Protect, preserve, promote has been the driving force of global packaging company Amcor for the past 160 years, but they are now heading for the next level of sustainability as they accelerate their digital journey towards procurement excellence.
Amcor is the world’s biggest packaging company – generating close to $12.5 billion in annual sales. Amcor Rigid Packaging (ARP), is the $3 billion business group focused on the rigid packaging market. Originally a beverage-centric packager, the global rigid packaging organisation has now extended its range to develop differentiated products and services to protect food, healthcare, wine and spirits, home care, personal care and technical applications.
Amcor is now focusing on its green credentials following a pledge three years ago to the Ellen MacArthur Foundation that its packaging will be reusable or recyclable by 2025. This includes their polyethylene terephthalate (PET) bottles which could be a game-changer due to their recyclable credentials, current health crisis and concerns over hygiene. Each PET bottle is capped and sealed to keep beverages protected from pathogens like viruses and bacteria.
But this is just part of the sustainability story for the Australian-American company - which puts customer centricity at its heart - as we learn from Ranga Mulabagula, Vice President of Global Procurement, ARP from their offices in Ann Arbor, US.
The journey to procurement excellence started for Mulabagula in 2013 when he was approached by Amcor, who were impressed by the work he was doing at General Motors (GM) managing global commodity purchasing and supply chain teams by leveraging GM scale, scope and using first-time analytical modelling and forecast capabilities to predict supply chain bottlenecks.
Mulabagula, points out Amcor deploys its expertise and knowledge of customer products and value chains to produce packaging that is more functional, appealing and cost effective for customers and their consumers, and ultimately more sustainable for the environment.
“We are making a distinct difference in a positive way. Our goal is to make 100 per cent of our products, recyclable, reusable, or compostable,” said Mulabagula who pointed out it is Amcor’s aim to drive at least 10 per cent of recycled content across the product portfolio by 2025 along with eliminating all plastics like PVC and PVDC as they are more difficult to recycle.”
As head of global procurement in ARP, Mulabagula is leading the organisation to the next level of procurement excellence, managing six global category directors and 43 co-worker strong global procurement teams with responsibility for a $2+ billion spend.
Mulabagula collaborates with his global teams to define and drive the current (FY20-22) and next Horizon (FY23-FY25) procurement objectives, strategy, priorities, metrics, policies, processes, systems and talent for accelerating the ARP "procurement excellence" journey through collaboration, technology enabled sourcing, master data governance (MDG) and procure-to-pay (P2P) solutions for a sustainable performance and “indirects category” transformation.
“ARP is a major converter in the North American packaging industry,” said Mulabagula. “We convert raw materials into the containers and provide services that brand owners (like Pepsi and Coca-Cola) want and aspire based on their market segment preferences, technical and functional requirements.
“Our geographical reach is global, being the biggest packaging company in the world. And the biggest converter, not just from a size point of view, but the technical know-how, innovation and value we bring to the table. We deliver through a customer centric approach coupled with excellence in operational, technical and value performance, which is why our customers keep coming back to Amcor.”
Drive to sustainability
Amcor invests $100 million every year in research and development (R&D) to ensure a top-notch pipeline of innovations to tackle the biggest technical and practical barriers to sustainable packaging as the world moves towards the goal of Net Zero by 2050.
PET bottles often have the lowest carbon footprint and according to Amcor their production results in up to 70 per cent less greenhouse gas emissions than packaging materials like aluminum and glass. “The problem lies in plastic recycling. So, I think once we accurately define and align on the problem, it's not the plastics packaging per se, but the lack of recycling infrastructure, incentivising and educating the end user where the challenges reside and the solutions exist,” comments Mulabagula.
“One example, US recycling rates of high-volume plastic bottles are still in the lower thirties, meaning, we are talking significant amounts of waste going to landfills that should not be there. And our challenge as a packaging industry is to accurately define the problem, align with key stakeholders in the value chain and take a leadership position across a multipronged solutions approach to address this issue,” he said.
One example of Amcor’s sustainable products is the ESL (aseptic/extended shelf life) plastic bottles which are revolutionising the packaging of dairy and juice. Amcor’s barrier technology protects against ultraviolet light, maximises the product’s flavour and provides up to a year of shelf life.
Master Data Governance
Amcor’s digital transformation is being accelerated with the Master Data Governance (MDG) process along with a P2P solution through SAP Ariba. “The biggest opportunity for any P2P program resides where the fragmentation or non-standard materials or services is the maximum - if you do it right that’s where the biggest value is,” said Mulabagula.
“The journey started in 2015 with MDG, a process through which we can standardise our materials and services. For example, a product specific application - if we talk about green colored bottles, well, define green? Green can come in different shades and different tones. So, classification and standardisation of that SKU is very important. And what MDG enables us to do - through the SAP platform - is to standardise material groups to define what the classification criteria is and applies them consistently across the spend”.
“Once the standardisation was in place, we then launched a P2P Ariba program, initially starting off with a high value, high problem areas in “Indirect Categories”; maintenance, repair and operations (MRO) management and then scaling to secondary packaging, professional services,” said Mulabagula who points out ARP is coming to the end of their first leg of the journey to digital procurement excellence.
“Once you have that visibility and transparency, then everything else comes into play in terms of putting in processes, operational resources and dash boards for compliance, consolidation and making sure we deploy back end robust procurement commodity strategies and processes to maximise the value return for our spend,” he said.
