Returnable Asset and Reusable Packaging Management — The Ultimate Guide
What Is Reusable Packaging and Returnable Assets?
Specialized reusable packaging containers such as crates, totes, cages, and load carriers are used to help package and transport your goods safely. Some types of dunnage—items used to tether, pad, or otherwise protect packages and shipments—are also classified as returnable/reusable packaging items. Regardless of category, reusable packaging is any supply chain item in a shipment designed to be reused, preferably for their original purpose, within a supply chain.
Reusable packaging is specifically designed with durable materials for multiple trips in loops with different manufacturers, processors, and suppliers. This makes it highly critical to know how to keep your multimodal transport operators on track. The reusable packaging is used in tightly managed shipping loops. Returnable/reusable packaging is primarily used for milk runs and thus designed for ongoing use to survive harsh logistics conditions, ensuring effective recovery and continuous use.
Reusable transport packaging is made with durable materials like wood, plastic, or metal and is designed for multiple trips in rigorous logistics systems. It is usually composed of materials that can be easily recovered, re-manufactured, or refurbished. The conventional option for packaging is single-use or expendable packaging, which is designed for one-time use or one-way travel. They are corrugated boxes intended for one-time use post which are either land-filled or disposed of and recycled. Some commonly used returnable packaging and assets are returnable totes, bags, bins, crates, kegs, drums, IBCs (Intermediate Bulk Containers), racks, pallets, cages, tubs, containers, RPCs (Reusable Plastic Containers), and Reusable Load Carriers (RLCs).
There are easily over a billion reusable packaging items like pallets and crates in circulation globally, and most of them aren’t easy on a supply chain’s budget. While single-use corrugated containers could cost as little as $20, most reusable transport items cost between $200-$5000 per unit, depending on the industry, use, and customization. The purchase of returnable packaging assets and subsequent depreciation significantly affect a company’s cash flow and balance sheet. It’s therefore vital to control these hidden costs in your supply chain.
The high capital costs of ownership are why most companies opt to rent or pool their pallets, containers, or other reusable shipping items and supply chain assets. If you are a multinational, however, chances are you are renting.
Which Industries Most Commonly Use Reusable Packaging and Returnable Assets?
Reusable packaging and returnable assets are prevalent in several industries and sectors, including manufacturing (automotive, electronics, electrical, pharmaceutical, chemicals, etc.), consumer and retail product distribution (grocers, stores, healthcare institutions and pharmacies, supermarkets, etc.), and Food & Beverage. Let’s explore:
Food and Beverage
Food & Beverage production and processing (agriculture and produce, meat and poultry, baked goods, dairy, processed foods, fast-food chains, etc.) is one of the biggest users of reusable packaging. The industry benefits hugely from using reusable packaging items like pallets, kegs, RPCs, and racks. Although some in the industry still use wooden pallets since they’re reusable, they’re often used merely once and thrown away. Using considerably durable aluminum and plastic pallets can help save money and reduce the environmental impact wooden pallets have.
Therefore, the food and beverage industry—one of the world’s largest producers of plastic waste—is on the front lines of introducing reusable packaging solutions. This is also because reusable packaging gives the F&B industry a chance to save considerably on costs and become environment-friendly.
The chemical industry uses various returnable assets like shipping drums, tanks, containers, and pallets. These shipping drums also carry sensitive chemicals and hazardous materials. Most of these are polyethylene and steel shipping drums owing to their high durability. These steel and polyethylene drums can be reused indefinitely when reconditioned with the proper equipment.
Another widely held reusable packaging and shipping item in the chemical industry is IBC totes. These returnable totes are made of durable plastic and metal and have an enormous capacity of over 275 gallons. IBCs are efficient and reusable when cleaned carefully. Since they can be reused, these IBC totes help in increasing savings that would otherwise be spent on single-use packaging.
The automotive sector uses various reusable packaging items such as crates, shipping racks, bulk containers, plastic pallets, protective inner dunnage, and lid systems. In fact, automotive is one of the first industries to have started using reusable packaging. Automobile production has a massive throughput. Single-use packaging could generate vast amounts of solid waste in the system, which reusable packaging eliminates. With the increasing globalization of the automotive supply chain, pooling services, transportation space utilization, and part density have become ever more critical, in which reusable packaging helps.
