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Building Better Business with Sustainability

As upstream supply-chain partners for retailers and downstream partners for growers, consumer packaged goods (CPG) manufacturers and co-packers live with the bullwhip effect. The bullwhip effect causes more significant upstream order variability and inventory requirements because of downstream signals, demand, and pricing. As the changes and signals travel up, each link in the supply chain reacts, which becomes a signal for the next link. The stimulus and response both grow as they move upward. Proctor and Gamble and IBM separately documented the effect; P&G found it in their Pampers baby diaper product line and IBM in the launch of the Aptiva personal computer – both in the mid-1990s.

Mid-stream partners feel bullwhip effects

CPG manufacturers and co-packers are especially susceptible to these problems because they sit between a variable demand generator, retailers, and a variable supply source, farmers, and growers. The solutions to the bullwhip effect are increased information sharing, better channel alignment, and improved operational efficiencies at each level of the supply chain. Over the past few decades, improvements in communications technology, inventory management software, and increased retailer competition have driven efficiencies and increased productivity in the retail produce supply chain.

Consumer demand drives initiatives

Consumers today are growing more aware of how their food is grown, how it is packaged, and how it is brought to market. Retailers want their customers to think of them positively, so they launch efforts to meet those demands. Consider these corporate-wide efforts from some of America’s largest grocery retailers:

  • Walmart wants to double the sales of locally-grown produce in the United States
  • Kroger will use at least 20% post-consumer recycled content in its private label packaging
  • Albertson’s will provide clear recycling communications on their private label packaging, including the use of QR codes, by 2022.

Bullwhip effects are varied, too

Not all bullwhip effects are equal. Some travel from the end consumer up to the first link in the chain, while others find their end mid-stream. For example, Walmart’s push for local produce will change what growers will plant and where manufacturers source their inputs. On the other hand, Albertson’s and Kroger’s packaging demands will affect how co-packers and CPG manufacturers produce their goods. These requirements mean increased variability – more packaging variants, changing requirements, frequent line changes, and more. Each brand comes up with its initiatives, each one of those is a new customer requirement for you, the manufacturer or co-packer, to meet.

At Greif, we help our customers adapt to the changing packaging landscape through a discovery and onboarding process that puts the product, the package, the producer, and the process at the center of our efforts. We work to help our customers use adaptability and flexibility as a competitive advantage in today’s dynamic, sometimes chaotic, market.

Exclusive sustainability toolkit

If you’d like to learn more about how Greif CPG can help you better meet the customer requirements of tomorrow – we’re excited to let you know about our new sustainability toolkit!

  • Our latest ebook: Growing Challenges in the Consumer Packaging Supply Chain
  • Infosheet: Recycling and Reconditioning Services for Mid-Stream Manufacturers and Co-Packers 

Do you have a challenge that you need to tackle today? Reach out, and we’ll start working towards our 6P Onboarding Process.