For example, given this unprecedented visibility and transparency, ARP streamlined and consolidated the supply base by 75 per cent during this transformational journey, while deploying robust supplier onboarding processes across it’s spend.
ARP digital procurement transformation journey has reached the “advanced basecamp” stage in its roadmap. ARP has achieved 70 per cent automation of indirect procure to pay processes, significantly improved indirect spend under management to 95 per cent, adherence to negotiated contracts with preferred suppliers and sourcing improved to over 75 per cent.
Commenting on how Amcor has risen to the challenges of providing packaging during the pandemic, Mulabagula said: “The basic needs of packaging have not gone away, which is to protect, preserve and promote but sustainability is being added and enhanced even prior to the pandemic”.
“Ensuring sustainability throughout the entire life cycle and end of use of product is equally as important, hence these requirements are accelerating the sustainability journey in the industry and driving unique business and technology partnerships with strategic vendors”.
Asset lifecycle assessment
Asset is an Amcor tool that helps brand owners assess and accurately communicate their carbon footprint of their packaging products backed by independent verification and labelling from the renowned “Carbon Trust”.
Amcor is driving awareness in sustainability packaging with their Asset lifecycle assessment tool. Detailed packaging lifecycle reports provide fact-based criteria to identify lower environmental footprint options, enabling brand owners to make informed packaging decisions. The company conducts on average 850 packaging assessments for its customers each year.
“This is a unique service from Amcor and important to our customers, who can be assured their product assessment is verified and validated by Amcor and Carbon Trust”, said Mulabagula.
But what other factors are giving Amcor the competitive advantage? “We continue to focus on value creation for customers and markets - developing unique technologies to serve customer needs, pursuing acquisitions that expand our presence in emerging markets, and help improve the industry structure so we can enhance the value delivery across the packaging value stream.”
“We work closely with brand owners to make sure we are aligned with their corporate sustainability goals and promote our capabilities to accelerate their journey towards this important objective. So that collaboration, innovation, consolidation and communication leads to significant opportunities for customers and Amcor,” he said.
Alliance with Oakwood packaging
Amcor works with many vendor partners but the partnership with Oakwood Packaging is a unique one. “We buy “secondary packaging” but the relationship is broader than a typical “buy-sell” arrangement. We provide strong value for one another through collaboration in catering to markets we operate and customers we serve.
“We are also embarking on a journey to make these products more sustainable - how can we drive more recycled content in the bags? Can we collaborate and standardise end of use solutions after consumption of these bags?
“So, there is significant opportunity in terms of re-using the products and also making sure we are putting sustainable materials in these products to start with,” said Mulabagula.
Another partner crucial for Amcor’s digital procurement initiative is Grainger who provides MRO parts and services through P2P enabled Ariba catalogs.
“I believe our ongoing digital procurement journey has set us up beautifully to take the next logical step in deploying future ROI driven solutions (ex: robotics process automation, machine learning, AI tools) in alignment with both internal and external stakeholders,” said Mulabagula.
Agile in the face of COVID-19
“It's been a challenging, but at the same time, very rewarding experience given the paramount importance of safety and health of our co-workers,” said Mulabagula.
“We started off importing PPE and masks from China. And we were the first organisation in Amcor to import and manage this complex supply chain to keep our plants and facilities running. So, we didn't miss a beat from a business continuity point of view, but we realised this was not a sustainable solution in the long term”.
“So, in collaboration with a strategic vendor we started our own new product line at our New Jersey facility, where we now make our own face masks that we commissioned in 12 weeks. And that was a record by itself”.
“I'm really proud of what the team has accomplished, working tirelessly and seamlessly with stakeholders to rapidly install a new manufacturing line. We are now self-sufficient in our face masks and have started charitable donations to local non-profitable organisations in communities we serve and operate. So that's been a fantastic and rewarding journey and a new experience for all of us at ARP.”
Bottle with low carbon footprint
Amcor is the industry leader in the use of post-consumer recycled (PCR) PET with over 15 years of experience.
PET, which stands for polyethylene terephthalate, is a thermoplastic polymer resin of the polyester family. It is extruded or moulded into plastic bottles and containers for packaging many different product categories including foods, beverages, personal care, dairy and spirits and wine products.
PET bottles are lightweight, shatterproof, re-closable, resealable, reusable and infinitely recyclable (with existing technologies including chemical recycling). PET bottles often have the lowest carbon footprint and according to Amcor their production results in up to 70 per cent less greenhouse gas emissions than packaging materials like aluminum and glass.
Global origins mapped out future for Amcor
Amcor’s 160-year history touches almost every corner of the world as the founder Samuel Ramsden, a stone mason from Yorkshire, travelled to Australia in the 1860s to make his fortune by opening a paper mill in Melbourne.
Around the same time, in St Louis, Missouri, Judson Moss Bemis founded bag manufacturing J M Bemis & Company, which by the end of the 19th century was among the largest enterprises of its kind in the world.
Amcor was historically known as APM, or Australian Paper Manufacturers, for more than a century, and in 2019 it acquired the Bemis & Company.
These two complementary companies have gone on to create the global leader in consumer packaging, with the footprint, scale and capabilities to drive significant value for shareholders and deliver the most sustainable innovations for the environment.