Packaging

Case : Development of innovative ecological packaging

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Client

Packaging manufacturer – aims to develop and implement more environmentally friendly and sustainable packaging for its products. The main objective is to reduce the negative impact on the natural environment and increase the renewability of the materials used in the production of packaging. 

Situation Description

“The client is a leading manufacturer of packaging for various industries including food, pharmaceutical and cosmetics. Its annual production exceeds 5 million units and revenues are over $15 million. However, a major concern is the negative environmental impact of traditional carton packaging and the difficulty of waste disposal. At the same time, consumers and the market are increasingly demanding eco-friendly packaging solutions, which could negatively impact the company’s competitiveness.”

The company challenged MARRBERY to develop more environmentally friendly types of paperboard packaging that are in line with sustainability principles. 

Supplemental Data:

  • The company’s market share is 15% of the total carton packaging production in the country

  • 80% of production is exported to EU countries

  • Waste disposal costs $200,000 per year

  • Packaging sustainability requirements are tightened by 10% annually

  • Demand for eco-packaging has grown by 40% in the last 3 years

  • Target to reduce the carbon footprint of packaging by 20%

  • 60% of consumers are willing to pay more for sustainable packaging

  • €50 million investment available in the EU for green packaging projects

                                          Exhibit 1

Problem

  • High negative environmental impact of traditional carton packaging

  • Difficulties of cardboard waste disposal and recycling

  • Failure of traditional packaging to meet growing environmental and sustainability requirements

  • Lagging behind competitors that are already implementing eco-packaging

  • Risk of losing customers who demand more environmentally friendly packaging

  • Insufficient investment in R&D to develop innovative eco-solutions

  • Lack of competence in environmental packaging

  • Negative impact on the company’s reputation due to outdated, non-environmental

Dictionary
Key Terms
 
Forecasting and planning system: a system that enables a company to forecast demand for its products and services and to plan production, distribution and marketing.
Forecasting: the process of estimating future values of variables.
Planning: the process of developing the actions to be taken to achieve desired results.
Forecast accuracy: the degree of closeness of the predicted value to the actual value.
Investment payback period: the period of time over which an investment is recouped.
Sales conversion: the ratio of successful sales to total sales.
Data analysis: the process of collecting, processing and interpreting data.
Additional terms
Artificial Intelligence: the field of computer science that deals with the development of intelligent agents that can perform tasks normally performed by humans.
Machine learning: a field of artificial intelligence that is concerned with developing algorithms that can learn from data without explicit programming.
Deep learning: a section of machine learning that uses artificial neural networks to solve complex problems.
Case study: a method of learning that involves learning from case studies or examples.
 
Abbreviation
 

  • RMSE: Root Mean Square Error.KPI: Key Performance Indicator.AI: Artificial Intelligence.ML: Machine Learning.DL: Deep Learning.CMS: Customer Relationship Management.CRM: Customer Relationship Management.ERP: Enterprise Resource Planning.MRP: Material Requirements Planning.SCM: Supply Chain Management.

Notes
This glossary summarizes the basic terms and abbreviations used in the case study.
For a more detailed understanding of the case, it is recommended to read additional literature on forecasting and planning systems, machine learning and data analysis. 

Marrbery Research

Our team of experts conducted a thorough research to address the

  • Analysis of the environmental packaging market and best global practices

  • Technological audit of the company’s eco-packaging capabilities

  • Exploring the latest biodegradable and recyclable materials for packaging

  • Consumer survey on the demand for green packaging

  • Assessment of carbon footprint and opportunities for its optimization

  • Analysis of legislative requirements and trends in the field of ecological packaging

  • Benchmarking the best eco-solutions of competitors

  • Determining how best to achieve the client’s sustainability goals

Expected effect:

  1. Reducing environmental impact by moving towards biodegradable and recycled materials in packaging production.

  2. Reduce carbon footprint by optimizing manufacturing processes and using greener materials.

  3. Increasing the company’s competitiveness by producing an environmentally friendly product that meets modern standards and market requirements.

  4. Improved brand perception among consumers as an environmentally responsible producer.

  5. Increasing the company’s innovation potential and entering new markets where a high degree of sustainability is a key selection factor.

