been approached by a paperboard supplier to examine the process and assess product responsiveness.
"MeadWestvaco wanted to ensure it was offering food manufacturers a more viable packaging option no matter where in the supply chain the damage occurred," Mr. Ghassali describes. "To my knowledge, this is the first supplier willing to invest money in root cause analysis to confirm its approach to packaging was on target."
By initiating this study, MeadWestvaco was wading into the rather heated industry debate. For years, retailers have been challenging food manufacturers to provide packaging that protects the product until it reaches supermarket shelves, the point at which they believe they take title to that product. Food manufacturers, however, believe the retailer takes title to the product when the truck leaves the store loading dock. After that, food manufacturers contend, they have no control over handling and/or refrigerator and freezer temperatures, both of which contribute to packaging and freeze-thaw damage.
Still, MeadWestvaco Coated Board's Mike Skrovanek, director of marketing, and Dr. T. J. Green, Six Sigma expert and product development manager, believed research was the only way ultimately to compare the effectiveness of the company's CNK cartonboard to SBS (also called bleached board) and other paperboard options food manufacturers currently use to build frozen food cartons.
"Approximately 75% of all folding carton packaging in any supermarket frozen food case is SBS while CNK is a little less than 10%," explains Mr. Skrovanek. "Since the two products are cost-competitive and can be used interchangeably in any manufacturing environment, studying the factors in the supply chain process that contribute to unsaleables offered a more concrete comparison between paperboards."
While some see unsaleables as just part of doing business, the costs to the consumer packaged goods industry for these damaged cartons and containers reached $2.57 billion last year.
"While unsaleables encompass many categories including expired code dates, over-ordering, etc., more than half the returns in the supermarket industry — 57% — are due to damage coming from packaging, handling, shipping, receiving and stocking," says Mr. Skrovanek. "Therefore, if we could determine where the damage was taking place, where the product was challenged — and make a significant reduction in that damage, everyone would profit."
Damage Control Study – Part One
MeadWestvaco approached Genco Damage Research in August of 2003. Its proposition — test whether CNK, the company's most robust cartonboard, protected frozen food content and carton integrity better than that of other paper boards. The supplier proposed following goods from manufacture through in-store stocking to determine where the damage actually occurred.
Genco Damage Research was up to the challenge. Over a three-month period, the company studied 12 items, tracking 3,500 cases from manufacturer through distribution pallet breakdown to delivery of 6,500 units into store inventory. At every step, the third-party researchers tested environmental temperatures of plants, facilities and trucks as well as the condition of the packages. The results indicated that, until the pallets arrived at the supermarket loading dock, there was virtually no damage.
"Basically, you are shipping frozen blocks of ice in very controlled conditions so any damage is negligible," Mr. Skrovanek states. "However, as soon as the product leaves the refrigeration-controlled truck at the loading dock, it is subject to eight to ten touch points as well as changing temperatures between unloading and stocking. That doesn't even factor in in-store freezer inconsistencies that can contribute to freeze-thaw weakening."
Results from the initial study, obtained in April of 2004, were definitive. Damage was taking place at the retailers' location. However, MeadWestvaco was still focused on capturing objective comparisons between packaging materials, no matter who was responsible. Skrovanek and Green again met with Genco Damage Research on phase two of the study.
Damage Control Study – Part Two
"We needed to know what percentage of damage reduction would motivate a food manufacturer to change vendors for cartonboard selection," explains Dr. Green. "With this information, along with published damage rates of frozen food cartons, we could determine the number of cartons we would have to evaluate in the field to show statistically the needed difference."
Based on industry knowledge and polls, the group realized food manufacturers would have to recognize between 20-30% reduction in damage to consider changing paperboard substrates. Further, to achieve a 25% reduction in damage from a statistical perspective, researchers would have to evaluate 21,160 cartons across the list of 30 competitive products on different substrates.
"The large number of cartons to be evaluated was primarily due to the low incidence of damage in the field," states Green. "If you want to find a needle in a haystack, you have to look through a lot of the haystack. However, with this sample size we knew we would be able to see a difference in damage rates between substrates if it existed."
Over the next two months, Genco Damage Research visited 212 supermarkets, measuring the outside temperature and humidity as well as similar readings in three locations within those stores. The researchers then checked the freezer section and conducted the same readings closest to the target product packages.
Once readings were confirmed, researchers assessed the physical condition of available units within the target products list. Packages were photographed and some were purchased to show MeadWestvaco.
"Of the 10,700 products packaged in CNK cartonboard, only 166 were damaged which equates to a 1.55% damage rate," concludes Mr. Ghassali. "In comparison, 235 of the 8,488 SBS carton samples were damaged, a 2.77% rate; and 59 of the 2,533 SUS® (a competitor's unbleached coated kraft board) were damaged for a 2.33% rate. The results substantiated that, when CNK is used to create the frozen food carton, the package more effectively protects against crushing, denting and tearing."
Translating Into Savings
"In damage reduction alone, this means food manufacturers moving from SBS cartonboard to CNK open the door to a potential 44% reduction in unsaleables," states Mr. Skrovanek who demonstrates the savings in further dollars and cents.
"Applying the third-party damage results to market costs per ton for CNK ($870) and SBS ($960) equates to a board cost including damage of 8.5 cents/package for CNK versus 10.8 cents for SBS," he calculates. "In purchasing terms, that means a manufacturer could recognize a savings in unsaleables of $22.55 per thousand cartons or $342 per ton by switching to CNK. For the company buying over 1,000 tons per year, that savings far exceeds the 20-30% motivation for change."
Mr. Ghassali believes this sends a clear signal. "Food manufacturers should look at how much the paper they use is costing them in damages," he asserts. "If they aren't using CNK, they should at least run a few tests themselves and determine if the current paper choice is truly the right one for them."
Ghassali also encourages retailers to use this information to their benefit. "Ask any retailer what is the strongest contributor to unsaleables and he or she will tell you it is packaging," he adds. "Inferior packaging causes more damages and more touch points. Conversely, better packaging means less handling, which equates to less damages. That's good for everyone and avoids the hassles of disposal and submitting for refunds. Retailers who are advocating for a better packaged product should be taking note."
CNK is MeadWestvaco's most robust cartonboard packaging solution. Made of strong virgin pine fiber, CNK offers excellent compression strength, smooth printing surface, uniformity and consistency, and meets FDA requirements for most packaging applications. The main manufacturing facility is located in Cottonton, Alabama, and its European organization is located in Vienna, Austria. MeadWestvaco also operates a sheeting and service facility in Venlo, The Netherlands.