Is a Returnable Supply Chain Right For You?
Deciding whether multi-trip, reusable packaging is the best option for your business
Running a manufacturing operation is a difficult job. Running one that spans multiple sites and / or suppliers, is even more difficult.
And this is even before talking about how to do it cost-effectively and efficiently.
There is a lot to consider. From managing the logistics and supply chain through to the manufacturing equipment and processes, raw material procurement, stock management and storage, as well as motivating and training an engaged workforce.
All of this (and much more besides) can make deciding whether to use returnable packaging or single trip packaging seem somewhat insignificant.
However, getting this right can have a surprising impact on your business’ manufacturing productivity, and therefore competitiveness, costs and ultimate success.
Before ascertaining which format is right for your operations, it is important to define what is meant by single trip and multi-trip packaging.
Returnable or reusable packaging – which you may also hear referred to as returnable transport packaging (RTP) or reusable transport items (RTI) – is as the name suggests. A reusable container or tote that will be used over multiple journeys.
These are generally manufactured from durable materials such as moulded polypropylene, corrugated plastics such as Correx®, or indeed other materials such as wood or metal (although these tend to be less common).
Reusable packaging can take the form of bulk containers, hand held totes, shipping racks, dunnage and even pallets.
Single trip packaging, on the other hand, is designed to only make one journey – such as from a factory to an end user – before being disposed of / recycled.
Commonly produced using corrugated cardboard materials, they may also be produced from lightweight plastics, films and even wood on occasion (pallets being a good example here). Most commonly, however, single trip packaging will be corrugated packaging and boxes etc.
Don’t get confused with opportunistic re-use
A key point to note here is that it is fairly common for packaging originally intended to be used as a single trip solution is repurposed and used again.
Whilst this could be argued makes it reusable packaging, it is technically termed as “opportunistic re-use”. So whilst this packaging will realise some of the benefits of reusable packaging in a more limited scope – such as reduced cost per trip and minimised waste – it is for the purpose of this guide still termed single trip.
Examples of this in practice include the (surprisingly common) re-use of wooden pallets until they become damaged, or corrugated boxes that have been used to ship specific components then being re-used to send other products or parts to another point on the supply chain.
Whilst not within the scope of returnable packaging, this does actually present an opportunity for many organisations that may not be ready to fully committing to a closed loop reusable setup.
Where is single trip and reusable packaging most common?
There is a number of points where the use of these types of packaging cross over, whilst there are others where one type is more prevalent than the other.
For example, both reusable and single trip packaging may be used for “inbound” logistics, such as the delivery of raw materials. Service parts or “after market” logistics also commonly use both types, as evidenced in the automotive parts sector and also with the return of damaged or worn items for refurbishment.
However, single trip tends to be most commonly used for shipment of finished goods to the end consumer (even if this is via a retail outlet or distribution network), partly due to the marketing opportunity this may provide, and also the customer burden of returning the pack.
Multi-trip containers and packs are more frequently (although not always) used for in-plant movement of parts and components (i.e. line side totes and handling containers), and are becoming prevalent in recycling applications too.
So why would you choose to use single trip packaging?
There are a number of benefits of using single trip packaging, and that is why it is still popular across a wide range of industries and applications.
Firstly, the upfront cost of purchasing the packaging is lower, due to the lighter weight, more cost-effective materials (i.e. corrugated cardboard) that it is manufactured from.
This point is further enhanced by the fact that less packaging is also required in the short term, as there is not the need for the (potentially) empty return containers that are part of the returnable “loop”.
This not only makes the inventory easier to manage – and can even allow for a just in time stock holding service to be used – but also cuts down the need for collaboration (and the investment / effort this requires) from all entities within the supply chain.
A final advantage that single trip packaging is also inherently more flexible. If a product changes and a different size is required, once the existing stock is used a new version can be implemented immediately.
The main disadvantage of single trip packaging however is the ongoing costs. Whilst initially cheaper, there comes a point where having to constantly purchase new inventory overtakes the cost of setting up a returnable supply chain.
The environmental impact of single trip packaging is also higher (even through corrugated cardboard is easily and widely recycled), and the burden for this disposal or recycling is placed on the end user.
This can in certain situations make it less convenient for those in the supply chain, and can also lead to increased efforts required to comply with Packaging Waste Regulations.
Finally, the levels of protection offered by single trip packaging are usually lower than that of reusable packaging. This is due to corrugated being more susceptible to moisture and impact. This can, in turn, lead to higher numbers of items being damaged in transit, and the associated costs of returns, replacements and delays.
Single Trip packaging advantages / disadvantages summary
In summary, these are the advantages of using single trip / disposable packaging:
Lower (initial) cost
Easier to manage
Suitable for longer distances / dispersed recipients
No requirement for supply chain collaboration
Smaller up front inventory
Flexibility to changes
And these are the negative points to consider before using single trip:
Ongoing / lifetime costs
When would using returnable packaging be more appropriate?
Returnable packaging is already well established in a number of manufacturing industries (being particularly prevalent in the automotive sector / supply chain) for a number of reasons.
Firstly, the “lifetime” costs of the packaging are lower. Although initially more costly (as a higher volume needs to be purchased, and the more durable nature of the materials used), their longevity and reusability make them the more cost effective long-term option.
As a result of this, many companies now view returnable packaging as a capital investment, whereas single trip packaging is viewed as a “cost”.
Besides this, the handling of the packaging is usually improved – being easier to integrate handles, lids and even wheels – than single trip where the cost needing to be minimised inhibits the inclusion of such features.
As well as improving efficiency of handling, this also improves safety of any manual handling too.
The greater strength of the material used in returnable packaging also means that the contents are afforded more protection during shipping, reducing written of stock and the associate costs.
The disadvantages of returnable packaging is that there is a significantly greater upfront cost due to the materials used and also the requirement for additional inventory to ensure there is sufficient for use in all parts of the supply chain.
When not in use, the returnable packaging is also likely to take up considerably more space than single trip (which is usually supplied unassembled), leading to higher storage / warehousing costs (at least until the majority of containers are in the supply chain).
The cost of replacing damaged, lost or stolen containers is also higher, and can be significant if there is ongoing loss of the packaging.
Finally, they are less flexible to changes in requirements (i.e. new products or components that are different in size), although this can be mitigated by the use of internal dividers and dunnage.
Returnable packaging: summary of pros and cons
To summarise, these are the main advantages of opting for a returnable “closed loop” logistical setup:
Lower lifetime cost
Capital investment vs expense
Protection / durability
Improved handling / processes
No end user disposal
Whilst the disadvantages when compared to single trip packaging are as follows:
Increased upfront volume required
Requires collaboration in supply chain
Less flexible once integrated (dividers mitigate)
Availability of space required
Ongoing loss / replacement cost
So should you choose single trip or returnable packaging?
The answer to this really depends on the scale and nature of your business.
The larger your manufacturing or distribution grows, the more likely returnable packaging will begin to make economic sense. However, this will involve taking a longer term, strategic view of your supply chain, and ensuring that all other companies / organisations within it are able to make it work effectively.
Whilst single trip may always have some place in your packaging requirement – particularly if you supply any products or parts direct to the end consumer – utilising multi-trip reusable packaging as much as possible – both through your supply chain and within your manufacturing facility – will realise cost savings and environmental benefits.
For further information on whether you should use single trip or returnable packaging containers, and the options available to your business, please visit the guides section of this website.
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Still can't decide between single trip and returnable packaging?
If you are still unsure on whether single trip packaging or a returnable loop supply chain is best for your business, then please get in touch with a member of the team here at GWP who will be happy to advise.