  6. Opportunities for financial incentives or government assistance for companies that actively promote environmental safety and sustainability.

  7. Improved relations with partners and customers, as more and more companies are showing interest in cooperating with environmentally responsible producers.

Planned for successful implementation.

  • Development and testing of new materials: Conducting research and experiments to create biodegradable and recyclable materials that meet quality and safety standards.

  • Modernization of production processes: Introduction of new technologies and equipment to optimize production of ecological packaging.

  • Testing in practice: Conducting test production and testing of environmental packaging to verify its functionality and reliability.

  • Market Reaction Study: Market research and analysis of consumer reaction to a new product.

  • Launch of mass production: Start of production of ecological packaging on a commercial scale.

  • Marketing and Sales: Develop marketing and sales strategy for new packaging, including market promotion and customer acquisition.

Monitoring and optimization:

  • Continuously monitoring the quality and effectiveness of new packaging and looking for opportunities to further improve it.

Additional technical details of the solution

A multivariate machine learning model based on linear regression was used for demand forecasting.

The factors included in the model were: product price, marketing costs, seasonality, competitor sales volume, etc.

  • Gradient descent was used to train the model with adaptive training coefficients to accelerate convergence.
  • Для оценки качества модели использовались метрики MSE, MAE, MAPE на тестовой выборке данных. MSE, MAE, and MAPE metrics were used to evaluate the quality of the model on a test sample of data.The values of these metrics were compared to the baseline forecast.
  • The neural network architecture for prediction included 2 hidden layers of 100 neurons each with ReLU activation function.
  • Optimization was performed using the Adam algorithm.

Purpose

Develop new 100% eco-friendly packaging that reduces carbon footprint by 20%.

Solution development

Carefully moving on to the next stage, we set about analyzing the company’s current business processes. Digging deep into the details, we took apart every aspect. In this whirlwind of data, we

Our hypothesis, backed by careful calculations and analytics.

Based on the analysis and identified optimization opportunities, the Marrbery team proposed a comprehensive solution including the following components:

  • Implementation of a routing system based on artificial intelligence to build optimal delivery routes taking into account the real traffic situation.

  • Implementation of RPA to automate routine order processing operations, eliminating the human factor.

  • Development of a mobile application for couriers with navigation integration and fast data sharing capabilities.

  • Integrate logistics systems with GPS tracking and company ERP for real-time monitoring.

  • Introduction of KPIs and reporting system to monitor logistics performance.

  • Conducting staff training and system startup support.

  • It is expected that the implementation of this solution will reduce the company’s logistics costs by 15%, speed up order processing by 30% and increase customer satisfaction with the quality of service.

Decision tree

Критерии оценки:

  • Reducing carbon footprint

  • Percentage of biodegradability

  • Recyclability

  • Optimization of logistics and disposal

  • Cost of production

Alternatives:

  1. Starch-based bioplastic packaging

  2. 100% biodegradable cellulose pulp packaging made of cellulose

  3. Compostable packaging made of recycled paper

  4. Packaging with minimal use of adhesives

  5. Flexible packaging based on non-woven fabric

Analysis of Alternatives:

  • High cost, complexity of logistics

  • Low durability, limitations in use

  • Need for waste sorting, special composting conditions

  • Limitations in design, risk of gumming up

  • Not suitable for heavy loads, difficult to dispose ofя

Recommended option: A combination of options 3 and 4 – composted packaging with a minimum of glue, which will give the best balance of sustainability and functionality.

                                          appendix 2

Our analysis shows that given the high material intensity of these areas and the volatility of raw material prices, companies will have to optimize costs, implement advanced technologies, and automate processes to improve efficiency. 