The final product of an automotive manufacturing process is a highly polished new car. Transporting such finished goods requires specialized reusable dunnage and customized outer reusable packaging. Reusable packaging provides more product safety and allows more robust transportation at a lower cost per trip than expendable packaging. These reusable packaging containers also enable the automotive company to precisely present auto parts. This facilitates robotic assembly, better utilization of transport vehicles with stackable containers, and enhanced part density within containers.
The shipping industry is the one that every other industry depends on to move their goods. Since it is one of the biggest industries for reusable packaging, any sustainability created in shipping is likely to reproduce improvements at every level. The industry uses returnable packaging/assets such as pallets, bins, totes, bags, RPCs, cages, crates, tubs, drums, and a lot more. These durable packaging items are built to last and be reused for over decades
Ocean shipping is also one of the significant areas where reusable packaging is used. Standardized reusable packaging comes in handy for better container space utilization. Perfectly stackable reusable packaging containers help with better container utilization and management, especially for LTL (Less-Than Container Load) shipments. There are several sustainable reusable packaging designs now available for use on sea shipments. They not only help in reducing costs and increasing ROI for shippers but also ultimately help the environment. Many shippers now prefer using reusable shipping containers that are reused and re-purposed for various commercial requirements. These containers are not only affordable but also more sustainable.
Reusable packaging items are critical to protecting cargo while in transit, during loading and unloading, and while in storage. Reusable packaging also enables shippers to improve their sustainability by substituting expendable/single-use packaging. It also helps reduce overall spends on returnable packaging.
Why Is Returnable/Reusable Packaging Catching on?
Today, most industries are switching from expendable, one-way/single-use packaging to reusable packaging options in their supply chain to optimize operations and get on board the sustainable bandwagon. There are several benefits to using reusable/returnable packaging options, including those below:
- Reducing overall supply chain packaging costs.
- Reducing waste, making supply chains greener.
- Improving efficiency and productivity through better shipment handling.
- Lowering processing and labor costs, improving competitiveness.
- Better product protection, reduced product damage.
- Greater shipment shelf-life and storage resilience.
- Ability to ship Less than Load (LTL) with minimal dunnage.
- Reduced shipping asset inventory and purchase spends.
- Improved ergonomics and safety features for your workforce.
- Fuel cost savings through the use of lighter shipping assets and lesser dunnage.
What Is Reusable Packaging/Returnable Asset Management and What Are Its Challenges?
Reusable packaging management is everything that concerns managing reusable packaging items and returnable assets. It involves handling reusable packaging inventory, optimizing their usage and costs, and ensuring there aren’t any delays or shipping downtimes because of reusable packaging mismanagement. Although there are plenty of advantages to using reusable transport items, a few concerns hamper their widespread adoption across global supply chains. Some are challenges that crop up due to the inherent nature of these returnable shipping assets, while others are caused by improper reusable packaging management.
Out of these, some of the biggest reusable packaging management challenges encountered while dealing with reusable shipping assets are:
Shipping Downtime: Due to the unavailability of reusable packaging alone, a shipment could get delayed. Imagine having a million-dollar worth shipment waiting just because you have run short of reusable pallets!
Under/Overutilization of the Reusable Packaging Assets: When you’re not aware of the location and availability of your reusables, it is hard to plan their utilization. This ultimately causes under/overutilization.
Over-Stocking to Avoid Reusable Packaging Shortage: The absence of a well-managed reusable packaging inventory management system gives rise to overstocking.
High Inventory Maintenance Cost: Storage and maintenance of reusables can add to overall operational costs like nothing else. And overstocking can impact costs as much as stockouts can.
Risk of Reusable Packaging Theft: At an estimated $800 million to $1.5 billion containers are missing annually. Their replacement alone remains a huge issue globally. Even after several record-keeping systems, the leakage somehow remains due to a lack of proper visibility. Merely adding an extra budget for lost containers every year isn’t going to solve the problem.
To meet these challenges in the best way possible, it becomes necessary to manage reusable containers. Let’s look at four reasons why you need better reusable packaging management
Returnable Containers Cost More Than Single-Use Containers
The biggest hurdle in adopting reusable packaging and shipping assets is probably the initial cost of purchase. Although the “per-shipment” costs for reusable shipping containers are lower over time, they’re still a hefty spend to contend with upfront.
Shipping assets like pallets and single-use fiber boxes could cost as little as $15 – $20, while their reusable counterparts could cost upwards of $75 – $100.
They Require Retrieval
Although reusable packaging items have many advantages, they’re another supply chain asset to deal with. Issues associated with managing reusable pallets or containers pose several added challenges to supply chains, including:
Need for additional labor and resources for reusable packaging management.
