Shelf-ready, steady, go

07-May-2007 - Last updated on 15-Mar-2017 at 12:43 GMT

Related tags Cost

Shelf-ready packaging (SRP) may be all about in-store efficiencies and on-shelf availability, but is its impact on efficiency and space availability on supplier production lines taken into consideration? asks Paul Gander

As we all know by now, SRP stands for shelf-ready packaging. Other variants have been suggested: 'straining retail partnerships' or, more feasibly, 'suppliers rant - privately'.

Larger traded units have been progressively replaced by case or tray formats that can be quickly and cleanly transformed into on-shelf merchandisers. Units tend to be smaller and may display the product more advantageously. But SRP also increases supplier costs and none of those increases is likely to be absorbed by the retailer.

In Europe-wide supplier research published last year by the IGD grocery think-tank 75% of respondents said the principal benefit of SRP would be in-store labour efficiencies.

This tallies with the 85% that viewed retailers as the major beneficiaries of SRP. A mere 3% said they believed that suppliers would be the ultimate beneficiaries.

Of course, the answer given will depend on who the question is put to. Marketing departments have been keen to see the benefits of adapting merchandising formats and this was reflected in the 66% that highlighted improved on-shelf availability and the 41% that saw brand enhancement as a benefit of SRP.

But for those managing production, where the emphasis has for years been on reducing costs and increasing efficiency, the introduction of SRP has been a largely frustrating exercise.

Keith Darroch, engineering project manager at R Twining & Co's North Shields plant, says: "Our products probably do better on-shelf as a result. But then, we wouldn't have put the additional costs into our packaging if it hadn't been for SRP. Some eight or nine years ago we took those same costs out."

Bradman Lake Group (BLG) was among the companies that helped Twining to adapt the 10 lines at the plant to SRP. The existing shrinkwrap lines were maintained as an option, but shelf-ready corrugated trays were added.

BLG sales director Ivan Reeve explains the background: "Twining decided to stage a complete relaunch of its teas, changing the style of the carton - and even introducing a TV advertising campaign with Stephen Fry."

The cost of the investment was offset to, some extent, by a reduced headcount in the North Shields factory, he adds.

This is one reason it is difficult to put a specific cost on the introduction of SRP. The capital expenditure associated with it is likely to have an effect on plant and supply chain efficiencies and concurrent rebranding, or relaunches, may improve sales. Pride, as much as good business sense, may account for the fact that SRP-related operational changes are rarely made in isolation.

Equipment-related costs do not begin and end with upfront spending on new machinery. Plant managers have often worked hard to optimise line efficiencies, only to have to start again with new equipment. Reeve talks about the "heartache" involved. But there are headaches as well as heartache.

There are specific problems on the lines to be overcome, such as the tendency of corrugated trays to warp, says Darroch. But he sums up the broader implications: "The more equipment you have, the more things there are to go wrong."

Squeezing the additional equipment in is a problem in its own right.

Most plants are built with little more than aisle space either side of each line. Secondary packing is also likely to be boxed in by installed primary packing and palletisation equipment. "So you have to look at taking out lengths of existing conveyoring and replacing them with machinery," says Reeve.

As BLG explains, with space at a premium, SRP has made robotic pick-and-place a much more attractive option. "There's often no room for mechanical pushers and placers," says Reeve. "And there's no loss of line speed, since each robot head can pick up three containers at a time."

Overall, Darroch is wary about quantifying the on-cost associated with SRP: "Some scary figures have been put about. But it's not as much as being delisted by Tesco would have cost the company." Since some 30% of Twining's sales go through Tesco, that does little to limit the figure under discussion.

For dips manufacturer Zorba Foods the push to invest in SRP came from Asda rather than Tesco. The small Welsh company, which has a workforce of slightly more than 100, was among the lucky suppliers that could combine SRP-preparedness with the design of a completely new plant. Its Ebbw Vale factory opened last September. In this case, the company was able to locate four boxmakers from Swedish company IBS on a mezzanine floor. Extended conveyors then take the erected cases down to the individual production lines for automatic loading.

Zorba md Chris Nash says: "We simplified our requirements down to two corrugated outers, one of which includes a tearstrip for easy-opening. The same outer can be used for our 170g, 200g and 300g pots."

In some cases, Zorba has been suggesting SRP formats to other retail customers. "You want to be first in the category so you can work with each retailer on shelf-ready," says Nash. "If you have to follow where a competitor has already led, it makes it more difficult."

But Nash has no illusions about how much tougher it would be to retrofit SRP at an operational plant. "Everything through to palletisation changes," he says. "You need to ensure the shelf-ready packs are protected through the distribution centre and reach the shelf in a pristine condition."

Zorba's IBS machines were supplied by DS Smith Packaging Systems (DSSP). The tray format is similar to that adopted by Rachel's yoghurts a couple of years ago, with an open top and diagonal tearaway panel down to the base at the front. According to DSSP general manager Stephen Parry, Rachel's was another customer that worked hard to transform SRP from a negative into a positive. "They took the bull by the horns. They were packing by hand, so they took the opportunity to automate," says Parry. "They went for a black base tray that stood out and sales rose considerably."

Understandably, companies tend to take the least costly route in converting to SRP. But as Reeve explains, where a company has previously slimmed down transit packaging to shrinkfilm, the oncost of moving back to corrugated will always be significant, over time dwarfing initial capital expenditure. He compares the typical 15p cost of a corrugated case with 2p or 3p for shrinkfilm. Multiplied over 20 or 30 finished packs a minute, this makes for a growing burden for the producer.

Weighing up machinery and materials costs is not always quite so straightforward. For instance, those companies already using standard corrugated cases are faced with a dilemma. If they run fully-enclosed SRP formats, such as DSSP's Shelfmaster 2 on the same line, the on-cost for each case is likely to be 25% or 30%, says Parry.

An open tray design such as Zorba's would necessitate new line equipment. In this case, says Parry, the customer paid around £30,000 each for two new tray erectors, to add to the two it already had. But any open-topped tray is likely to incur much lower materials costs than an enclosed case.

To further complicate matters, the combination of board and shrinkfilm, which may satisfy all or most UK sales channels, is increasingly unlikely to make the grade in mainland European markets. Here, single-material requirements are for even more costly fully-enclosed or tray-and-lid board formats. And Darroch at Twining said French and German exports are being affected by this.

Longer-term, shelf-ready (or more properly retail-ready) solutions could look very different. Equipment supplier Kliklok Woodman already supplies the JR lock-forming cartoner for shelf-ready trays of fruit and veg. But its system for loading layers of fresh milk on to wheeled metal trolleys could say much more about the future of retail-ready. FM

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