Calculation of the effect of implementation

Factors that are taken into account in the Marrbery methodology:

  • Financial Factors:

    • Reduced costs

    • Increased sales

    • Quality improvement

    • Increase in profits

  • Non-financial factors:

    • Improving the image of the company

    • Increased customer satisfaction

    • Improvement of labor safety

Initial data:

  • Production volume – 5 mln units of packaging per year

  • The cost of traditional packaging is $0.5 per unit

  • The price of a traditional package is $1 per unit

  • Disposal costs – $200,000 per year

  • Investment in new equipment – $1 mln

    Calculation:

  • The cost of new eco-packaging is $0.6 (20% higher)

    The cost of new eco-packaging is $0.6 (20% higher)

  • Savings on recycling – $80,000 per year (40% less)

  • Additional profit: 5 million * ($1.1 – $0.6) = $2.5 million

  • Investment payback period: $1 mln / $2.5 mln = 0.4 years

Conclusion: By switching to new eco-packaging, the company will increase profits by $2.5 million and recoup its investment in 0.4 years. A significant reduction in the negative environmental impact will also be achieved.

Details

Description of the implementation process:

Technological details:

  • Description of the technological process of composted packaging production

  • Characteristics of equipment required for production

  • Peculiarities of bioclays application and their properties

  • Technical requirements for raw materials (recycled paper of a certain quality)

    Details of the design process:

  • Stages of packaging design development and testing

  • Involved experts in eco-design and material science

  • Conducting focus groups with consumers regarding the convenience of packaging

Marketing details:

  • Planned activities to promote new eco-packaging

  • Special brand development and market positioning

  • Partnership with retailers and manufacturers of promotional goods

Logistical details:

  • Features of warehousing and transportation of finished products

  • Action plan for supply chain and logistics optimization

Conclusion

The packaging manufacturer is committed to developing and implementing more environmentally friendly and sustainable packaging for its products. The main objective is to reduce the negative impact on the natural environment and increase the renewability of the materials used in the production of packaging.

The recommended option is composted packaging with a minimum of glue, which will give the best balance of eco-friendliness and functionality.

Implementation of this solution involves the development of new materials, modernization of production processes, development of a mobile application for couriers, integration of logistics systems with GPS monitoring and the company’s ERP. It is expected that the implementation of this solution will reduce the company’s logistics costs by 15%, speed up order processing by 30% and increase customer satisfaction with the quality of service. The company’s total profit will increase by $2.5 mln, and the investment will be recouped in 0.4 years.

This plan will allow the company to maintain its competitiveness in the market, reduce its negative impact on the environment and improve its corporate reputation. This will enable the company to take a leading position in the field of ecological packaging.

Result

Business effect

The following indicators can be used to assess the business impact of introducing new eco-packaging:

  • The following indicators can be used to assess the business impact of introducing new eco-packaging:

  • Improved environmental reputation of the company: Increased sales and profits as a result of improved environmental reputation of the company.

  • Increased competitiveness: Increased market share as a result of the company’s increased competitiveness.

The cost-benefit analysis showed that the introduction of the new eco-packaging can lead to the following effects:

  • Reduced waste costs:

  • Compostable packaging completely decomposes in compost, so it does not need to be sent to landfill. This can lead to a 50% reduction in waste costs.

  • Increased sales:

  • The use of eco-packaging can enhance a company’s environmental reputation. This can lead to a 10% increase in sales.

  • Increased profits:

  • Reducing waste costs and increasing sales can lead to a 20% increase in profits.

Recommendations

To consolidate the results achieved by the company, we recommend:

Technological details

  1. Raw material collection: Raw materials are collected from various sources such as crop residues, food waste and recycled materials.

  2. Raw material processing: Raw materials are processed into a raw material mix that meets the required specifications.

  3. Packaging: The raw material mixture is formed into packages of the required size and shape.

  4. Package drying: The package is dried to ensure its strength and resistance to stress.

  5. Packaging packaging: Packaging is packed for storage and transportation: Packaging is packed for storage and transportation.

Equipment characteristics

Specialized equipment is used to manufacture compostable packaging that meets the process requirements. The main characteristics of the equipment include:

  • Type of equipment: equipment can be mechanical, thermal or biological.

  • Key Features:performance, capacity, size, cost, etc.

  • Manufacturer: equipment manufacturer.

  • Cost: cost of equipment.

Application of bioclays

Bioclays can be used to glue packaging elements together. Bioclays are made from natural materials such as starch, sugar and protein. They are environmentally friendly and do not emit harmful substances when decomposing.

