Previously, we looked at a what a potential DRS model could look like for drinks producers in Europe. The stated aim of DRS is to increase the amount of single use packaging that is recycled and increase the amount that is brought back into the economy. Without a shadow of a doubt, DRS will cause discontinuity for producers and distributors alike but what can you do now to pave the way for a smoother adoption of the DRS regulation?
You will have to make changes in every single department in the company. DRS is not a supply chain problem (rather like S&OP) but it is very much a cross-functional responsibility (very much like S&OP). Ahead of those changes, there are many initiatives you can take now to make your own supply chain simpler and reduce the impact of DRS. You could potentially gain a competitive advantage.
Here are just a few portfolio related opportunities you may consider. There are many more!
- Cut that tail. Irrespective of DRS you probably have an SKU tail that is draining valuable resources for little or no profit. Those resources could be more usefully applied in design and management of the DRS. Now is the time to stop endless debate, take a leadership decision and delist unprofitable SKUs, whatever the packaging material.
- Alternatives. If the positioning, pricing and profitability allows, you may gain a benefit from converting plastic SKUs to materials with an established and perhaps more flexible material recovery model, e.g. metal, glass.
- Colours. Used bottles have to be separated by colour in order to produce the highest or most appropriate quality of recovered plastic noodles. Do you need so many discrete PET/plastic colours? Are they really brand critical or necessary for product stability? Find out.
- Innovation. Your innovation funnel should already have the requirements of DRS as a key parameter in the design and development of new packaging. If your R&D people believe they have little to do with DRS, you might ask them if they ever thought detergent and shampoo would be sold in paper bottles.
- Distributors. While you may be surprised to see distributors in this list, they will play an important role in your DRS model as your partners. Are they suffiently briefed on DRS, a committed part of the solution and do they have the management capability to handle DRS and day to say selling? If not, you may need to review how many and which distributors you use in your Route to Market. (Also, do they need to carry the entire portfolio?)
As an FMCG leader you must be careful not do just enough to tick this “irritating’’ DRS box and then relax. DRS is the first of many similar pieces of legislation that will promote a real circular economy and materials not in scope now, almost certainly will be in time. Learn from this DRS legislation and your business will be better prepared for the next initiative.
DRS will come as a shock to many producers but now is the time to start your engagement with internal and external stakeholders. Consider professional, external help now before it is too late to influence DRS.
Finally, feel free to use any of our contact routes including Live Chat, if you have any questions about how the Enchange Supply Chain House can assist your journey to supply chain excellence.