Need for additional record-keeping and data entry for tracking reusable shipping assets.
Need for additional processes such as asset maintenance, repair, or replacement.
Unreliable data entry or tracking due to a reliance on manual processes
Difficulty in keeping track of assets due to complex global supply chains.
Smaller companies may get around some of these issues by throwing more workforce at the problem or using more complex paper-based or electronic logging systems. However, these hacks aren’t scalable in the long run. Thus, it’s unlikely that anything short of reliable tracking solutions and a greater degree of automation will help resolve these hassles. It would be best to track returnable containers within a supply chain in real time to manage them effectively. Efficient pallet management can bring agility to your supply chain.
They Could Easily Get Stolen
Returnable packaging or reusables are a pretty big expense for a logistics budget, yet these “assets” are seldom treated that way. They are rarely tracked and managed with the same level of care and scrutiny afforded to other assets in a company’s book. Packaging is, as it has often been, treated like an expendable commodity.
However, not everyone sees it that way. Reusable packaging assets like pallets, crates, and totes have significant aftermarket and salvage value, which is why reusable packaging theft is on the rise. There’s a growing market that thrives on the theft and resale of reusables, especially plastic items (like Reusable Plastic Containers) that can be ground and sold off as scrap. There’s no shortage of unscrupulous elements waiting to capitalize on supply chains that aren’t tracking their reusables.
Pooled Reusable Packaging Items Need Auditability
Large enterprises could probably afford the heavy upfront investments of purchasing and managing containers, as well as the lengthy break-even periods involved. On the other hand, small and medium-sized enterprises (SMEs) opt to share the costs of their reusable shipping assets (and their associated overheads) through pooling.
If you are in a pool, it is essential to manage your returnable packaging well, not only because you’re trying to avoid bottlenecks in your returnables pooling arrangement, but you also need to verify and audit your bills.
Returnable packaging can be a sneaky hidden cost in your supply chain. Learn how to have better returnable packaging management by using this threefold technique: Watch > Calculate > Attack the hidden costs of returnable packaging assets.
Which Bad Returnable Packaging Management Practices Could Cost You Dearly?
The lack of effective tracking and visibility into supply chains leads to inefficient, wasteful practices in supply chains large and small, some of which include:
Overstocking Returnable Packaging Assets
Shipping assets like pallets are usually overstocked because there’s a fear of running out during peak shipping periods.
While that’s a workaround to a problem that stems from lack of supply chain visibility, it’s not an efficient one, and overstocking reusables is one of the key factors that affect your supply chain efficiencies. Containers and pallets cost money, both to buy and to hold, and buffering idle shipping assets is—just like having NPAs—a recipe for loss.
Manual Logging and Billing
A surprisingly large number of complex supply chains still rely on manual record-keeping, tracking, and auditing processes. The human element is bound to create snags, and good old human error means data isn’t always reliably captured, analyzed, or presented. The lack of automated data capture or reliable asset tracking means there’s always a heated debate about discrepancies in asset usage, storage, or detention costs.
Managing large or unwieldy reusable packaging fleets poses several added challenges to supply chains, including:
Need for additional labor and resources for inventory management.
Need for additional record-keeping and data entry for tracking shipping item fleets.
Need for additional upkeep such as maintenance, repair, or replacement.
Throwing more workforce at the problem or using better shipment logging or tracking systems could help, but the most commonly deployed solutions are still manual endeavors. Such systems aren’t scalable in the long run, and anything short of reliable tracking solutions coupled with a greater level of automation can help.
Why Should You Track Returnable Packaging and Assets?
Returnable packaging isn’t just an issue for you. The industry is facing a considerable challenge. Around 10%-20% of annual logistics budgets are spent just to replace missing reusable packaging assets, whether bought, rented, or pooled.
Most supply chains deal with shrinkage between 3% – 20% annually, which makes recovering reusable shipping a significant problem with a high cost. Replacing stolen or missing reusable shipping assets costs supply chains billions every year, with plastic pallet and container losses within the U.S. alone pegged between $800 million and $1.5 billion annually.
Top 6 Reasons to Track Your Reusable Packaging
To manage your reusable packaging better.
To maximize the ROI on your Returnable Transport Packaging (RTP).
To minimize buffer stock.
To reduce lag and avoid downtime in your supply chain.