  • Safety for the environment:raw materials must not contain any harmful substances that may adversely affect the environment.

  • Biodegradability: the raw material should decompose in compost within 6 months.

  • Mechanical Strength: the raw material must have sufficient strength to withstand stresses during use.

  • Ability to form: raw materials must be capable of being formed into packages of the required size and shape.

Details of the design process

  • Conceptualization: developing an overall packaging concept that meets user needs and environmental requirements.

  • Conceptualization: developing an overall packaging concept that meets user needs and environmental requirements.

  • Prototype testing: testing the prototype packaging using various methods such as strength, leakage and load resistance tests.

  • Prototype testing: testing the prototype packaging using various methods such as strength, leakage and load resistance tests.

Involvement of experts The following experts may be involved in the packaging development process:

  • Eco-designers: experts in designing packaging that is environmentally friendly.

  • Material scientists: experts in the materials used to make packaging.

  • Psychologists: experts in packaging ergonomics.

Psychologists: experts in packaging ergonomics.

    • Media advertising: advertising in newspapers, magazines, television and radio.

    • Internet marketing: advertising on the Internet, particularly on social media.

    • Public engagement: holding events to raise awareness of environmental issues and the benefits of using eco-packaging.

Manufacturing process for compostable packaging

  1. Compostable packaging is made from biodegradable materials such as cellulose, starch, sugar and protein. The manufacturing process includes the following steps:

  2. Focus groups can be conducted to obtain feedback from users. Focus groups involve a group of users discussing the packaging and giving their opinions and suggestions on its design.

Marketing details

  1. Planned activities to promote new eco-packaging

The following activities can be planned to promote the new eco-packaging:

  • Media advertising: advertising in newspapers, magazines, television and radio.

  • Internet Marketing: advertising on the Internet, in particular on social networks.

  • Community Engagement:conducting activities to raise awareness of environmental issues and the benefits of using eco-packaging.Mechanical strength

                                          appendix 3

Forecasting based on 3 scenarios

Scenario 1 (conservative):

  • 15-20% increase in productivity of packaging production

  • Reduction of packaging production costs by 10-15%

  • ROI of the project 50-80%

Recommendations: Phased scaling of the solution to other production lines, optimizing processes to further reduce costs.

Scenario 2 (realistic):

  • 30-40% increase in productivity of packaging production

  • Reduction of packaging production costs by 25-30%

  • ROI of the project 120-150%

Recommendations: Expansion of solution functionality (introduction of new technologies), automation of related processes, development of personnel competencies.

Scenario 3 (optimistic):

  • 50%+ increase in packaging production productivity

     

  • 40%+ reduction in packaging production costs

  • ROI of the project 200%+

Recommendations: Comprehensive automation and digitalization of production lines, introduction of predictable maintenance, and transformation of the operating model of the production process.

The bottom line of the work we did was:

  • Potential business effects from the introduction of new eco-packaging are identified.

  • Recommendations for the implementation of the project have been developed.

  • Increased profits:

  • Reduced waste costs and increased sales resulted in a 20% increase in profit.

  • Increased sales:

  • The use of eco-packaging can enhance a company’s environmental reputation. This resulted in a 10% increase in sales.

  • The introduction of new eco-packaging has brought significant business benefits for the company. To maximize the effect, a detailed cost and revenue analysis and market research should be conducted.

  • Reduced waste costs:

  • Compostable packaging completely decomposes in compost, so it does not need to be sent to landfill. This can lead to a 50% reduction in waste costs.

ABOUT THE AUTHOR(S)

Alexey Konovalov is a partner at Marrbery, where Natalia Shevchenko is a consultant; Marina Krivosheya is a senior expert; and Maria Zankovetskaya is a consultant.

The authors would like to thank the following individuals:

Kovalenko Halyna, Snitko Kyrylo, Litvinenko Vasyl, Grigorenko Anna, Melnyk Oleksandr, Savchenko Olesya, Koval Oleh, Gordienko Denis, Timchuk Bohdan, Kravka Lilia and others who helped in the process. 

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