Key Challenges for Sustainable Sourcing of Packaging Materials

Packaging is the activity of producing containers for a product to prepare it for storage, transportation, use, and distribution. The primary packaging materials are plastic, paper, and glass. It is estimated that 141 million tons of plastic packaging is produced in a year. One-third of plastics end up disposed and processed into incinerators or put into landfills. This process produces carbon and is then released into our atmosphere. Thus, companies must do more to adopt sustainable practices in their packaging products. Although the technology in developing alternative materials has improved vastly, the mechanical and transport properties of sustainable materials need to advance further to be considered as alternatives. This article addresses the challenges in sustainable sourcing and what can be done to mitigate these risks.

Higher Cost

The lower availability of sustainable and recycled materials offered in the market has led to higher costs of sustainable procurement practices. The development of sustainable materials requires companies to invest in extensive research and development, often leading to higher costs. Recycling materials take up considerable resources to gather, clean, break down and repurpose. These additional steps in the supply chain and manufacturing process incur higher costs that, in most cases, are passed on to the consumer. Although consumers are now more willing to pay higher prices for sustainable materials, there is a need to evaluate and strike a balance. Manufacturers of fast moving consumer goods (FMCG) that have smaller profit margins will face significant challenges in tackling the higher price of incorporating sustainable packaging options. Products of higher value might not face similar challenges, as the profits can cover the higher packaging material costs. Firms can look to approaching packaging distributors who have the expertise and can purchase in bulk to lower their costs.

Optimizing Material Performance

The challenge to adopting sustainable packaging is ensuring that the material provides companies with an alternative without compromising quality. If there is a need to compromise on quality, most firms will be reluctant to drive sustainability efforts. The sustainable material must be able to protect the product as intended during transport, storage and delivery to the customer. Additionally, sustainable materials are often biodegradable. The shelf life of the product may be shortened due to the packaging material. Firms may end up with products with shorter shelf life, or more cases of damaged goods being reported if the packaging is not as effective or durable. The first step to tackle this issue is to conduct thorough research and development into alternative materials. After conducting research, samples need to be obtained and tested to determine the suitability of the material. Alternatively, firms can approach packaging distributors who specialize in packaging materials to propose and source for them. Packaging distributors have wide networks and can obtain economies of scale when negotiating with various packaging manufacturers, potentially lowering the cost of purchase.

Underdeveloped Infrastructure

The purpose of driving towards sustainability is to reduce carbon emissions. Packaging materials are often one time used and disposed of after serving their purpose. The discussion of sustainable sourcing of materials must include the entire life cycle of the product, including manufacturing to waste management. Without proper waste management infrastructure, sustainable materials will eventually be leaked out of the circular economy. Around the world, there is insufficient recycling and waste management infrastructure. According to McKinsey (2020), plastic waste mostly ends up disposed of as garbage. 25% are incinerated and 40% of plastic waste are being sent to landfills. The current rate of 16% plastic waste is recycled to make new plastics. This statistic shows that the current recycling infrastructure is inadequate to meet sustainability goals. Governments have been implementing measures to drive sustainable packaging to address the current situation. In Singapore, single-use plastic bags are strongly discouraged from use and a five-cent charge has been imposed for all plastic bags. This implementation led to a drastic fall in consumption of single-use bags. Singapore has also introduced the National Recycling Program, where recycling bins are placed in convenient locations for citizens to recycle their waste appropriately.

Lack of Subject Expertise

One challenge of sourcing sustainable packaging materials is the lack of subject expertise. Sustainable packaging is currently in the developing stage. Thus, procurement professionals may still be unfamiliar with what is available on the market. Due to the lack of knowledge of the industry and the benefits it can potentially bring, some companies may have difficulties driving the change toward sustainable packaging. Tackling this issue requires commitment from organizations to initiate sustainability goals. Advocating education and investing in training by external vendors for different departments will help staff to have a deeper understanding of the industry. Governments can also drive the initiative by conducting or subsidizing training programs for organizations. Knowledge of the market availability is an important aspect of education for procurement professionals in terms of sourcing. Without this knowledge, it is difficult to source for the correct materials required.