To get 100% auditability on your reusable packaging, whether they’re rented or pooled.
What Are the Technologies Available to Track Reusable Packaging and Returnable Assets in Real-Time?
Tracking returnable containers, pallets, crates, and bins is easier said than done. There are four primary cost-effective technologies for tracking shipments or reusable packaging:
Hybrid IoT solutions working on BLE/GSM/Wi-Fi
Multi-LPWAN Tags (Nb-IoT, LTE-M, Sigfox)
UHF (Ultra-high Frequency) RFID vs. NFC vs. BLE for Tracking Returnable Packaging
Each of these technologies works by using a gateway hotspot and tags. Tags are attached to the containers. The gateway hotspot senses any tags in its vicinity and informs an inventory tracking software (usually a cloud setup) using a data plan or through the Internet connection available at the premises where the returnable packaging assets lie.
RFID has been available for a while now, and in some forms, since the beginning of the 21st century. It uses a fixed or mobile reader to read passive or active UHF RFID tags as a gateway hotspot.
The read distance with passive tags is very low, which means you need to deploy many readers to assure coverage. Therefore, it is not suitable for effectively monitoring many packaging or containers in a large warehouse.
Active RFID is a better choice because the read distance is high enough to cover the entire warehouse or at least a significant part of it.
Many companies tried using active RFID to track reusable packaging but eventually gave up due to its limitations.
The limitations of RFID are:
Infrastructure requirement: RFID needs connectivity through LAN or Wi-Fi to be present. GSM-based RFID technology isn’t pervasive. The readers are proprietary, which means that you cannot fall back on your smartphone when needed as a reader.
High cost: Active RFID reader-tag technology is proprietary and hasn’t reached economies of scale yet.
Lack of visibility in transit: RFID readers are expensive and need infrastructure. Unlike in a warehouse, such kind of setup isn’t always possible during transportation.
Lack of visibility at your customer’s warehouse: Once again due to infrastructure requirements.
NFC or Near-Field Communication technology is relatively new and works on the same frequency as passive RFID. It works similar to passive RFID, but the read distance is even lower.
Therefore, using NFC to monitor returnable shipping assets would end up bring laborious where:
- Every pallet has to be scanned manually at a close distance during check-in and check-out
- It’s prone to errors as it involves someone scanning the packaging in and out
Thus, NFC, which is becoming popular as a contactless payment system, and solving other consumer applications, is not best suited for monitoring pallets, crates, bins, tubs, etc.
Hybrid IoT (BLE Beacons with GSM/Wi-Fi) – The Best Choice for Tracking Returnable Packaging Assets
When coupled with GSM or Wi-Fi, Bluetooth Low Energy (BLE) Beacons address returnable container tracking almost perfectly.
This is a hybrid IoT technology that uses a portable GSM/Wi-Fi gateway hotspot and BLE beacons. They communicate by beaming signals towards each other just like active RFID, but there are several unique advantages of BLE beacon technology when compared to RFID, some of which include:
- Low energy consumption, which translates to a higher battery life of tags.
- The ability to use a portable gateway hotspot like the “Bee” or even your mobile phone as a reader.
- Low-cost, as BLE components and tags like the BeeBeacon, have reached economies of scale. Bluetooth is also an integral feature in most smartphones today.
- The ability to monitor your reusables seamlessly, in your warehouse, at your customer’s location, and in transit.
Can ERPs Like SAP Help in Returnable Packaging and Asset Management?
ERPs like SAP have a Returnable Packaging module or RTP module, which helps track your returnable packaging stock, but the missing piece is the data collection.
This means that if you can figure out a way to scan your reusable packaging items seamlessly, your SAP returnable packaging workflow can be turned into a real-time tracking solution.
To achieve this, you need an IoT technology that upgrades your ERP’s reusable transport packaging module to function in real-time and rid you of manual check-ins and their associated errors.
How to Successfully Track Returnable Packaging and Assets?
What you need to track returnable packaging successfully is a comprehensive solution. Such a solution would use IoT devices, data analytics, and a control tower for better tracking and decision-making. Let us see in detail what it is and how it works.
Getting Started — Tackling Reusable Packaging
To track returnable packaging and maximize the ROI from your implementation, you need an IoT device-based solution that consists of:
Monitoring your returnable containers, not only in your warehouse but also at your customer locations and in transit.
A data analytics platform that seamlessly integrates with your enterprise software.
Reliable reverse logistics for your IoT devices, so you don’t have to worry about losing them.
Roambee crafted the BeeBeacon solution combining innovative GPS/BLE/GSM/Wi-Fi-based IoT technology with proactive 24×7 BeeCentral and is the industry’s first end to end returnable packaging monitoring solution
Multi-LPWAN Tags (Nb-IoT, LTE-M, Sigfox)
When it comes to monitoring reusable packaging items, multi-LPWAN tags (Nb-IoT, LTE-M, Sigfox) are the newest chip in the block. With the standards of technology it sets, and by the way it manages the packaging containers, it can be safely stated that it is the solution that suits the most and has none of the cons above – it is practically infrastructure-less, facilitates easy installation (just attach tags to the returnable containers), and costs the least of all the solutions.
It can be easily set up by picking the right LPWAN tags and connectivity to monitor your assets without disconnecting and malfunctioning and gathering data for the cloud even when there are low or no signals. This is followed by establishing what your data analytics and alerts can save you and enforcing prompt action.
In short, to start monitoring the returnable packaging assets, all one needs to do is attach the LPWAN tags to the packaging container, and it’s good to go. There is no need to set up anything at any of the facilities since the tags can track the containers independently.
Going by the pros and cons of all the returnable packaging tracking solutions, there is no second-guessing that using multi-LPWAN is the most flawless way to monitor your Returnable Packaging Assets and perfecting the art and science of Reusable Packaging Management. Multi-LPWAN technology is best-suited to monitor your returnable container—in your warehouse, at your customer locations, as well as in transit—across your supply chain.
Steps to Implement a Comprehensive Reusable Packaging Tracking Solution
Tracking your reusables involves monitoring your warehouse, your customer locations, and everywhere in between, especially when they are transporting your shipment.
Your first step is to provide seamless connectivity to enable this seamless visibility, which involves deploying gateway hotspots such as a portable wireless device like the Bee, or perhaps even your smartphone with a monitoring app like Mobile-as-a-Bee (MaaB).
Tag Your Reusable Packaging and Assets
The very first step would be to tag your assets with low-powered IoT tracking devices that would travel everywhere with your returnable assets. Being able to track your reusable packaging would allow you not only to plan well but also always know where one of your assets is at a given point in time—in your warehouse, in one of your customers’ facilities, or still in transit. Lately, solar-powered tracking devices are also available. You can charge these devices using solar power and tag your reusables to track them anywhere. Whichever devices you use must be able to collect and send location data to the cloud continuously.
Secure Your Warehouses and Customer Warehouses
The second step would be to use gateway hotspot devices that work on GSM or Wi-Fi. Make sure you set them up to cover all the areas of the warehouse or customer locations, so you can monitor every container moving in and out.
Integrate your Existing ERP data using a single unified dashboard
This system isn’t complete without data analytics. You can only correctly analyze the data if you have a system to integrate all your data and get unified visibility across the chain of custody. This way, you will always know where each of your reusable packaging assets is, whether any of those is in use or empty, or even lost. Such data analytics will help you make better reusable packaging optimization decisions.
How Can Better Returnable Packaging Management Enhance ROIs?
Savings through better returnable packaging management can be gauged by measuring returns in terms of the following parameters:
Fewer Losses/Thefts: By implementing an end-to-end visibility solution, you can finally quit spending a fortune on replacing missing returnable packaging assets. Addressing the loss/theft problem could easily save over 10% of supply chain expenses every year.
Improved Utilization: A better returnable packaging management system would enable better inventory utilization and reduced handling costs. You can use visibility to reduce overstocking by recovering anywhere between 15% – 30% of extra containers in a supply chain that were earlier held to offset shortages.
Savings on Working Capital Interest: With better visibility into your returnable asset supply chain, you could avoid delays that would otherwise end up accruing interest on your working capital for these extra days. Once these delays are addressed, you can minimize this interest. Imagine savings and the increased ROI it could drive!
Savings on Detention Cost: Once you know their location in real-time, you can avoid the unplanned unavailability of returnable packaging assets. By doing this, you ultimately save the detention costs this unavailability would have fetched—a price that both you and your logistics service provider would pay. This one change could save you anywhere between $20-$100 per day on detention costs depending on the size of your load or its type (FTL/LTL/LCL).
Reduction in Warehousing Costs: By eliminating your excess stock through better reusable packaging utilization, you also get to shave off the rental and operational costs of stocking extra reusable packaging items at your facility as well as at third-party warehouses.